Yet we all understand that this option is a recipe for creating substantial inflation. Indeed, it is often a path toward hyperinflation. Failure to resolve underlying fiscal imbalances combined with rising inflation means nominal funding requirements to close the budget gap keep growing, requiring ever more money to be created, and causing inflation to rise even further.
It is a cycle any nation should seek to avoid. In addition, inflation is a hidden tax on holding nominal assets, and when it is unanticipated, it can have significant consequences that redistribute wealth from creditors to debtors. The near-term effects of money creation often appear to be positive, while the undesirable consequences only become apparent over time.