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Its not quite that simple unfortunately. Inflation can't be measured or controlled in such accurate detail that we can keep them pegged without any "real" growt
by _heimdall 3y ago
Its not quite that simple unfortunately. Inflation can't be measured or controlled in such accurate detail that we can keep them pegged without any "real" growth. Debt will need to increase faster than inflation to keep a level of buffer in the system.
The monetary system itself does actually depend on inflation. Inflation creates an incentive to spend and invest your money, and without both our system of money would collapse.
Fiat currency and fractional reserve banking mean that the money requires flow through the system. The velocity of money is a bit of a controversial measure, though personally I don't understand why. Ignoring the specific measure though, our money must have velocity at some level and the system would collapse if velocity fell too low or increased too high.
- Dylan16807 3y ago> Debt will need to increase faster than inflation to keep a level of buffer in the system. Creating a buffer only needs to happen once. So if debt increased faster than inflation 30 years ago, and then on average kept pace since then, we'd still have the buffer. That kind of buffer is sustainable.
- _heimdall 3y agoI think that still assumes that we can reliably and accurately keep inflation and debt on the same page. If I were in charge of something similar I'd absolutely want to see a small but steady increase in debt vs inflation just to be sure, entire economies aren't easy ships to right when things go wrong