Crowding out
The crowding out effect is an economic theory stipulating that rises in public sector spending drive down or even eliminate private sector spending.
In simple terms, if the government borrows too much from the market, the money left for lending for others is less. Which means the supply decreases causing the interest rates to rise precipitously. So, the private investors may not be interested in borrowing and investing when the interest rates are too high.
Because large governments have the power to borrow large sums of money, doing so can actually have a substantial impact on the real interest rate, raising it by a significant degree. This has the effect of absorbing the economy’s lending capacity and of discouraging businesses from engaging in capital projects. Because firms often fund such projects in part or entirely through financing, they are now discouraged from doing so because the opportunity cost of borrowing money has risen, making traditionally profitable projects funded through loans cost-prohibitive.