> Mild inflation, for better or worse, incentivizes anyone with a bit of money to use that money to fund companies, infrastructure, technology, and jobs that ma

> Mild inflation, for better or worse, incentivizes anyone with a bit of money to use that money to fund companies, infrastructure, technology, and jobs that may ultimately return higher value than the loss to inflation. Yes, if you sit on your cash in an inflationary economy, you slowly lose wealth. It incentivizes people to attempt to apply their assets toward productive ends. One other point: inflation is actually beneficial to people who are in debt[0], as it reduces the real value of their debt. (In other words, the dollar that they use to pay off the debt a year from now is worth less than the dollar today, so inflation literally allows them to use less money[1] to pay off their debt). Conversely, deflation is terrible for people who are in debt, as it effectively increases the amount of money they have to spend to pay off the debt (this is on top of the compounding interest; it is looking at the real value of the same nominal dollar amount). So, one of the biggest dangers of deflation is that it harms people with negative net worth (people deeply in debt)[2]. [0] Assuming fixed interest rates [1] In real terms, not nominal terms [2] The people who 'win' in this particular context are the people who own that debt (ie, the bankers). But as jandrewrodgers pointed out, there are a number of other ways that deflation harms them as well, so deflation is really a lose-lose situation.