Trump Says Inflation Could Pay Down $40 Trillion US Debt “Very Rapidly”

Donald Trump discusses how inflation could help reduce the $40 trillion U.S. national debt, alongside economic growth and interest-rate polic

President Donald Trump said certain levels of inflation could help pay down the United States' $40 trillion national debt “very rapidly,” linking the value of inflation to his broader argument that economic growth can help reduce the government's debt burden.

The comment was made during an interview with TIME published on Oct. 1, according to Watcher.Guru, which shared the remark on X. Trump said that while lower interest rates could make government borrowing less expensive, other approaches could also be used to address the country's debt.

Trump Points to Inflation and Economic Growth

During the interview, Trump argued that economic growth could play a role in reducing the government's debt burden. He pointed to what he described as strong economic performance before turning to inflation as another potential mechanism.

“You know, inflation, certain levels of inflation will also pay off that debt very rapidly. Very rapidly,” Trump said, according to the TIME interview transcript.

The president also criticized the Federal Reserve's interest-rate policy and has repeatedly called for lower borrowing costs. His latest remarks place inflation and growth within a broader discussion about how the government could manage its debt obligations.

The comments do not represent an announced debt-reduction program, and Trump did not provide a specific inflation rate or timetable for paying down the debt through inflation.

How Inflation Affects Government Debt

Inflation can reduce the real value of existing fixed-rate debt because the government repays obligations with dollars that have less purchasing power. However, higher inflation can also raise borrowing costs if investors demand higher yields on Treasury securities.

The distinction is particularly relevant because the United States continues to carry a historically large debt burden. The Joint Economic Committee said in September that total gross national debt stood at $40.10 trillion as of Sept. 3, 2026. It also reported that the debt had increased by $2.67 trillion over the previous year.

The committee said the average interest rate on the total marketable national debt was 3.475% in August, compared with 3.415% a year earlier and 1.458% five years earlier. Higher borrowing costs can increase the government's expense of refinancing maturing debt.

Federal Reserve Policy Remains a Key Factor

Trump's comments come as inflation remains above the Federal Reserve's 2% target. Reuters reported on Oct. 2 that inflation stood at 3.4% in August, while the Federal Reserve had recently raised interest rates as policymakers continued to balance inflation risks against economic conditions.

The U.S. Treasury market has also faced higher yields. Reuters reported that the 10-year Treasury yield reached 5.34% on Oct. 1, its highest level since 2002, amid concerns over inflation and the government's expanding debt burden.

Trump's remarks therefore come amid an ongoing debate over whether economic growth, inflation, interest rates or fiscal measures can meaningfully improve the government's debt position. He did not specify what level of inflation he considered appropriate or outline a policy for deliberately using inflation to reduce the debt.

For now, the president's statement adds inflation to the range of economic factors he has cited in discussing how the United States could address its $40 trillion debt burden.

Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
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