1. Creditors and debtors are functional descriptors, not distinct social classes. In their capacity as owners of corporations, most of the large capitalists are both creditors and debtors. Furthermore, the impact of inflation on profit and on fixed income (absolutely and differentially) is an open question. It varies over time and place.
2. Global inflation, as distinct from US inflation only, could defuse the threat of debt deflation without a major realignment of exchange rates.
Jonathan
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CARROL COX: Isn't inflation a good way to balance the books?
DOUG HENWOOD: Our own creditor class would hate that approach.
DANIEL DAVIES: Are we absolutely sure that the whole problem will not end up being solved by an inflation rather than a recession? I know that this is the orthodox view; that US rentier capital is big enough, important enough and anti-inflation enough that anything will be tolerated other than inflation, but it does strike me that it would sort a lot of things out, rather less painfully than they might otherwise be sorted out.
