Inflation is Not an Easy Answer for Debt

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Should inflation be seen as an “easy” way to deal with runaway debt?

In a white paper posted on, guest analyst Peter Hooper found that sovereign risk among industrial countries has become a more central focus of market attention as projections under current fiscal policies show considerable instability in debt/GDP ratios for the US and other major countries.

Hooper is Chief Economist with Deutsche Bank Securities and co-wrote the white paper with Christine Dobridge and Torsten Slok. They considered the scope for stabilizing and reducing debt/GDP ratios via increases in inflation and the analysis indicated that the scope is at best only limited and temporary.

To read more of Peter’s guest posting, join the debate.