question archive What happens when inflation makes it impossible for the US to pay interest on their debt?
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What happens when inflation makes it impossible for the US to pay interest on their debt?
Based on the current estimates, around $16 trillion of the US debt is included as public debt. There are three conditions where the US government do more to reduce the amount of national debt. They are:
1. The economy has outreached its national debt.
2. The government has a lot to forgot by cutting public spending.
3. Raise in taxation.
Since 1929, the amount of national debt exceeded for the US economy. for example-
1934, the debt increases to 25 billion.
Feb 11, 2019, the public debt increases up to $22 trillion.
When the rate of inflation is greater than its neutral point, the economy could face unlimited problems. This makes a tough situation for the US government to pay its debt amount. When the government is failed to do so, it led to hyperinflation, higher unemployment, instability, etc.