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
It’s not so much that inflation is good (even though there are some benefits, primarily around encouraging investment rather than hoarding cash), it’s that a little deflation over a long period of time is a much worse alternative (falling wages, falling home prices, rising debt payments).
Aiming for 0% is basically an impossible goal, so aiming for a little inflation gives some cushion against deflationary pressures.
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