Why Do We Need Inflation? | Metals Mine

  • Why Do We Need Inflation?

    From awealthofcommonsense.com

    A reader asks: What’s the deal with inflation? It’s bad for our individual spending power. It erodes the value of our money. Yet, the economists want 2% inflation per year every year. Why do we need inflation for a healthy economy? Why can’t we have a 0% inflation goal? I get the idea behind being against inflation. Why would people want to see prices rise over time? Wouldn’t people benefit from lower or stable prices? In theory, this seems rational but theory rarely works in the real world. In the real world, the economy operates based on expectations. And, right or wrong, inflation and deflation bring about a ... (full story)

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bulltrap
Jun 18, 2019 6:23pm
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Inflation keeps people constantly fighting for return. Inflation is part of what forces everyone to continue fighting to progress the world into the future. If you stand still you will slowly disappear and that is a statement that is true for more than just the USD.
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petefx82
Jun 18, 2019 8:02pm
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The problem is the way inflation is measured. These out of touch with real world central bankers/idiots are still chasing the 'must have 2% inflation' at whatever cost when in real life inflation is much much higher than 2% already. Just go to your local shop and see how much you have to spend on your weekly groceries or go out for dinner and see how much it costs you. I honestly don't know what world these so called academics live in.
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DonFF
Jun 19, 2019 1:42am
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Quoting petefx82
The problem is the way inflation is measured. These out of touch with real world central bankers/idiots are still chasing the 'must have 2% inflation' at whatever cost when in real life inflation is much much higher than 2% already. Just go to your local shop and see how much you have to spend on your weekly groceries or go out for dinner and see how much it costs you. I honestly don't know what world these so called academics live in.
Your point is taken. But we have to bear in mind that these are the basic measures that have been used for the last 50-100 years in setting budgets and measuring value of money in public and private sector globally so inflation will be with us for a long while to come. It would be interesting to ask what would be your substitute?

One substitute would be the measure of how the economic pie is shared between the 1% and the 99%. Then we would be talking about a forward-looking measure that would address crime, equity between individuals and employers as well as between countries.

But we assume that People buy into the basic idea that if more is distributed that the distributors or rulers of the world will have even more!

They clearly dont buy this and therefore greed masked as efficiency continue to be the order of the day!
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cogs
Jun 18, 2019 6:38pm
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In theory, this seems rational but theory rarely works in the real world
Yes, but inflation is a bi-product of a doomed debt based financial system which eventually requires a 'reset'.
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