I’ve been wondering this question for a while. Ignoring current events, why is a little bit of inflation desirable?
I do understand that it’s done to “stimulate” the economy so people don’t let their cash rot in a checking account, but isn’t it a zero-sum game? Everybody says that money is not meant to stay where it is, rather, should flow through the economy. But if the economy always needs injections of liquidity because otherwise it fails, isn’t the economy broken?
I feel like there’s something I can’t comprehend about that.
Monetary theory is complex, and lots of stupid people want it to be simple.
Inflation is a measurement, for starters. it’s the change in the price of of something. the general inflation rate is a index measure, it’s not a true measure of inflation, let alone inflation of any one type of product or service.
prices always change, but generally price stability is good, we prefer price stability to price instability, because it’s predictable and allows us to plan for the future.
inflation is easy to understand if you stop thinking about it as piles of money, and think about it in terms of how people interact with each other. people don’t want to socialize with unpredictable people.
further, some inflation is good, some is bad. people like housing and stock price inflation, because they are investments, they don’t like inflation in food, fuel, and consumables because those are not investments, you can’t sell the food you ate to someone else, but you can sell your home or your stocks.
“<Complex subject> is complex, and lots of stupid people want it to be simple” applies to far too many subjects, and politicians tend to use that to manipulate voters when those subjects are societal.