Clearly the interest rate paid relates to past inflation rates, but if the goal is to pay off the national debt not just borrow more a little inflation can help

Clearly the interest rate paid relates to past inflation rates, but if the goal is to pay off the national debt not just borrow more a little inflation can help things along. Say inflation is 2% interest rate is 2% over inflation (or 4%) and the bond is for 10 years. 1.04^10/1.02^10 = 1.2143. Now compare that to 3% and major assumption you still need to pay out 2% over inflation well you get 1.212 which is a lower cost. At the same time your debt servicing costs drop. Now it's true that you may need to pay a fraction more than 2% in interest but for small positive increases in inflation it can reduce debt servicing costs significantly. For this to really work well your new debt needs to be well below your debt servicing costs AND you need to hold mostly long term bonds is rarely the case for country’s with debt issues. Unfortunately, few nations are trying to pay off their national debts and are more focused on maximizing their ability to borrow which is another story.