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> Why do people suggest inflating away debt rather than just defaulting on it? Because one ultimately still keeps the debt obligation in place, whilst the latt
by x-complexity 2y ago
> Why do people suggest inflating away debt rather than just defaulting on it?
Because one ultimately still keeps the debt obligation in place, whilst the latter causes debt confidence collapses & the destruction of faith in repayments from the government.
Would you rather take a 2% value loss via inflation, or a 90-100% value loss as the government declares default? Most people would take the former rather than the latter, as the impact of one is much softer than the other.
- ilyagr 2y ago2% inflation per year is a healthy amount. To inflate away 90% of debt, I imagine 1000% of inflation would be needed over some amount of time (and this amount of time better be short enough that you don't accumulate significant debt during it).