“Governments have piled up massive debts that cannot and will not be repaid. “
It isn’t intended to be paid off and doesn’t need to be.
It is a Funded Public Debt as was first set up by Alexander Hamilton in the Funding Act of 1790.
Alexander Hamilton converted what had been an ‘overwhelming’ debt inherited from the Continental Congress and the Colonies, into an asset desired by investors. All that investors care about is that interest be paid on time. All that Congress and the Treasury needs to pay attention to is the debt coverage as a percentage of revenues.
“And if the Government keeps expanding bonded indebtedness, inflation does not end at all. “
We had a real world test proving that that simply isn’t so. Inflation collapsed during Reagan’s admin without ending deficits and while Treasury debt was increasing. Inflation was killed by freeing restraints on the economy through deregulation and tax relief along with the Fed restraining growth of the money supply. The three legs of Reaganomics as described by Martin Anderson, one of its principle designers. This allowed the production possibility frontier to shift to the right, permitting economic expansion without inflation.
...for as long as Government can make the interest payments out of current tax collections.
If interest rates too fast and too high, the interest payments trap and overwhelm Governments. Debts start growing exponentially. The Government can then either (A) raise taxes, (B) default, or (C) inflate the currency to cover payments.
At some point taxes will be raised but cannot be collected. The States will go to "Plan B" if they cannot get Federal bailouts. The Federals will go to "Plan C".
Inflation