The European Central Bank is regulating the inflation of the Euro. Why do they do that and why do we even have artificial inflation?
In: Economics
Inflation is artificially induced by central banks, to disincentivize holding on to money. It gets worth less, so you better spend or invest it, which boosts the economy. It also stops deflation from happening which would hinder the economy, because everybody holds on to their money as long as they can, removing it from the economy.
They do that by giving more money into circulation and setting the interest rate on their loans.
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