Wait, what do central banks do, exactly?

“Certain levels of inflation will also pay off that debt very rapidly. Very rapidly,” said President Trump about a national debt that has passed $40 trillion. This statement is fantastically blunt, even for him. The President is right, of course – inflation does shrink the national debt because every dollar paid back is worth less than the dollar that was borrowed. The cost doesn’t vanish, though. It lands on whoever is holding the debt – and whoever saves their money in dollars. There are two alternatives to debasement: Austerity, which is politically infeasible, and dramatically higher productivity, which may happen…