Forbes: The narrative of Bitcoin as a "depreciation hedge" is heating up, Trump says a moderate level of inflation can quickly reduce $40 trillion in debt.

According to Forbes, U.S. President Donald Trump told Time magazine in an interview that "a certain level of inflation will also pay off debt very quickly," sparking market debate over whether the U.S. can reduce its real debt burden through nominal economic growth and inflation. The outlet notes that U.S. federal debt has surpassed $40 trillion, more than doubling over the past decade, while interest payments have climbed steadily after Federal Reserve rate hikes. Trump, Treasury Secretary Scott Bessent, and Elon Musk have all previously cited technology-driven economic growth as a critical solution to debt pressure. Meanwhile, Bitcoin’s price has rallied roughly 300% from its 2023 low, but remains about 30% below its 2025 all-time high of $126,000. Markets have recently refocused on the "debasement trade"—a strategy where investors hedge against fiat currency purchasing power erosion by allocating to assets like gold and Bitcoin. Forbes cited Bitfire Research’s analysis, which argues that Bitcoin’s long-term value as a hedge against fiat depreciation remains valid, though short-term prices may still be swayed by interest rate policies and U.S. dollar liquidity. Additionally, the Federal Reserve’s preferred inflation gauge, the PCE index, shows U.S. prices rose 3.4% year-over-year, still above the Fed’s 2% target. Markets assign a roughly 70% probability that the Fed will hold interest rates steady at its late-October policy meeting.