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Using Inflation to Reduce Public Debt and Rout Entitlements

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.

Interestingly, the aggregate increase in the Consumer Price Index (NYSEARCA:CPI) between 1973 and 1982 inclusive was approximately 85% (see How High Can Inflation Go…?). But, even a relatively modest 5-9% annual inflation rate over a ten-year period can reduce public debt and entitlements by 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...

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