>Western governments all seem to target 2% annual inflation. Why is this? When currencies operated via the gold standard. Inflation of gold was out of their co

>Western governments all seem to target 2% annual inflation. Why is this? When currencies operated via the gold standard. Inflation of gold was out of their control, gold mining, gold rush etc. Which tended to be about 2%. This goes back to antiquity. Roman emperors clipped metal off their coins and thus created inflation. Inflation doesn't exist in economics, inflation is a political tool. This is it though, that's why it's 2%, nobody has ever had the courage to aim at anything lower. But now that it's not gold standard, what is the 2%? This is actually government being able to print money for free. 2% of total money supply pays for quite a significant amount of government. This is compounding obviously, so it's not a long term strategy. However, this is what makes large currencies so powerful. >Why not target 0% to make financial projections simpler for businesses and households? The government has to raise taxes(not going to work) or reduce spending(very very not going to happen) So aiming for 0% isn't plausible not because of economics, but because of politicians. Something did happen in 2020, usa/canada/others no longer targeted 2%. They targeted >10%. The government printed a ton of money to pay for extreme spending. Canada for example put more debt on the books in the last few years than all other prime ministers in history combined; inflation adjusted. Someone will pay for this eventually or retirees are coming back to work.