Is Inflation Necessary

[alastantiger]

The bitcointalk forum is comprised of diverse people from all over the world. Our countries' must have gone through inflation as a nation at least once or more since its history. As a refresher, inflation happens when the prices of goods and services rise and people can no longer afford those items because the country's money almost becomes useless. But is inflation needed? Why can't we just keep the currency at the same value? And why does it only happen to money? For example, the same wouldn't happen if we used gold as a currency instead. Is inflation a ploy that the government uses so people don't get rich off of savings?

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But is inflation needed? Why can't we just keep the currency at the same value?

The government will not want their foreign reserve to deplete and finish. That is why they will prefer to manipulate and devalue their own local currency.

And why does it only happen to money? For example, the same wouldn't happen if we used gold as a currency instead.

It can not affect gold because the government do not have control over gold price.

Is inflation a ploy that the government uses so people don't get rich off of savings?

Yes, people should know that fiat do not have value. The value in fiat is when you use it for something like business or investment.

[Stepstowealth]

But is inflation needed? Why can't we just keep the currency at the same value?

Maybe the government are trying but keeping the inflation away may just be unavoidable. Some policies may sound good, but on implementation may not provide the required results.

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Maybe the government are trying but keeping the inflation away may just be unavoidable. Some policies may sound good, but on implementation may not provide the required results.

For a country not to have inflation is not good, it is people that should know that they should not save money in fiat because government will always devalue it for their own benefit. It is not mandatory to have your money in fiat. You can invest it or use it for business. If a country do not want to have inflation, the economy of the country may collapse.

[goaldigger]

The bitcointalk forum is comprised of diverse people from all over the world. Our countries' must have gone through inflation as a nation at least once or more since its history. As a refresher, inflation happens when the prices of goods and services rise and people can no longer afford those items because the country's money almost becomes useless. But is inflation needed? Why can't we just keep the currency at the same value? And why does it only happen to money? For example, the same wouldn't happen if we used gold as a currency instead. Is inflation a ploy that the government uses so people don't get rich off of savings?

Inflation is the basis for the value of money of one country and I think due to economic competition, inflation was made to serve its purpose and let those big countries remain in the power. Probably, this is where every nations agrees just like the Washington conference where we are forced to used USD as the basis of all trade this can also relates to inflation. We cannot live without this anymore and if there’s no inflation, your money will become weaker against other currency and that can be another problem.

[Hyphen(-)]

But is inflation needed? Why can't we just keep the currency at the same value? And why does it only happen to money? For example, the same wouldn't happen if we used gold as a currency instead. Is inflation a ploy that the government uses so people don't get rich off of savings?

I think price of things goes up when the demand is high and supply is low; and lower supply can be caused by so many factors which includes production costs and others. And mostly, goods that are not been produced in our countries are the once going very high with huge inflation which can be caused by cost of currency exchanges, transportation and so on.

Inflation is a general something that happens worldwide but some people suffer it more because of their improper economic management, but provided your country depend on any good that is been imported from other countries, then inflation is likely to occur.

[Zaguru12]

As a refresher, inflation happens when the prices of goods and services rise and people can no longer afford those items because the country's money almost becomes useless. But is inflation needed?

Inflation doesn’t necessarily mean that the country currency is devaluing but also comes in such a way that the demand for a product or service is way higher than the demand and such people pay higher to get the product. There are other reasons for inflation. Now concerning your the devaluation rate of money as a cause of inflation I think the government can easily afford to make their currency stronger by either reducing the supply of the currency printing or even increase the production and exportation of goods outside the country using the currency as an exchange currency.

[AVE5]

Inflation I'd as a disease or an anti progress for a national economy growths because they masses would be put to stranded and frustrated in as much they can't be able to afford valuables and essential needs with the value of funds at hands and most especially Poor and average citizens do suffers it most so at it all there's no good remark about inflations unless we should say only those who're the national influencers and the politicians are beneficial to it because it on the other way increases financial revenues to the accounts of the government but it's of no good accounted that it's for th good of the public but only those who're the inner cacus.

Until we realizes that the Fiats are also volatile which can be inflated by economy detriments, then we'd find every necessity to have our unplanned to be used funds saved in bitcoin with being aware that it can also be inflated to face depreciation of value as your fiats would also do but right while you've your funds in the bitcoin, you're assumed a potential Investor who had invested your funds on a sector that it'd bring you profit which otherwise you can do away with the frowning emotions of when your fiat funds could be values less during a national economy inflations.

