A relatively simple way to reduce public debt and rout government entitlements is through inflation. The phenomenon of using inflated dollars to pay for existing debts is a well understood benefit of inflation. Similarly, cost of living increases tend to lag inflation resulting in reduced entitlement obligations.
The aggregate increase in the Consumer Price Index (CPI) between 1973 and 1982 inclusive was approximately 85% (see How High Can Inflation Go…?). However, even a relatively modest 5-9% annual inflation rate over a ten-year period can reduce public debt and entitlements by at least half. Also interesting is the fact that the government does not need a public referendum to “print” money. Indeed, an extended period of inflation could be a slick way to solve the nation's deficit and public debt problems...
How High Can Inflation Go...?
Repairing Sovereign Indebtedness: Get Ready
Using Inflation to Erode the US Public Debt
Implications of the Financial Crisis
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