[jfengel]

The yield rate does mater in that it's correlated to inflation. If the yield goes up, investors sell bonds, and prices go up.

Modern Monetary Theory says that's OK. You stop the pretense of borrowing, then print as much money as you want. You then control inflation by taxation, and then simply burning the dollars you collect.

But the switch from one to the other would be unpleasant, since a lot of bond holders are depending on their bonds being worth more than the purchase price after inflation.