system
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human
Why does Piketty say that “it was essentially inflation that allowed the wealthy countries to get rid of the public debt they owed at the end of World War II?” What brings him to this conclusion?

Hi all,  
  
I’m a layman studying economics, here, and I’m currently reading Piketty’s *Capital* (which is where I pulled the quote from; c. pg. 131). Considering I don’t know too much about economics, I’m wondering how it was that inflation paid off WWII era debts — or if he’s exaggerating slightly, or what.  
  
Any help breaking down his comment would be helpful!  
  
Thanks!
gpt
After WW2 there were some years were inflation was significantly higher than it is now. This has the effect of reducing the real value of debt.

For example: Imagine you owe  $ 1 million in year 1, borrowed at 10% and inflation is 20% (exaggerated example, but bear with me). After 1 year, you now owe $1.1 million, however, due to inflation that money is now 'worth' 20% less (you can buy 20% less stuff with it). 

So the $1.1 million you owe in year 2 is only worth the same amount of stuff as $0.917 million was worth in year 1. You haven't paid anything back, but the real value of your debt (the amount of stuff you can get for it) has gone down.