[dwhitney]

The debt to gdp ratio is higher than it’s ever been.

https://fred.stlouisfed.org/series/GFDEGDQ188S

I don’t see us cutting back spending any time soon, so it doesn’t seem crazy to me that we inflate our way out of this, especially since after this pandemic a lot of countries are in a similar situation, making inflation more politically viable

[throw0101a]

> The debt to gdp ratio is higher than it’s ever been.

Have a look at Japan:

* https://fred.stlouisfed.org/series/DEBTTLJPA188A

Japan's inflation:

* https://fred.stlouisfed.org/series/FPCPITOTLZGJPN

There was only one published paper that I'm aware that had any debt-GDP-inflation link (Reinhart-Rogoff) and it was retracted:

* https://en.wikipedia.org/wiki/Growth_in_a_Time_of_Debt

[Yoric]

FWIW, I seem to remember that taxation is also a pretty good instrument against inflation.

[nostrademons]

When was the last time we've raised tax rates appreciably? The graph I found shows the top marginal tax rate hovering around 30-40% since 1986, and the last major tax increase (> ~10%) being 1949.

https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco...

With a 50-50 Senate split and Manchin committed to bipartisanship, I don't see much chance of successfully passing significant tax increases.

[laverya]

Don't forget Hauser's law [0]: "No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP."

0: https://en.wikipedia.org/wiki/Hauser%27s_law

[throw0101a]

An interesting idea from Matthew Yglesias was to not care about maximizing revenue as a primary goal of raising tax rates:

> The Laffer Curve — the idea that tax cuts can sometimes increase tax revenue — is one of the most influential and widely debated ideas in the past two generations of American politics. Beloved by the right and despised by the left, one thing that both sides have tended to agree on is that knowing what side of the curve we're on should be a key driver of tax policy.

> But in an era of surging inequality, it's time to revisit that assumption. Maybe at least some taxes should be really high. Maybe even really really high. So high as to useless for revenue-raising purposes — but powerful for achieving other ends.

> We already accept this principle for tobacco taxes. If all we wanted to do was raise revenue, we might want to slightly cut cigarette taxes. And since cigarettes are about the most-taxed thing in America, we certainly would want to cut out all our other anti-smoking initiatives. But we don't do that because we care about public health. We tax tobacco not to [primarily] make money but to discourage smoking.

* https://www.vox.com/2014/4/18/5620702/case-for-confiscatory-...

[twiddling]

Always look at the 30 year bond yields. If they are out of control, then I get worried

[lumost]

From a practical perspective, doesn't inflation naturally destroy large capital accumulations and debts? From a policy perspective this would seem like a viable remedy to the current extreme income inequality and debt burden.

[ComputerGuru]

Only if wages rise accordingly. There is some sign it may happen given the still-high levels of unemployment combined with companies actively seeking workers, but it’s too soon to really tell.

[trts]

Assets like housing and land have certain intrinsic value to them. The intrinsic value doesn't change because the amount of money circulating doubles, but the price of the asset in the inflated currency rises.

Since wealthy people hold more of their wealth in assets, this insulates them from inflation more than those who hold their wealth in savings or who live paycheck to paycheck and see their cost of living increase.

On paper it does reduce the burden of certain debts, but people on the lower socioeconomic end of the spectrum are often already paying debts at much higher or variable interest rates.

[machinebun]

It's a complicated relationship. The prices of assets are related to the price of debt (the cheaper the debt, the more expensive the asset). Housing is an asset that pays a coupon (rent), so it acts a bit like a bond. Bonds have been riding the coattails of decreasing interest rates for the last 40 years - if interest rates increase then stocks, houses, bonds etc are going to deflate.

While inflation with low interest rates might increase the value of assets - inflation that leads to higher interest rates might actually do the opposite. So it ends up being a choice of the central bank which way to push this thing (although there is a lean towards keeping interest rates lower for longer because of the size of the U.S. government debt interest payments)