heavy government borrowing when private sector organizations also want to borrow. Government agencies can theoretically pay almost any interest rate, but individuals and business borrowers may be unwilling to borrow at high interest rates. Crowding out rarely happens except in periods of sharply rising interest rates, and very tight money.
heavy federal borrowing at a time when businesses and consumers also want to borrow money. Because the government can pay any interest rate it has to and individuals and businesses cannot, the latter reduce their demand and are thus crowded out of credit markets by high interest rates.
heavy federal borrowing at a time when businesses and consumers also want to borrow money. Because the government can pay any interest rate it has to and individuals and businesses can't, the latter are crowded out of credit markets by high interest rates. Crowding out can thus cause economic activity to slow.
