Money earmarked to make interest payments could be used for other purposes if interest rates were lower. Thus, the fiscal authority has a strong incentive to keep interest rates low. The United States faced this situation during World War II. 15 Marriner Eccles, who chaired the Federal Reserve at the time, favored financing the war by coupling tax increases with wage and price controls.
•  Second, shortcomings and uncertainties in the valuation of structured finance products, due to their complexity, imperfect information about the underlying asset characteristics and excessive reliance on the ratings of such products by credit rating agencies.