Inflate the debt away? Not feasible. You can’t simply inflate your way out of a debt trap. Yes, inflation erodes the real value of existing nominal debt. But here’s the inconvenient part: A large share of government spending is also indexed to inflation — pensions, wages, benefits, healthcare and other transfers. Then it gets even uglier: Higher inflation → higher yields → higher refinancing costs. So you inflate the debt away… …and inflate government spending right alongside it. Congratulations. You didn’t escape the debt trap. You just made it bigger. #debt #trap
