A simple explanation of the new view of fiscal solvency

The traditional view of fiscal solvency is that if the public debt becomes too high, it must be monetised, and this monetisation leads to inflation. Fiscal solvency is then ensured through the inflation tax on money balances. In this traditional view, there must be long-term stability in the money supply as a percentage of nominal GDP. But the new view is different : when the public debt becomes too high, it is still monetised, but the monetisation no longer leads to inflation. According to this new view, there must be long-term stability in the money supply as a percentage of total wealth. At equilibrium, this monetisation leads to a rise in the prices of other assets (bonds, equities, real estate) , which ensures the necessary increase in wealth.