Just a Thought on the Government Debt to GDP %

The inflation remains high (6-8% annual) for a few years and The Fed stays at 3-4% for a few years (it will go down or higher depending on the economy or recession but this would be the average).

Basically if the Fed stays at an average below inflation by 3-4%, then real rates would be negative 3-4%, which means the nominal GDP will grow faster than the real GDP and something magical will happen…

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You know what’s that magical thing?

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Debt to GDP as a % will get lower! By keeping real rates negative, the Governments can work their way out of debt (and I personally think that would be more likely). Case in point is post World War II. High debt to GDP % was bought down by running negative real rates for a while.