Post
Topic
Board Economics
Re: Question about inflation and debt.
by
mu_enrico
on 13/01/2020, 01:58:43 UTC
If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.
You should be more specific about what kind of debt it is? Is it foreign debt or domestic debt?
For foreign debt, you should know that the currency exchange rate is affected by the increase/decrease of the local currency supply. So a country could print more (domestic) money, but it would trash its exchange rate, it's the same.

For domestic debt, the government could repay its bond with newly printed money. However, in the end, it will only reduce the country's wealth because of hyperinflation. So no point in doing that. A good government is not likely to scam its own people.

Would the barter system be a good way of combating this?
No, barter is a means of trade, not related to debt and repayment.
Maybe if the debt is pegged to gold (or something stable), then you have a case.