[sugarpile]

I'm not informed enough on the topic to speak anything near authoritatively but there was an essay posted here ~6(?) months ago that spoke about how >2-3% inflation effectively serves as a means of effectively reducing government debt.

I would imagine your 5% number has to assume some baseline of inflation and that 5% would increase as inflation increases beyond said baseline.

[QuarterReptile]

It's true, you can gradually default on the government's obligations by changing their denomination to make the underlying promises worthless. That's consistent with my third hypothesized path.

I don't see any way that inflation jumps gently in that case. I'm suspecting we wouldn't jump straight to hyperinflation, but annual inflation 30-50% would be my guess for the first couple years that 0% of government services were covered by revenue.