: Why is (consistent and steady) inflation considered to be a good thing? We hear about rising wages chasing the rising cost of living, and we do this calc every time we look at historical prices, so why is this better than static prices? Is it all driven by TVM?

Question

: Why is (consistent and steady) inflation considered to be a good thing? We hear about rising wages chasing the rising cost of living, and we do this calc every time we look at historical prices, so why is this better than static prices? Is it all driven by TVM?

In: Economics

Answer 1

We want a little nudge to buy today for fear that prices might go higher in the future. And we want a nudge to save money in banks or invest money vs. stuffing it under the mattress or in a safe, allowing that capital to be available for loans and business investment.