David Rubenstein says there's only one solution to US debt: inflation

• The US won't cut spending, raise taxes much, seek a bailout, or default on its debt, David Rubenstein said.
• "The only alternative is to inflate your way out," he told Bloomberg TV.

The US won't climb out of its $32 trillion debt, David Rubenstein said. Instead, its best bet is to lean on inflation.

"We aren't going to cut expenses in the government. We aren't going to increase taxes that much. We aren't going to go to a bailout with the IMF, that's not realistic. And we're not going to default," the Carlyle Group's co-founder told Bloomberg TV. "The only alternative is to inflate your way out."

But he noted that when inflation increases, lower-income people are often much more disadvantaged than wealthier consumers.

And that adds to a real risk for US society, Rubenstein said, as growing income inequality is setting the stage for turmoil. For example, he warned of a clash between different age groups, as retirees are living longer and turning towards the younger generation to help support their lifestyles.

As a solution, Rubenstein encouraged young people to get more involved in leadership positions, whether in politics or the corporate world.

"I think that their concerns are not reflected very often in board meetings, corporate boards or foundation boards, nonprofit boards and so forth," he said.

Meanwhile, the Federal Reserve is focused on taming inflation, which has cooled significantly in the past year.

The most recent consumer price index showed an annual inflation rate of 3% in June, down from a year-ago high of 9%. But that's still above the Fed's 2% target, and markets widely expect at least one more interest rate hike at the next Fed meeting.