bobbyw24
03-12-2010, 05:06 AM
NEW YORK (CNNMoney.com) -- It's dawning on people that getting a handle on burgeoning U.S. debt will be a long and hard process.
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.
That's hardly a good plan, say a bevy of debt experts and economists.
"Many countries have tried this and they've all failed," said Mark Zandi, chief economist at Moody's Economy.com.
It's true that inflation could reduce a small portion of U.S. debt. The International Monetary Fund (IMF) estimates that in advanced economies less than a quarter of the anticipated growth in the debt-to-GDP ratio would be reduced by inflation.
But the mother lode of the country's looming d
http://money.cnn.com/2010/03/10/news/economy/inflation_debt/index.htm
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.
That's hardly a good plan, say a bevy of debt experts and economists.
"Many countries have tried this and they've all failed," said Mark Zandi, chief economist at Moody's Economy.com.
It's true that inflation could reduce a small portion of U.S. debt. The International Monetary Fund (IMF) estimates that in advanced economies less than a quarter of the anticipated growth in the debt-to-GDP ratio would be reduced by inflation.
But the mother lode of the country's looming d
http://money.cnn.com/2010/03/10/news/economy/inflation_debt/index.htm