Trump says inflation will pay off the $40 trillion debt. Cory Klippsten on financial repression, and why savers might want Bitcoin

Cory Klippsten on Washington’s growing comfort with higher inflation, and why his answer is Bitcoin.

In his latest Time interview, President Trump said “certain levels of inflation will also pay off that debt very rapidly.” On CNN, former PIMCO CEO Mohamed El-Erian told the Fed to keep promising 2% while gradually raising the acceptable ceiling to 3. Back in 2023, former IMF chief economist Olivier Blanchard argued for a 3% target.

Others are warning where this leads. J.P. Morgan Private Bank’s 2026 Outlook described a risk to its clients: policymakers deliberately tolerating higher inflation, allowing real interest rates to fall and the government’s debt burden to shrink. The report calls that financial repression. In January, Janet Yellen warned that “the temptation to rely on inflation or financial repression to reduce the debt burden will surely grow.”

Inflation lets the government repay its old debts with dollars that are worth less, even though higher refinancing costs can eat up the benefit. Congress can raise taxes or cut spending, and voters know exactly who to blame. With inflation, the cost arrives through higher prices, and the blame gets spread around. What sounds like debt relief in Washington means the dollars people earn and save buy less.