High inflation good for repaying Government debt

[anonymous-user]

High inflation not all bad for the Government? If you have a couple of trillion of debt as long as you have fixed your interest rate low for a decent period and with say 10% inflation you inflate your way out of the size of debt in real terms. In other words it takes a smaller percentage of the total tax count to repay the debt. Tax count rises as prices increase and personal tax thresholds don’t keep pace. The person holding the bonds ( pension funds) are worse off

On the flip side more difficult to raise new debt if bond holders think Governments will keep inflation high they will want a higher interest rate to compensate

[loafer123]

That would be fine if Gordon Brown hadn’t issued loads of index linked gilts.

He really was a tosser.

[BobToc]

Gordon Brown being notorious for his control over debt policy after 2010 of course.

[fido]

The cost of keeping public services at the same level also increases. Inflation (like war) is good for absolutely
nothing except for moving the asset rich up the money tree.