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
Supply, demand, productivity.
Say you have 200K to buy a house but decide against it and someone else does. You put it in the bank. Years later it’s back up for sale but there’s less houses for sale and more people trying to buy them and it sells for 250K. So now you can’t buy it because you still only have 200K.
Same money. Same house. Different price and purchasing power. Ergo inflation.
We also want some inflation to keep up with other growth or things would get screwy as better described elsewhere.
This is why rich people own assets not money.
Of course inflation should also mean your employers have more cashflow and so inflation should also affect your wages and increase them.. lol.
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