They are better off with inflation in the short term because of debt. If rates rise and we see a recession high debt holders won't be able to roll it over and the whole house of cards comes down. 2008 on steroids.

We are already seeing the Chinese real estate market collapse in slow motion as the central government is doing its best to hide it, but it is such a large part of their economy that it will spread to many other industries that support real estate, steel, cement and so on. These Chinese industries are all highly leveraged, and bond holders, world banking, are going to take a huge hit.