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
Two main reasons.
First of all getting to 0% and keeping it at exactly 0% is nearly impossible and deflation (negative inflation) is so bad that you would rather be at a slight positive at all times than risk getting into the negative.
Second of all its encourages that you use your money. That can be either spending or investing the money. Now the real target of this isnt you or someone with a few thousand $ in the bank they are pretty irrelevant to the economy. The real target are people with loads of money and even more so companies. You want companies to use their money and not just sit on it, because sitting on it means there is no more production or even a reduction in production which leads to lower employment and less goods available to the public.
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