If the Fed stops buying bonds as it claims, won't bonds very quickly dip hugely in price, driving yields through the roof? And won't that crush the economy? I.E. the U.S. government has to start spending a ton more on interest going forward (although ratcheting it up as bonds are issued at the new much higher interest rates), and higher interest rates mean higher borrowing rates for private individuals crushing business growth and what not? And then will not the U.S. government pressure the Fed to start buying bonds again to keep rates down, continuing massive inflation?
Correct, which is why they cannot raise rates without causing an economic collapse. Therefore, they want the economic collapse to be due to their inaction, not action and then can later claim "we didn't foresee this particular sequence of events".
