The world economy is in trouble, the US has leadership issues and China has declining growth.
Inflation will soon strip away any gains in growth.
Hold onto your seat.
Creation of more debt is creation of more money, increasing supply, and is inflationary.
Conversely, destruction of debt destroys money, and is deflationary, in this case, deflationary to the dollar.
Also, selling of dollar-denominated assets also decreases the dollar-value of those assets and so increases the value of the dollar.
But it is inflationary for the Chinese currency.
This is why with the Fed's QE programs since the 2008 crash everyon ehas been yelling "Inflation!!" for over a decade, yet there was none-negative until this year, and even that is arguably transient. So much money was destroyed in that crisis that they have been ever since then trying to fill in the (deflationary) hole.
To the extent that that debt is denominated in dollars and is about to be destroyed, it will be dollar-deflationary, not inflationary.
Deflation, even in small amounts, can be devastating. It's a contagion that can cause a deathspiral, that if left unchecked. When businesses and people lose income, they can't keep up with debt payments, causing their assets to be liquidated, which causes the assets of others to suffer further depreciation, causing more losses and bankruptcies.
Also Inflation vs Hyper-Inflationyper is a key distinction.
Ordinary inflation is relatively harmless, and the NET returns available tend to equalize at the actual growth rate of the economy. E.g., if inflation is 5%/yr the stock market is likely growing at 7.5%/year, yielding the same returns as if it were growing at 2.5%/year in a 0-inflation environment.
Hyper-Inflation is the killer - when inflation gets out of control, people lose confidence in the currency, which leads to the vicious cycle of needing to print more, which leads to lower confidence, etc.. Obviously, this is to be avoided nearly as strongly as deflation. It's why Volker raised the Fed Funds Rate to up to 18%, to killed the '70s inflation that threatened to run away. But even in the following decade it was typically 3-4%, as low as 1.1% and as high as 6.1%. Yet we're now seeing 3-4%, likely transient, and people are squawking like it's the end of the world.
Inflation only becomes a problem when the money-printing (incl. debt creation) is so prolific that people lose confidence in the currency — that's when you get hyperinflation, which absorbs almost everyone's full attention. It's pretty wild to see live in person, but it is still survivable.
But you're right - DEflation is really dangerous, which is why the Fed, ECB, and other central banks are working so hard to avoid it.
I don't know how much debt vs assets were destroyed in Zimbabwe, but it seems that most of the inflation was due to the govt printing insane quantities of money to finance it's involvement in wars in neighboring countries -- when they are printing and distributing individual notes in denominations of 100 trillion Zimbabwe dollars, when that currency started above par with the USD, it doesn't seem like debt has much to do with it; do you have some details I'm missing?