> 1) Pay all your debt now, unless you have a sure way to make money at a higher interest rate CONSIDERING INFLATION (ie if you hold debt at a fixed 2% annual rate and can access 3% guaranteed placement, don't pay your debts if inflation is <1%)
If you can get 3% nominal and hold debt at 2%, it doesn't matter what inflation is, since your debt isn't in inflation-adjusted dollars. Indeed, the higher the rate of inflation, the less it makes sense to pay off debt. If you have debt at 5%, and your real rate of return is only 3%, it might still make sense not to pay off that debt if inflation is > 2%.
Paying off debt is not risk-free, in the sense that paying down loans now is a bet on future inflation being low.
If you can get 3% nominal and hold debt at 2%, it doesn't matter what inflation is, since your debt isn't in inflation-adjusted dollars. Indeed, the higher the rate of inflation, the less it makes sense to pay off debt. If you have debt at 5%, and your real rate of return is only 3%, it might still make sense not to pay off that debt if inflation is > 2%.
Paying off debt is not risk-free, in the sense that paying down loans now is a bet on future inflation being low.