On Apr 26, 2009, at 8:25 AM, Carrol Cox wrote:
> How great/long a hyperinflation would it take to wipe out the debt &
> start with a clean (!) slate?
>
> And what would happen when the inflation ended?
A great hyperinflation would presuppose at least a partial weakening of the power of the creditor class, whose power is now being shored up by the Obama administration. (E.g.: bank insurance isn't only about keeping depositors whole - it's about keeping the holders of bank bonds whole.) But real hyperinflations - rates of 80% or 500% a year - happen only when societies are in or near a state of collapse. A regular big inflation, 10-15% a year for a few years, would really reduce the debt burden. But that, too, would presuppose a sharp weakening of the power of the creditor class, which doesn't look in the cards right now. My guess is that Obama & Co. will engineer modest tax increases on the upper classes, cuts in Medicare & SS, and a gradual weakening in the value of the dollar to make the debt more manageable. Not, of course, that events will cooperate, but that looks like the expedient way out.