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?
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I would rather have a dollar now than I would have a dollar 10 years from now even if it bought me the exact same product. The human condition puts more utility value in immediate satisfaction than it does a rationally equal satisfaction in the future. This human irrationality, despite having a biological purpose, leads to a concept of “time value of money.” Inflation is the logical next step if we accept the time value of money theory.
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