What the world most needs now is growth, not austerity
Debt cannot be magicked away.
Reducing it is bound to have consequences.
By Roger Bootle
In the case where the Government uses economic growth combined with fiscal restraint to eat away the debt gradually, those who bear the direct costs are just about all citizens, who pay higher taxes than they would have to without the need to work down the debt (and/or those who do not benefit from the higher government expenditure which would have been possible; without the debt).
In the case of default, it is the holders of government bonds, who lose all or part of their wealth. Under the inflation solution, it is the holders of all assets whose prices do not rise commensurately with the rise in the general price level.