Interest is determined by the risk inherent in the debt. Think of it in terms of consumer credit. Whether a bank or credit card company lends you money at 5% or 15% has more to do with how creditworthy you are, then with how good a use you will make of the money. (Think TVs on installment plans)

> 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?”

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