Eli5: Why can’t prices stay the same/inflation be 0%?
In: Economics
Assuming the population remained the same (balanced birth rate and death rate) and no innovations were made (machines that do work faster/cheaper than humans) and no natural disasters occurred (crop failures etc), then prices could be fixed and inflation be 0%.
That said, price fluctuations and inflation are influenced not just by raw economics, but also by government (and private) manipulation. Under capitalism (AKA greed, the opposite of altruism), some parties stand to benefit from inflation, so they will engage in behavior that encourages it — even at the expense of others. Inflation allows the rich to get richer and the poor to get poorer.
Latest Answers