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Inflation is much easier to sell from a PR perspective. New taxes typically lead to lots of protests and are politically difficult, while inflation has no such
by WJW 4y ago
Inflation is much easier to sell from a PR perspective. New taxes typically lead to lots of protests and are politically difficult, while inflation has no such problems.
In addition inflation benefits entities with lots of debt, such as homeowners and governments. Since homeowners are often a significant voter block in most democracies and governments are, well, governments, it is easy to see why appeasing both those groups would be appealing to politicians.
- _Algernon_ 4y agoTo your second point: I'm not convinced that that is true. If inflation is predictably 2%/year, you'd expect that to be priced into the interest rate on loans. A bank selling a loan would pass the inflation cost to the borrower by increasing the interest rate appropriately.