My first thought was that's absurd; they're terrified of raising rates at +126% Debt-to-GDP as it is in the United States at present, which would prioritize a higher rate of interest over the principle payment. (That's a big chunk of change!)
My second thought was that's one of the only things fiscal policy probably can do now with the bias of avoiding a broad, economic, deflationary spiral, which they're also terrified of...
My third thought was this kind of situation is virtually inevitable in terms of how debt cycles work in a world run by central authorities like the Federal Reserve.
Manipulating interest rates and money supply leads to economic booms/busts a la "the debt cycle," which typically come in greater frequency and amplitude over time the more it's done. And once you start, it's hard, if not impossible to stop . . . like a self-fulfilling prophecy due to the algorithmic nature of it.
Taxation and spending are the strongarms of fiscal policy (US Treasury). Interest rates and money supply are the strongarms of monetary policy (Federal Reserve). Obviously they co-exist in the global monetary system, but once a country's Debt-to-GDP crosses over 80% or so, central authorities almost "have to" keep spending in order to avoid deflation. So they work in concert to achieve that end.
That being said, I like Howard Mark's rhetorical reply to the idea of taxing unrealized capital gains: "Would you then give us a refund if we took losses [for no cap gains]... (More)