No. of Recommendations: 4
I believe the Fed will be forced politically to allow inflation to become rampant - as paying back US bonds with depreciated bucks will appeal to the same crowd as a lower USD.
As far as I am aware, we haven't "paid back" any US bonds in quite a long time. We refinance ALL of them. And we refinance ALL the interest due on them. AND we finance a trillion or two of new excess spending every year!
So we aren't paying anything off, we just constantly refinance at the going rate. And when inflation spikes, we will be constantly refinancing at higher rates. And it will cost more and more and more. But I agree, that if by some magic we begin paying any of it off, paying it off with inflated dollars may look attractive so some (mostly uninformed or misunderstanding folks).
