An examination of possible ways in which large, persistent federal budget deficits could cause inflation through action on money-stock growth, velocity, and real gross national product (GNP).

The U.S. national debt now exceeds 100 percent of gross domestic product. Given that a significant amount of this debt is the result of governmental efforts to mitigate the effects of the financial crisis, the recession, and the anemic recovery, it is tempting to think that the debt problem is a...