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Inflation is necessary to a certain degree to decrease savings rate in the economy and promote capital flow.

• nine_k 4y ago
  So it's basically a tax which is really hard to evade, and which sort of "happens" instead of being voted for.
  • s1artibartfast 4y ago
    Inflation is mostly a regressive tax because it is pretty easy to evade if you have your value parked in non dollar assets. Housing or stocks for example should appreciate with the inflation rate, if all else is equal. Wages are usually more sticky, so consumers have less to spend.
  • systemvoltage 4y ago
    That's an interesting perspective. I'd say that it propels society forward in many ways. If you only think of capital is something that needs to be saved, then ideally you'd prefer to live in a deflationary society where capital is scarce, it's value is increasing (deflation) and the only winner is the one who saves it. In a well oiled society, capital is merely an instrument to multiply the labor value (think capital needed to buy automation machinery or paying AWS bills), and thus leading to GDP growth – here, inflation promotes liquidity. You'd rather invest than to save. Taxes are the opposite of optionality, since you can't really do anything about the coercion from the government besides pray to god that your tax contributions are being efficienty allocated.