If the ideal inflation rate is around 2%, won’t money eventually become worthless?
In: Economics
If you only hoard your money in a vault? Yes, that’s the point.
2% inflation is high enough that you don’t want to hold your life savings as cash because it will lose a lot of value over ten, twenty, thirty years. You are incentivized to **INVEST** your money somewhere in the economy where it can be put to work growing businesses and creating jobs.
2% inflation is low enough that most forms of investment with beat that and grow your money. It’s also low enough that it doesn’t really affect day to day household finances beyond what to do with your Retirement fund.
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