8 ms·
Can you describe to me how inflation is good for a household? The literature you've probably seen is ex post facto about inflation trying to convince themselves
by whb07 7y ago
Can you describe to me how inflation is good for a household? The literature you've probably seen is ex post facto about inflation trying to convince themselves and the world that the inflationary behaviors that were done are "good".
"So every year, your savings get watered down and you lose wealth", is not what one wants to hear.
- koheripbal 7y agoInflation is good for an ECONOMY because it ensures that currency is not sitting on the side lines, but being actively invested wherever possible. ...so the velocity of money is increased, and hence volatility is decreased. The negative impacts of volatility on the economy are very well documented. Inflation has zero impact on a household as long as their savings are kept in assets other than cash.
- whb07 7y agoSo unless you're hiding bags of gold underneath your bed as "saving" then that money is going to circulate across the economy naturally as investment. But it is sort of weird that any single person/group can fully know what is best for all individual actors in an economy (not possible). Lastly, to say that a currency losing 99% of its value over time is not damaging to a household is either ignorance or corruption. The lower tiers of society furthest away from the money printer are the ones that are impacted the most. Coincidentally, I'm going to assume you want to help these tiers the most but end up hurting them. There is something called the Cantillon effect, where those closest (banks, those connected to the gov) to the "stream" of money get benefited while those furthest away (regular people) get hurt.