Inflation, is the simple answer. But what causes this? Why couldn’t society just keep on keeping on with prices? Examples, a $0.25 for a candy bar, $0.75 for a fast food burger, $30k for a home etc. It worked then, so why not now, why not just agree to lower the prices of everything?
In: Economics
The threat that your dollar will be worth less in the future makes you want to do *something* with it.
More importantly, if you have lots of dollars saved and actually have “extra” sitting around you are losing value unless you can find a way to beat inflation.
This means you lend it to others that might promise to pay you back more in the future (this is pretty much what you are doing with investments like owning shares in a company).
If your dollar wasn’t losing it’s value over time, you might just keep saving it. When enough people do this… this whole capitalism thing comes to a screeching halt.
Money needs to move for an economy to work. Inflation is part of the carrot and stick to encourage people to use the money.
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