In a modern economy, inflation acts as a tax on idle cash. This encourages people and organizations to keep their wealth in forms that help the rest of the econ

In a modern economy, inflation acts as a tax on idle cash. This encourages people and organizations to keep their wealth in forms that help the rest of the economy. A thousand dollars under your mattress isn't doing anything for anyone, but in a bank account, equity, or bond it can be used by others to finance their business. The higher the inflation rate, the more pressure there is to invest instead of hoard. Governments adjust the inflation rate via mechanisms such as making large loans to major banks ("printing money") or selling bonds. The goal is for the economy to experience constant slow growth at the minimum practical inflation rate.