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Inflation can be good. It causes the value of debts to decrease. However, sharp inflation in consumer prices without corresponding wage increases can precipitat
by tehjoker 5y ago
Inflation can be good. It causes the value of debts to decrease. However, sharp inflation in consumer prices without corresponding wage increases can precipitate a humanitarian crisis.
- javert 5y agoSince inflation can cause the value of debts to decrease, it's more expensive to borrow money. All monetary distortion (including inflation) translates into economic distortion (suboptimal allocation and waste).
- qeternity 5y agoInflation is neither good nor bad. It is merely a measure. People mistake cause and effect in economics all the time. Inflation can be a good proxy for money velocity. But it can also just be a proxy for growth of money supply. In the former, it’s often a sign of economic activity/growth. In the latter, it’s often a sign of stagflation. The US seems closer to stagflation at the moment. The Fed have an opportunity to nip this in the bud and deflate their balance sheet, but they won’t.