If Governments use FIAT currency, why do we have inflation?
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Because the money supply continually increases.
This is done through the Federal Reserve.
We could stop inflation tomorrow if we wanted to. Heres the rub, the economy is a complex machine with lots of moving parts. The same levers that control inflation also affect our economies growth, productivity, etc. We could mess with those levers to completely reduce inflation, but we would destroy the economy at the same time. The trick, which is hard, is to keep inflation at a pace that is considered good, while also keeping the economy going in a place that is considered good.
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