If the ideal inflation rate is around 2%, won’t money eventually become worthless?
In: Economics
Not really? Sure, the cash you have in your mattress will be worth less the longer you let it sit there.
But $1,000 will still be $1,000, it will just be less able to buy much as time goes on.
At some point, if we take the US as the example, the penny will certainly become worthless, and not used other than in virtual transactions.
As time goes on, we’ll shift to larger and larger denominations. The $1 item will be $5 then $10, then $20, then eventually $100. So one penny might be essentially worthless at some point (or already!), that doesn’t really matter, because no one will care about pennies as anything other than useless details on a ledger.
By the time any of it matters logistically (will pennies/dollars still exist when cheap things are $1000?) we’ll be on to all electronic/virtual transactions anyway, so the fact that we go to higher and higher numbers won’t matter.
At some point, just for ease of language, we’d then come up with a new ‘dollar’ type term. $100,000 (or whatever) would be called a “c-dollar” or whatever, and we’d start to talk about things in c-dollars. “that will be 3 c-dollars please.”
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