Hypothetically, what would the value of the US dollar drop to if the US government decided it wanted to inflate its way out of their national debt all at once? Would it simply be:

M2 money supply / (M2 money supply + debt)


$13.5 trillion / ($13.5 trillion + $20 trillion) = 0.40

Which would be 40% of its current value?

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    I'm voting to close this question because it's about a hypothetical situation, that is both unlikely to occur and hasn't got a definite answer (therefore being opinion based) – SleepingGod Jun 20 '17 at 22:17
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    This seems like an interesting question, though possibly a better fit for SE.Economics. – Nat Jun 20 '17 at 22:52
  • For the political aspect of paying off the debt via printing money all at once, that doesn't seem to make much sense. For example, about two thirds of the US debt is to itself, so why would it undergo rapid inflation to pay it? – Nat Jun 20 '17 at 22:58
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    @Nat The US would be less likely to have inflation for debt bought from foreign entities. Paying them back would cause currency fluctuations or a stock market bull market more than inflation. It's the domestic money paid back that causes inflation. Foreign money only matters if it turns around and turns into domestic consumption. – Brythan Jun 20 '17 at 23:51
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    I would think it would be closer to the monetary base (all the money the US have ever created, about $3.8 trillion) divided by the total debt ($20 trillion), since each dollar (Federal Reserve Note) holder would now own that much smaller a portion of all money created. However, that's purely theoretical because other governments also inflate currency, prices tend to increase regardless, and economics can be complex. The concept of printing (well minting) our way out of debt was discussed seriously in 2011: en.wikipedia.org/wiki/Trillion_dollar_coin – barrycarter Jun 21 '17 at 5:18

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