Why if I have $100 right now, 10 years later that same $100 will have less purchasing power? Why can’t our money retain its value over time, I’ve earned it but why does the value of my time and effort go down over time?
In: 5591
Because we add money to circulation.
Look at it this way. If you had a dollar, and your friend had a cheeseburger, you could buy that burger with your dollar. Nobody else has a dollar so why would he give the burger to anyone else? Now add in 6 more friends who each have a dollar, how do you get the burger now? You have to offer more than a dollar. Now each friend has 2 dollars, you need to offer 3. This continues untill something happens taking dollars out of circulation. That’s essentially what is happening. More people get more dollars, meaning people who have goods they want to sell will ask for more than a dollar since they can.
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