How does inflation affect national debt

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If we have lower federal rates, that causes an inflation right?

Currently we have massive national debt. And we pay interest on that.

Why not try to maintain inflation just slightly above the interest rate of our debt, so that eventually our debt is irrelevant (the “buying power” of the 30ish trillion dollars would be reduced faster than the interest we pay on it).

In: Economics

11 Answers

Anonymous 0 Comments

There are several problems here, but a primary one is that the relative value of a dollar has no bearing on the ability of the US to make payments on its debt.

The US has sovereign currency, so it can never “run out” of dollars. It can always pay any dollar amount it needs to to pay any debt which is promised in the denomination of US currency.

So you’re trying to “solve” a non-existent – or at least severely misunderstood – problem by using inflation, which is generally a painful process for everyone in the economy, as high inflation harms consumers, workers, and businesses.

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