The Peter Zeihan Podcast Series - Here's Why Inflation Isn't a Solution || Peter Zeihan

Episode Date: July 14, 2025

Would inflation be good for the US? Sure, it could erode some of the federal debt, but if that's the best we can come up with...yikes.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/heres-why-inflation-isnt-a-solution

Hey all, Peter Zine here coming to you from Colorado. And today we are taking a question from the Patreon page, and it's specifically on finance. The person has been hearing that some government decision makers and some folks, especially in the MAGA union, are talking about how inflation actually be a good thing because it will inflate away the debt and make the overall level of payments of the U.S. federal government has to make relatively less compared to what they borrowed in the first place. And there is something to that. If you have a high inflationary period, then the rest of the rate, relative value of the debt compared to what you actually got. When you borrowed, it does go down and

it does become easier to pay. If, if, if, if, growth keeps up and so that income growth exceeds the level of the inflation. So problem number one, let's say that we get 10% inflation for four years. That comes out to a total of about a 50% price increase. If income does not grow faster than that, you've actually dug yourself into a little bit of a hole. So careful, how it you, for here because there aren't a lot of people out there, certainly not in a lot of countries that expand their income by more than 50% in four years. That's problem one. Problem two, inflation doesn't just whittle away at the federal debt. It whittles away at the relative value of everything. So think of the stock market. That's

worth 50 trillion. Do you want to reduce that by half? Because that's more than the US government owns in debt. Think about your house. Do you want that to be to You know, that's another $35 trillion for private single-family homes. Another $11 trillion for the bond market, not counting federal debt, of course. And another, what is it, $15 trillion, $15 trillion for, say, commercial real estate, another $5 trillion for farm real estate. The point is that inflation doesn't just hit one thing. So it raises the cost of living.

And if your income doesn't keep up, life kind of sucks. So hurting all of these asset classes that pretty much all Americans have all of their savings in in order to whittle down the one debt class because we can't seem to get anyone in government who can do basic math. I would vote against this solution.