Quote:
Originally Posted by Vman455
I think it should be pointed out for clarification that the majority of our debt is not held by foreign creditors, and of the part that is, China is not our largest foreign creditor (that would be Japan).
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Good point.
The issue remains that increasing taxes and decreasing government entitlements (fiscal policy) is political suicide (nobody wants to pay more to get less). For that reason, inflation is the most likely method of "paying" off the national debt.
Inflation (monetary policy) is a hidden tax levied on anyone that owns dollars, or U.S. debt.
People don't riot when they are taxed via monetary policy, but they sure will if they are taxed through fiscal policy, even though the effect is largely the same.
Most people in the U.S. don't understand basic economics, yet have strong opinions about the subject while their political preferences underscore their lack of understanding.