[ryandamm]

This derives from false pretenses, the US government can’t inflate away its debt; it gets rolled over and inflation expectations get baked into interest rates paid on debt (US treasuries are sold at auction).

Governments that borrow in their own currency reduce debt best via growth, since debt is stated in terms of GDP.

On the other hand, people who are short dollars — debtors with fixed debt — are helped by inflation. Have a mortgage, student loan payments, even car payments that aren’t linked to inflation? Then inflation does reduce your debt burden.

Inflation hurts those groups that are long monetary assets — those who own fixed debt, or cash. Its effects on other asset prices, like stocks, are less direct. For example, stock prices reflect changes in growth in the economy that may be hindered by high inflation (or high interest rates).

Simple models are great except when they’re wrong.

[iso1631]

> the US government can’t inflate away its debt

Of course it can. if the government "owes" $20T, it could simply print a $20T note and pay off its creditors.

For over 10 years interest rates people pay for US debt has been below inflation. Why do you think they can't inflate away the debt when the last 10 years shows that happening?

[imtringued]

I don't know what you mean. Inflation has been incredibly low in the past 10 years meanwhile debt has to structurally go up every year because the global economy needs more dollars.

[ryandamm]

Note, inflation also hurts those on fixed income — people whose income is set at a fixed rate, like pensioners or retirees collecting social security.