Donald Trump has stated that certain levels of inflation could allow the United States to repay its federal debt very quickly, which stands at 40 trillion dollars according to the Council on Foreign Relations. This debt is growing by 7 billion dollars per day, with an annual deficit of 6% of GDP and interest costs already exceeding the defense budget by 16%. The mechanism works by reducing the real value of debt through monetary depreciation: according to the IMF, one point of unexpected inflation can reduce the debt-to-GDP ratio by approximately 0.6 points. However, this strategy has limitations, as it only works effectively if the cost of debt remains below inflation, yet the Congressional Budget Office forecasts the average rate paid rising from 3.4% in 2026 to 3.9% by the end of the next decade.
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