A common misunderstanding: Low interest rates and the availability of savings

It is often claimed that because interest rates are very low in OECD countries and globally, governments are able to issue a large amount of debt, for example to finance the energy transition. But one must be careful to not get the wrong idea : Because interest rates are low, this debt would not be very expensive; But savings (in the OECD, globally) are currently used to finance investment s . If this large new debt is issued, there will be a crowding-out effect: first, interest rates will rise, unless central banks buy the bonds issued; second, even if interest rates remain low, savings will have to be transferred from their current use to finance the new debt. The fact that interest rates are very low, whether spontaneously or because of central banks’ actions, does not mean that there are unused savings: all the world’s savings are currently used to finance investment s .