eli5: If a 2% inflation is considered good and healthy, will this not at some point cause abnormally high money values or a currency crash?

Question

eli5: If a 2% inflation is considered good and healthy, will this not at some point cause abnormally high money values or a currency crash?

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Answer 1

Well, for one, it all depends on how you define “abnormal”. For instance, the Japanese Yen seems abnormal to the US Dollar (128 Yen = $1) or the Euro (136 Yen = 1 Euro). But there’s nothing really strange in practice, because nothing is denominated in decimal Yen, and the smallest coin they issue is the 1 Yen coin.

Secondly, even if it does become a problem, there are ways to address it. Even the nuclear option of completely replacing a currency has been done successfully elsewhere, such as the Europe with the Euro and Brazil with the Real.