If the ideal inflation rate is around 2%, won’t money eventually become worthless?

Question

If the ideal inflation rate is around 2%, won’t money eventually become worthless?

In: Economics

Answer 1

Yes.

But that’s the point.

Since you know money will be worth less tomorrow than today you’ll do something with your money other than just hold onto it.

You’ll buy a thing or you’ll lend it to someone at an interest rate better than inflation. Maybe you buy a sliver of ownership in a company who is expanding faster than money is becoming worth less.

It encourages people to spend and keeps money changing hands. That exchange of money for goods and services is the economy.