Inflation is not the Escape Hatch that Some think it is

Some of the more cynical economic analysts say that America’s $12 trillion national debt is no big deal because – if the debt gets big enough – we can just inflate the currency, and while that would be bad for most Americans – especially those living on fixed incomes – it wouldn’t be as bad as paying off our staggering national debt.  There’s just one big problem with that theory: It just wouldn’t work.  As Jeanne Sahadi points out in this CNNMoney.com article, inflating the currency would just drive up the cost of the government’s entitlement program, and those higher costs would – in turn – merely drive the national debt to even higher levels.  The bottom line: There’s no short-cuts – and no easy way out – of our growing debt problem.  In the future, the federal government will simply need to do more with less.