I meant Grow*
In: Economics
Inflation is the decrease in “value” of any single piece of currency. This is represented by increasing prices; since a “dollar” is worth less next year than last year, a loaf of bread (worth some relatively fixed value) will cost more dollars next year than last year.
Inflation is caused by increased money supply; more physical (or digital) money moving around in the economy. This is what makes the money worth less; since there are more dollars, each dollar is worth less.
This is helpful to make the economy grow because it encourages people to spend their money. If you have 100 dollars now and can buy 100 loaves of bread today, but the same money next year can only buy 90 loaves of bread, then you are “losing” money each year (actually, you’re losing “value”, but it’s six of one or half-dozen of the other).
To reduce this “loss”, you should spend your money now instead of next year. This can either be to buy things (eg. a book won’t lose value like money will) or to invest in things (investing in a business may make more money for you than you would lose, so you’d net-gain money). Making money/value move around is what the economy is. Investing money into new businesses, technologies, and/or education improves our capability to make things, which grows the economy, as it increases the “value” that we have access to.
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