/biz/ - Business & Finance

>>56195756
>>56195864
>the only way out is massive inflation
Theoretically, yes. A year of 5% inflation knocks $1.65t off our debt. That's why people talk about negative real rates.

But you do that too much and bond bagholders start to wise up. They demand a 5% return for the 5% inflation environment and you're no longer gaining ground.

And God help you if you've got a deficit - ours is currently ~6.5% of GDP. Or expenses pegged to inflation. Want to reduce the real value of planes or medical procedures the government buys? Or cancel grandma's 9% cost of living adjustment in her social security checks? Good luck.