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Because money is a medium of exchange, and has no inherent value. Hoarding cash is equivalent to destroying production-- by then time you try to spend it, there
by Evbn 14y ago
Because money is a medium of exchange, and has no inherent value. Hoarding cash is equivalent to destroying production-- by then time you try to spend it, there won't be anything left to buy. Inflation encourages people to be active in the system, exchanging to produce real value, not staring a the charts of growth of imaginary wealth that means only as much as a video game high score board.
- Minthos 14y agoThat sounds awfully counter-intuitive. Before there'd be nothing left to buy, the prices of things to buy would go up (i.e. inflation), which would discourage further hoarding.
- aminok 14y agoHoarding cash does not destroy production, as the number of units of cash in circulation does not affect economic productivity.