[bestcoins1]

The bitcointalk forum is comprised of diverse people from all over the world. Our countries' must have gone through inflation as a nation at least once or more since its history. As a refresher, inflation happens when the prices of goods and services rise and people can no longer afford those items because the country's money almost becomes useless. But is inflation needed? Why can't we just keep the currency at the same value? And why does it only happen to money? For example, the same wouldn't happen if we used gold as a currency instead. Is inflation a ploy that the government uses so people don't get rich off of savings?

On the one hand, I don't think that inflation is a tactic by the government to prevent people from becoming rich, because the high price of certain goods or most goods can be caused by three things now. The first is because there is a lot of interest in the item and the second is because there is a lot of interest but the supply of the item is limited. And the third is because of war which can involve chaos in the economic sector for most countries so that it can cause an increase in the price of goods as it is now.

Maintaining the value of the currency is actually not easy for every country because it also involves importing and exporting goods in a country so that it can adjust the value of its currency to foreign exchange. So if we examine it in depth, we actually don't need inflation because everyone can feel the bad effects of inflation which sometimes makes it more difficult for poor people. This is due to their low income and the increasing circulation of money so that the government is starting to find it difficult to maintain the value of the currency itself.

Meanwhile, gold is a precious metal which generally has quite a large number of enthusiasts and not all countries have large levels of gold in their soil, although we don't know the limit of gold itself. But when everyone in the world starts to like having gold, of course the price will tend to be more expensive and the value itself can also continue to remain at a better figure. However, if gold is really agreed to be used as currency, I think there will be several countries that will not agree with that because there may not be a large supply of gold in their own country.

[Alphakilo]

I think inflation is needed in a debt based economy since the financial system is based on fiat currency and not Gold the inflation is at the core of the system since fiat currencies are driven by debt monetization hence the rapid increase in debt in the economy.  So debt is the cause of inflation spiraling out of control because fiat currency has unlimited supply unlike Gold. This is why governments becoming bigger and thus leading to bigger budget deficits and rapid currency devaluation

[batang_bitcoin]

So based on some quick information from wikipedia, it all started on 16th century. I'd say that it is not necessary at all if we have the power to remove it but it has now a global matter and each country's economy can't be reset as much as we want to delete inflation. It is there and will stay there and even if we're already dead, inflation will remain and going to keep on rising. This is where the world is heading unless there are a lot of rich people that will provided everything for us which is most unlikely but I've heard that Elon want to do that for everyone.

[EluguHcman]

As a refresher, inflation happens when the prices of goods and services rise and people can no longer afford those items because the country's money almost becomes useless. But is inflation needed?

Inflation doesn’t necessarily mean that the country currency is devaluing but also comes in such a way that the demand for a product or service is way higher than the demand and such people pay higher to get the product. There are other reasons for inflation. Now concerning your the devaluation rate of money as a cause of inflation I think the government can easily afford to make their currency stronger by either reducing the supply of the currency printing or even increase the production and exportation of goods outside the country using the currency as an exchange currency.

That is a good one. Inflation is not really about the rate of the fiats value but mostly about the immediate hike of commodities fostered on multiplications of demands and the rate of supplies.

So it is the insight that the higher the demands is the higher the price and also less productions on speculations.

It can also be an effect of the fiat where there was much prints which could get it on the junks and has it losses values for exchange.

Let me just say disasterous occurances such as crisis and governance sentiments is also capable to cause inflations.

[Agbamoni]

For example, the same wouldn't happen if we used gold as a currency instead. Is inflation a ploy that the government uses so people don't get rich off of savings?

What i have come to understand is that inflation doesn't affects assets specifically. Of course, the price of Gold, Silver, Bitcoin and other profitable assets won't be affected when there is inflation. Inflation is phenomenon that affects our purchasing power in our individual countries. When you sell you r gold or Bitcoin into fiats that is when inflation starts affecting the value of that your assets in fiat. If we look at it in your point of view then it is certain that i will agree with you that the government has a hand in manipulating the economy of a nation. But i dont think it works that way, yes the system is being manipulated a little since the governemtn has central authority over it but i feel the main cause of inflation is scarcity. When there is scarcity of food, raw materials, local produce, goods and services the value of these things tend to increase drastically causing those who have them to use the opportunity to extort money.

