I’ve read that many banks want a certain level of inflation and I don’t really see why. Why is important to banks that a stable product costs more tomorrow than today?
Is it to make people spend their money more since storing it will eventually make is worth less?
In: Economics
The actual reason has to do with foreign exchange rates. If we owe $1 billion to another country, and the value of the US dollar decreases (inflation), then we technically owe them less money. Banks can use this to their advantage with oversees trading.
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