What would happen if a companies profits just stayed the same over a period of quarters? I obviously don’t understand it at all but isn’t it just unsustainable to expect growth indefinitely?
In: Economics
It’s not indefinite growth. Inflation means that CURRENCY is shrinking in value constantly. $/£/€1 today is worth less tomorrow – guaranteed for the last… well hundreds of years. We actually implement financial measures to *ensure* it does (so that people don’t just hoard money, in effect) – the Bank of England aims for 2% at all times.
So if you DON’T increase your profits by at least 2%, what that means is that you’re making less money – your profits are effectively decreasing.
Of course, it ALSO means that you should just automatically give all your staff a 2% raise without them ever having to question it – or else they are losing money themselves. But that’s not always a given!
Inflation exists to promote money being spent, invested, used to buy assets or services, rather than hoarded. Inflation means that profits need to go up every quarter/year by at least the amount of inflation.
Indefinite growth is even the literal target of huge nations like those in Europe and the US.
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