Donald Trump suggests inflation could rapidly reduce U.S. national debt

In a recent interview with TIME, President Donald Trump stated that ‘certain levels of inflation’ could serve to pay off the United States national debt ‘very rapidly.’ While he did not specify the exact levels of inflation he considers acceptable or provide a detailed plan, he suggested that debt could also be addressed through economic growth.

Trump criticized the Federal Reserve’s current interest-rate policies, arguing that rate hikes are ‘hurting our country more than inflation is hurting our country.’ He characterized the Fed board as ‘very hostile’ and has previously called for interest rates to be at 1% or less. The remarks come amid concerns in the bond market that higher inflation reduces the real value of fixed-rate debt, effectively shifting the burden from the borrower to bondholders.