I keep hearing the argument that inflation is necessary to encourage a country's exports.
Gut feeling is that this is a load of crap.
Yes, putting artificial pressure on an economy to force trade encourages exports but,
exports aren't needed if you're rich.
If there's no inflation then the country just gets richer.
If richer, then the country is more powerful and less reliant on exports.
Is it as simple as this?
When I hear inflation in current times, you need to think, debasing their currency to make it more competitive on the foreign exchange market. The make your currency cheaper compared to your trading partners so that a trading partner can get more goods from you for their currency. The problem is that it is a race to the bottom and can end in serious inflation with nothing really to show for it because on the flip side, your raw materials will cost more to import and they will offset any gains other than "goosed" up economic data and temporary employment increases.
Gut feeling has nothing to do with economic theory. Maybe you get lucky and make a true claim, but that is all.
Your statement says it all, "
If there's no inflation then the country just gets richer. ". The is the crux of it all, when you put this artificial pressure on the country, you do get inflation in some or multiple asset classes and usually leads to bubbles in certain assets classes, or even worse, broad-base inflation. Take for example, the U.S. takes food and energy out of the CPI but for a majority of people, rent, food and energy (gas & heating or cooling fuel) is their largest monthly expense. So in that case, what are we really measure?
No is not as simple as that but I hope the above added to your conversation.