[danherbias07]

There's so much to consider and I think the government is always looking at those things before they implement it.
I can still remember how much the price of an apple was when I was still young and now it's tripled in price. I've also experienced a lot of changes in my salary just to equal the inflation that is happening and yet it is still not enough to pay for everything especially if you bought a house in a 30-year payment.

Is it necessary? I don't think that's the right question for this.
Inflation just happens because a country might crumble if they use the reserves to even what is happening. In the long term, the market will react so inflation is like a short-term cure for people to spend their money and let the cycle continue. Sadly, after inflation, necessities won't go back to their former price and what they will do is try to just increase the salaries of the people. This has happened in our country many times and I cannot even remember how many.

[franky1]

yes, proper well managed inflation is necessary for fiat currencies

2 reasons
a. population increase
if more currency didnt get printed, generation growth would happen but each person would have less cash each

b. world economics
when other countries grow economically a competing country needs to also economically to stay in the same ranks

so yes  inflation is needed..
.. BUT when inflation outpaces population growth, and printing occurs outside of real growth of production economics. thats when inflation turns bad

in short printing for the sake of printing where each new money lump print does not benefit the general populous but gets lost in the upper echelons of the elite, done just to fake boost the rankings without the funds being used to boost the utility/productivity of the population.. its bad

[Catenaccio]

But is inflation needed? Why can't we just keep the currency at the same value? And why does it only happen to money? For example, the same wouldn't happen if we used gold as a currency instead. Is inflation a ploy that the government uses so people don't get rich off of savings?

Inflation naturally exists in societies and all nations because governments fail to control all sectors and things in their countries. When economy is down, governments must ask central banks to print more money and distribute it to citizens and societies to increase purchasing power from their citizens. They have to do it because if they don't, companies will collapse.

Later as consequences of money printing, they will try to tighten their money policy but it won't resolve inflation and money circulated in societies never return 100% to banks. The cycle repeats and with time, with many cycles, we have bigger and bigger inflation.

An example

Purchasing Power of the U.S. Dollar Over Time

[pooya87]

Why can't we just keep the currency at the same value? And why does it only happen to money?

Because money does not exist. We only have Bitcoin that has the potential of being money some day but for now all we have is currency. (currency is medium of exchange and money is a currency that is also store of value).

Why is it like this? Because economy as a science is wrong. What they teach kids in schools, universities, etc. is wrong. Which means the economy that rules the world is built on top of flawed sciences hence it works like this, where the so called "experts" believe that inflation is a good thing.

a. population increase
if more currency didnt get printed, generation growth would happen but each person would have less cash each

You are confusing supply and demand with inflation.
Printing money (increasing fiat supply) doesn't automatically mean inflation. Where that printed money goes can lead to inflation. They also don't print it based on population, they print money (or should print money) based on demand which could be simply referred to as the "production capacity".

But in reality they print money to cover their budget deficits which doesn't go into production so it causes inflation. For example US doesn't print $1 trillion every 100 days because US population is suddenly growing, or the US economy is growing. Neither one of these are happening. What is happening is a massive budget deficit that they have to cover by printing that much money.

[Poker Player]

It is not whether it is necessary or not. Good inflation indicates economic growth but what we have today is high inflation due to the devaluation of the currency and the indebtedness of the states.

For example, the same wouldn't happen if we used gold as a currency instead.

This is false. Already since Roman times the rulers found a way to devalue the currency by introducing copper alloys and other metals, but people soon realized it and prices went up.

[adaseb]

When I was young I also found this odd. I also found it odd how every year the same food kept getting more and more expensive. And peoples wages would increase every year and the price of services would increase.

Why it happens is simple. Basically the government is in debt and needs to print money to pay for it and other things. Hence there is more money out there and eventually things get more and more expensive. It’s horrible for savers and doesn’t really benefit anyone.

[Porfirii]

In economics it is said that inflation is necessary for the economy to grow, as it generates more movement in the market, and a signal of a healthy environment, in contrast to deflation, which is linked to recession and financial crisis, when people don't have much money to spend and those who have it prefer to save it.

But I don't think inflation at the current high levels is a good thing, not to talk about the great devaluation and subsequent loss of purchasing power in some countries like Venezuela. Some say that inflation is a tax on savings. They are not wrong either.