boy, this is surely true
but then if surprise inflation reduces A´s real debt, A gains but B loses.
how can that lead to higher investment, higher consumption then?
it can because people are not equal: some are credit-constrained, whereas others are not, and some have better real investment opportunities at hand than others.
if you can get those constrained entrepreneurial guys some relief, the economy may start growing again
i talked to paul k these days and we agreed this is of the utmost importance when it comes to europe
ps. the rumours that my real name is Fernando are false, and the rumours that my name is Marcio are also false