Eli5: Why can’t prices stay the same/inflation be 0%?
In: Economics
0% inflation is an unstable point. Like setting a ball on a sloping driveway, you can’t make it stay still there. It’s unstable for inflation because if there is no cost to invest money, then people with money have no incentive to spend or invest it because it will be worth just as much next month. As a result, they spend less and the economy slows.
1-2% inflation is like a little crest in the driveway. The ball can be rolled there and stopped there, but it won’t go there on it’s own.
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