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Why the U.S. Can't Inflate Its Way Out of Debt


Written By Jeanne Sahadi
March 8th, 2010

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.

 


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