ELi5: Why is inflation so important for the economy to go?

Question

I meant Grow*

In: Economics

Answer 1

in a perfect world, we might not have inflation. we might hold all things to zero.

but… its not a perfect world, and no matter how precise you attempt to control a thing, it will wiggle around.

Deflation is disasterous. the idea that money is increasing in value, tells people to horde cash, if I wait till tomorrow to spend, I get more than I can get today.

but now demand falls, so prices fall, I can get even more, so I keep waiting. and waiting. and waiting. and it feeds on itself, until we are all unemployed because no one buys anything, so no one is working.

So we try to keep a small rate of inflation, so we dont risk ever having deflation.