Eli5: Why can’t prices stay the same/inflation be 0%?
In: Economics
The feds could manage the money supply to keep inflation at 0%, but most economist believe a small amount of inflation is better than zero. If at zero, you could comfortably sit on the money you have without engaging with the economy, but any positive inflation means that if you want to simply maintain your wealth, you have to put it to work to earn some sort of interest. Thus the notion that a small amount of inflation encourages investors to put their money back into the economy.
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