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
One thing I don’t see mentioned here is that inflation decreases an individual’s debt (assuming wages increase). The total debt you owe, in real dollars, decreases every year.
There are other things to consider as well with exports and the value of one currency against another.
Inflation is also partially responsible for the creation of increased wealth. If GDP (and other metrics) outpace inflation, that’s the literal definition of creating new wealth. How the wealth is distributed in an economy, well that’s another matter entirely.
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