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by torginus
13 hours ago
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Not a finance person, but my understanding is that the US govt is indebted via bonds which pay according to their issued yields. So the interest rates are the yield rates of said bonds, and if the dollar were undergo hyperinflation, then said debt would inflate away. Sure, that would mean getting future financing would be difficult and expensive for the US, but that's a problem down the line, and goes beyond just the current debt. For the record, I do not agree with current US foreign or domestic policy, but I wouldn't say it doesn't serve current US financial interests. |
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This is a fantasy. Do you really think lenders would just not notice if America inflated its currency away to get rid of its debts, and they'd just say "aw shucks you got us. Anyways, here's a new loan at the same terms as last time." ?
And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
In almost all cases, you're better off just defaulting on loans than pursuing hyperinflation. The reason to go for hyperinflation is if you're worried about your creditors invading you for defaulting.