The bear case against “inflating the debt away,” stated cleanly (puckrin, 09/2026): inflation only transfers wealth from bondholders to the state when it is unexpected — lenders priced 3%, inflation ran 5%. Once they expect 5% they demand 5% plus a real return plus a term premium, and the state refinances at the new price. With roughly a third of marketable Treasuries maturing inside a year and a ~6-year average maturity, “yesterday’s cheap debt” is gone within a few years. So inflation can shrink the existing stock, but not a persistent deficit — the new debt is always issued at the post-surprise rate. The real question is the one in r minus g — debt dynamics: can nominal GDP grow faster than the effective interest cost while the primary deficit closes? At 6% nominal growth and 4% effective cost, the ratio falls; at 6–7% borrowing costs and 6% deficits, inflation solves nothing.
His last line is the pivot the Debasement trade depends on: “unless you can stop bond yields from fully adjusting — and that’s where financial repression comes in.” The two camps agree on the mechanism and disagree on the politics: the debasement side bets repression is coming (The financial-repression toolkit), the puckrin side bets the Bond vigilantes get to reprice first. The 1940s worked because the Fed capped yields and the deficit vanished after 1945; the 1970s didn’t, because neither held. This is also why the Stock vs flow repricing error cuts both ways — the stock is insulated from a rate rise for the same reason it is insulated from an inflation surprise: only briefly.