[dragonwriter]

> Interest is determined by the risk inherent in the debt.

That's the supply side consideration of the price of debt, but interest, like all prices, is determined by intersection of supply and demand, not supply alone.

Demand side consideration is “what new income in the future does taking on this debt now enable?”

[mathattack]

It’s a zero sum game. Debt for one party becomes consumption and investment for another. The interest payments go from one to another.