Inflation aligns real public debt with the present discounted value of future fiscal surpluses, highlighting the discount factor's role in treasury demand stability. This study links the state-dependent Fisherian relationship in treasury yields and inflation to stable or unstable demand based on changing household beliefs in sound public finances. In low discount factor scenarios, the central bank accommodates rising trend inflation, e.g., due to unfunded fiscal debt, while long-term yields stay resilient, reducing the natural rate. Conversely, in high discount factor settings, households question public finances before the shock, exerting upward pressure on yields and inflation, e.g., after unfunded fiscal shocks, neutralizing the natural rate response and monetary efficiency. In a nutshell, this study proposes that shocks which persistently alter the public debt-to-discounted-surpluses ratio fuel trend inflation and nominal GDP, thereby reducing the public debt-to-GDP ratio. Therefore, a high public debt-to-GDP ratio, such as Japan's, could indicate fiscal resilience as the government tackles the real debt burden. Conversely, low debt-to-GDP ratios, as observed in Turkey, may signal a lack of fiscal funding, and hence the use of inflation for fiscal adjustments.