🚀 go-pugleaf

In article <1993Jan22.061857.22935@midway.uchicago.edu> thf2@midway.uchicago.edu writes:
>In an era with 4% inflation and $4 trillion, inflation shrinks our national
>debt by $160 billion every year.  Not including this shrinkage overstates
>the actual harm done by the deficit.

ok, i understand what monetizing the debt means (don't know why i
didn't get your previous point...).

of course, raising inflation is a good way to reduce the effect of debt.
was done to perfection by Germany in the 20's.

the problem is that we have to pay interest on this debt, and inflation
is stable enough that it is being incorporated into interest rates.
investors are also starting to demand a risk premium from the US gov't,
based on articles i have read looking at the yield curve.

the real point, however, is that the monetization of the debt is
going to happen independently of expenditures anyway. if we ran
a balanced budget for the next 100 years, the 4 trillion might be
insignificant at that time. but we continue to grow the debt at
a much higher rate than we can monetize it.

also, i think when all is said and done, the '92 deficit will be
much closer to $400B than anyone wants to admit now.

--
charles