If the ideal inflation rate is around 2%, won’t money eventually become worthless?
In: Economics
Yes, and no.
The British currency, the Pound Sterling, was, originally, a *literal one pound mass of metallic sliver*, mined from the Sliver mines of Sterling.
It’s obviously worth vastly less than that now, but the economy works fine, weather a pound mass of sliver is £1, £5,000, or £5 million. If the number on the banknotes gets too big we can just knock a few zeros off it.
A small amount of inflation that people can plan around and adjust to is basically the “least bad” option over the long term. It’s sudden rapid inflation that causes problems, or deflation
Latest Answers