> The real underlying demand for a currency comes from the advantage that everyone gets by using the same currency in a common market. > The 'required for tax'

> The real underlying demand for a currency comes from the advantage that everyone gets by using the same currency in a common market. > The 'required for tax' purposes is a side-show. Why can't it be both? :) > Totally false. Inflation is a target by most central banks. They can make it positive or negative, generally, and target specifically 2% for certain reasons. This is a bit questionable. There are good reasons why a slight positive rate of inflation is a good thing, and while you could try to target a negative rate, it would almost certainly be very harmful to the economy. Basically, people and even many companies have fewer contracts or prices for selling things than for buying things. So when relative prices need to adjust, this adjustment happens more smoothly and faster when prices don't have to decrease in nominal terms (because e.g. an employee whose compensation should go down in real terms will fight very hard against a nominal decrease in their income, but will fight less hard against a broad nominal increase in their outlays). So you should generally aim to have only very few (if any) items in your basket of goods whose prices are decreasing. (Economists call this the zero lower bound and focus on salaries, but I'd expect the effect to apply to other prices as well.)