[quote=FlyerInHi]Sure, you can inflate away debt denominated in your own currency.
We did it and so did France after WWII. http://www.nber.org/papers/w15562
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From 1946 to 1956 the economy grew 45% (1.96 trillion to 2.84 trillion). The net deficit for all 10 years was a negligible 4.8 billion. So for 10 years we added almost zero debt and grew at about 4% per year. CPI from 1946 to 1956 was 39% or about 3% per year. So while inflation helped reduce the GDP/debt ratio, it looks like real growth and the lack of incurring additional deficits were far more important to shrinking the debt/GDP ratio. Of course we bombed the rest of the world industrial capacity to nothing at the time and had no globalization to impact domestic wages then, so we had a massive competitive advantage for growth.
In the end though, we didn’t inflate the debt away we grew and stopped taking on additional debt. Inflation added a bit of a boost.
