Inflating our way out of debt

The most likely way we will resolve the national debt is to inflate our way out of the debt. It isn't the best way, but its probably the most likely way.

This is bad news for people with savings such as seniors with fixed income from retirement savings plans.

Our accumulative national debt, as a percentage of the total GDP, was higher right after WWII than it is today. Imagine that. The total numbers are bigger today, but as a percent of GDP, today's debt is smaller than it was right after WWII. The GDP is just much larger than it was after WWII.

Part of that larger GDP is economic growth since WWII and another part of that GDP is inflation. Inflation is a big factor. I remember when one could easily buy a house in Seattle for under $20,000 That was just back in the 1960s. Today, the same lot could cost a half million. That's inflation.

WWII debt is still with us, but it's no longer a big deal compared to today's economy. The kids of tomorrow will be using $10 bills as we use $1 bills today, but they will be used to it. Just move the decimal point and go on from there. The debt we have today will look smaller in their economy. That's how we deal with the debt. We just inflate our way out of it so it isn't as big by comparison. Moderate inflation over the years. Why worry about it? It's bad news for savers who are alive today, but it's not necessarily stealing from future generations. People who haven't been born yet will just start with the higher numbers; such as using what we consider to be $10 bills as their $1 bills. By then more transactions will be on the computer, rather than dollar bills, but I'm using the concept of dollar bills to explain things.

I do feel for folks who have savings, including myself with my modest retirement plan. The lack of value in these savings will likely mean more need for government spending to subsidize housing and so forth for seniors; thus necessitating more debt and the need to print more money. A vicious cycle.

Raising taxes on the rich to pay for some of this government spending, rather than just printing money for it, can take some of the bite out of this economic predicament. Remember, the predicament effects our current generations of savers more than it will effect future generations who haven't been born yet. That is my guess at least.

Seems like Republicans create a lot of unnecessary anxiety over the debt. Too much of that anxiety is unhealthy. Yes there are problems, like the erosion of people's savings, but savers are already used to savings being battered by years of rock bottom interest rates. I ahte to say it, but a lot of people have most likely given up on saving money.

Also, with inflation, there is the problem that not all prices, in the economy, go up together. Wages have tended to fall behind prices for things like housing. Some products don't go up in price while other things inflate. This creates affordability gaps in the economy.

Inflating our way out isn't the best way to resolve the debt, but it's what we seem to be doing. The best way is collecting enough taxes so the government doesn't have to have long term debt. Balance spending and taxes, but that isn't easy to do. Balancing the budget is the ideal "Plan A," but we are most likely stuck with the less ideal "Plan B;" inflating our way out of debt. Maybe we can reduce the need to resort to plan B in the future, but plan B isn't necessarily the end of the world. It's just not the ideal world we would like.