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It has nothing to do with "comfortable folks producing for the government" and everything to do with coordinating production and consumption. If everyone produc
by trhtrsh 14y ago
It has nothing to do with "comfortable folks producing for the government" and everything to do with coordinating production and consumption.
If everyone produces for 20 years and accumulates money, and there is no inflation for 20 years, and then they all try to retire and spend it, but there is no one to produce, since everyone wants to retire, you get hyperinflation chasing the small amount of available goods. Alternatively you inflate the currency for 20 years, to encourage people to consume their savings as a sustainable pace.
Remember: if you spend your inflationary money NOW on durable goods (canned food, wood, whatever), then you can trade those goods for inflated currency later, and not lose any value.
But, if you don't spend your money (maybe because there is nothing on the market worth buying), then inflation is the natural correction to bring the money supply into balance with the goods supply.