Consider the immediate consequences to Social Security, interest rates and the cost of refinancing government debt.
--many multiples of the official rate of around 1% per year.
Here are a few of the consequences:
The Social Security system, which is already distributing more benefit payments that it is receiving in payroll tax revenues, would immediately go deep in the red.
(Please don't claim the SSA Trust Fund will be solvent for decades. I've dismissed the fraud of the illusory Trust Fund many times. The reality is the federal government has to borrow every dollar of deficit spending by Social Security by selling more Treasury bonds, just as it borrows every other dollar of deficit spending.)
If inflation is running at 7%, then bond buyers would need to earn 8% per year just to earn a real return of 1%.
Central states are only able to sustain their enormous deficit spending because interest rates and bond yields are near-zero or even below zero. If the federal government suddenly had to pay 8% to roll over maturing government bonds, the cost of servicing the existing debt--never mind the cost of borrowing an additional $400 billion or more every year--would skyrocket, squeezing out all other government spending and triggering massive deficits just to pay the ballooning interest on existing debt.
Bond yields of 8+% would collapse the status quo of massive government deficit spending.
How many autos, trucks and homes would sell if buyers had to pay 8% interest on new loans? A lot less than are being sold at 1% interest auto loans or 3.5% mortgages.
Recall that a very modest drop in new borrowing very nearly collapsed the global financial system in 2008-09, as the whole system depends on a permanently monstrous expansion of new borrowing to fund consumption, student loans, taxes, etc.
How many billions of dollars will be siphoned off the debt-serfs, oops, I mean students, should student loans be issued at interest rates north of 8%? (Some private student loans are already in the range of 8%; where will those go if inflation is recognized as running at 7% per year?)
Super-wealthy elites earning 10+% yields on stock, bond and real estate portfolios aren't particularly impacted by 7% inflation; their real wealth continues to expand nicely.
Who's being destroyed by 7+% real inflation? Everyone whose income has stagnated and everyone who depends on wages rather than assets to get by--in other words, the bottom 95%.