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.
Japan had deflation for 35 years, and keeps a mostly stable economy. Is inflation actually desirable? If you look at economics long enough it starts being about subjective politics, and systems people oversee and behave in. Somethings are true some times with certain goals, other things are true other times.
Inflation is more a byproduct of certain circumstances.