One path to U.S. fiscal disaster is most alarming — and most likely
... An Everest of debt is an incentive for an inflation crisis to reduce the value of existing debt by paying lenders with debased dollars. But inflation would become baked into the expectations of investors, who would demand higher interest rates. Then R>G would bite: When interest rates paid on debt exceed the rate of economic growth, a crisis intensifies as rising interest rates depress economic growth. ... The most probable, and most ominous, outcome would be a gradual crisis. ... Nothing unsettles a middle-class nation more rapidly than inflation, a component of all of these crises. ...
