Government and economists say, that ideal inflation is about 2%.. why is that? Why is 2% of my savings disappearing every year good? (In ideal case)
In: Economics
Other people have covered it pretty well. Something else to think about is that one thing that causes inflation is the government creating more money. As the government prints and distributes money, there’s more money in the system, causing everyone’s money to become less valuable. That *can* be a good thing, if the government uses that money to invest in infrastructure and public services: rather than needing to run the government as a for-profit business, the government can ensure it has the money it needs to provide vital services. And that’s on top of mild inflation encouraging people to spend and invest, both healthy things for an economy.
There’s no guarantee a government will spend its money well, of course, but it’s a potentially good thing that would cause inflation.
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