Is Inflation Necessary

[Abiky]

Imagine you are a king in the Middle Ages, constantly making new conquests. The gold you have access to is limited and after a certain point you cannot access new gold supplies. What do you do to persuade your army to make new conquests? Do you have any other choice but to add silver to the gold coinage? Today, instead of making new conquests, we are building up our countries to join the ranks of developed countries. We don't have unlimited gold mines, and worse, we are not even in a position to put silver into gold coins like a middle age king, so we use paper money, which is the only thing we can do, and we solve all problems with inflationary strategies...

I am accumulating gold, silver and Bitcoin, which are in limited supply, but these are the harsh realities of life and I cannot ignore them...

We have given too much power to governments and banks as a society. Now they hold "all of the cards" to either destroy or recover the economy. The introduction of paper money marked the beginning of the end for the world economy. Being backed by nothing other than debt, gives governments full advantage over our financial lives. The situation is such where the poor become poorer, and the rich, richer. Inflation is necessary to liven up the economy. But too much of it is harmful. Especially to those in need.

Fortunately, we have ways to beat down inflation. That's assuming with have enough capital to invest in scarce assets such as Bitcoin and Gold. These are uncertain times we're living into. So we should be prepared for the worst.

[Knight Hider]

Inflation is necessary for governments and anyone else who is in debt. It takes money from other people's savings.

[Samlucky O]

But is inflation needed?

inflation is a normal thing in all country all over the world, it doesn't only happens to some country. For me inflation has it important too in the sense that it increases work force of any country. For example when the goods becomes expensive more people will increase there production. Be it agriculture or manufacturing sector and many other sectors. It also reduce  importation and increase exportation.

Why can't we just keep the currency at the same value?

The reduction in value of currency is as a result of limited in supply in goods which cause scarcity and it causes inflation and goods becomes expensive and people say money has reduced in value. Money doesn't reduce in value rather scarcity males things more expensive than before but people misinterpret it.

And why does it only happen to money?

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

I don't think so. If gold was used as money, inflation would have affected it. because if it was measured in 1gram to buy a basket of orange before, When inflation happens, 2 grams of gold would be used to purchase that same goods of 1gram of gold. Using gold as currency does not mean inflation would not affect it.

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

Though most inflation is a natural inflation while some are manipulated by government, but in which ever way anything that has advantages also has disadvantages because most people gain from it while some lose from it. So its vise versa.

One important thing to scale through inflation, is to pull out our fund from fiat to bitcoin to avoid inflation.

[frnandoh]

In current countries scenarios, at least a little inflation is important to economy because that encourages people to buy goods and companies to make products instead simply save money. A cold economy can bring a big crisis to a country.

[shield132]

Inflation at 2% doesn’t cause people to stimulate the economy and help it grow. In certain countries like Swiss or Japan they had negative interest rates in the past where you are being charged interest to hold it in the bank. That is a way to get people to spend it, not low inflation numbers.

We cannot deal life without inflation. Governments need to issue bonds to pay for the country to run and as a result that money comes from money being printed out of thin air. It’s impossible for a country like the US to function without raising money from selling bonds, they hold too much debt.

If you hold money and there is 2% inflation in first year, 3% - in the second year, then 2% - in the 3rd year, you'll understand that your money is losing purchasing value. 2% inflation mostly forces rich people to do something but it's not a catalyst for the poor or middle class. When rich people are forced, they start businesses and employ more people, the economy gets stimulated and people feel happy and aren't in fear. When inflation is high, too many people are in fear and feel hopeless to my mind.

[Ever-young]

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.

You are actually right, there is no where on earth that inflation doesn't exist, that is the part of existence that makes life beautiful.

Everyone do suffer inflation in one way or the other but most countries suffer it most, as you have said because of lack of management by our leaders, also for their selfish interest and also no matter how we try to be good or do good, there are things or law that can't be changed, I don't know if it's a natural occurrence just like this inflation, no matter how we do, our resources might be difficult for one to afford.

So that is why we should be self employed or learn a skill to help our selves than depending on our government to makes things easier for us.

[eightdots]

If a country experiences stagnation regarding the economic growth of a country then it has a big impact on people's lives because there will be an imbalance that occurs. So that the public sector which is usually a step to support people's lives will have problems, such as food problems and so on. The state has a responsibility for the economic growth cycle and they have ranks to control the prices of goods in the market. What happens is that they do not side with the people and consider more the problems of companies and the problems of the country's economy.

