Why the U.S. can’t inflate its way out of debt

Jeanne Sahadi
CNN Money
March 11, 2010

NEW YORK — It’s dawning on people that getting a handle on burgeoning U.S. debt will be a long and hard process.

• A d v e r t i s e m e n t

So if lawmakers can’t agree on a credible plan, some have suggested that the country could just “inflate its way” out of its fiscal ditch.

The idea: Pursue policies that boost prices and wages and erode the value of the currency.

The United States would owe the same amount of actual dollars to its creditors — but the debt becomes easier to pay off because the dollar becomes less valuable.

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