Usually this happens because the government is corrupt and has no vision in managing the country and although in certain cases all countries experience the impact of inflation or recession at an uncalculated stage because certain problems occur. Economic growth is very important because it speaks of a wide scope and if there is no principle to control then the problem will arise bigger.

I would guess that you are right that stagnation would result with big companies keep taking money, while smaller investor or just regular people not growing with it, so all the big companies would take all the money. But when we are talking about stagnation, we should not just take it face value, we can't just say this is why it is bad, we should compare it to make sure that it is bad.

So, when you compare stagnation to inflation, which one seems worse to you? I would say a very very high inflation could be much worse, of course a 5% inflation would be fine, that is not too much, I think people can live with that, anything under is perfect, but what if you had like those famous 100%+ ones? Argentina had one, Zimbabwe certainly had a lot more, and Türkiye recently had one I believe. Those are much worse than stagnation.

States can control the prices of goods, but they usually do not intervene because the companies that change these prices are large corporations. In some cases, they are late to intervene in the price, which increases the rate of inflation. In some cases, the state cannot prevent the increase in inflation even if it does many things. The market continues its progress in some way.

High rates of inflation negatively affect life. Inflation in the countries you mentioned is very high and the state is trying to intervene. As a result of mistakes made in the economy, inflation rose very high and some interventions were delayed. I hope that high inflation will drop soon and people will be able to sustain their economies comfortably.

[theteknolojist]

Inflation is necessary, and hedging against it is selfish...

But I don't mind 

[lizarder]

States can control the prices of goods, but they usually do not intervene because the companies that change these prices are large corporations. In some cases, they are late to intervene in the price, which increases the rate of inflation. In some cases, the state cannot prevent the increase in inflation even if it does many things. The market continues its progress in some way.

High rates of inflation negatively affect life. Inflation in the countries you mentioned is very high and the state is trying to intervene. As a result of mistakes made in the economy, inflation rose very high and some interventions were delayed. I hope that high inflation will drop soon and people will be able to sustain their economies comfortably.

If the state has the capacity to do so and what often happens is that they are late and the stock of goods is controlled by unofficial distributors so that they are the ones who play the price in the market. The inflation rate will be increasingly uncontrolled when goods start to become scarce in the market and that will become an even bigger problem to control inflation. If asked which sector plays a bigger role in the scarcity of goods when inflation occurs and maybe almost many of us know that.

That is why the government must have a process design before everything happens and they must be able to review the stock of needs for each year. Although in certain cases inflation occurs even though the government has prepared everything well. The food sector plays a fairly large role and this sector needs to be maintained well by the government so that there is no shortage.

[darkangel11]

In current countries scenarios, at least a little inflation is important to economy because that encourages people to buy goods and companies to make products instead simply save money. A cold economy can bring a big crisis to a country.

Why would you need to artificially enforce a rule like that, making people buy stuff they don't need.
In a perfect world, people buy goods they need and save money when they don't need them. Inflation is a tax imposed on everybody, especially hard on people who own money. It's like a tax that punishes you for saving, or punishes you for being rich. Is that a bad thing? IMO rich usually means smart and successful. In nature dumb people, if they happen to inherit wealth, will often lose it due to bad choices.

[Mate2237]

In the world today with the bad leadership we have, inflation is not something that comes once or twice in the history of a country but it is part and parcel of human existence. In the inflation in this year in Africa is so much high that increasing the crime rate in the world. Everything in the world now is cost. Example. Car. Vehicles that were sold at the rate d $3,000 as of 2019 now it is sold as $10,000.

And the thing that shocked.me.mosy is the Petroleum. Petroleum that was sold as $0.068 now has $1.5 in my location per litre. There are two major people that causing this bad leadership in Africa. The electoral body and the judiciary. These are the problem in Africa leadership.

[Essential10]

If I call the market conditions of the last two years in the country where I live, it has been an extraordinary growth. So far the government of my country has not taken any action, it is getting worse day by day. The people of my country are largely uneducated so the government is doing whatever it wants. A one-party government has been in power for a long time, with no one to speak against. The government and the government servants have become so corrupt that they are totally looting which is causing the price of everything to rise constantly. If we calculate the changes in the prices of various goods and services in the last two or three years, it is seen that inflation has increased a lot. Inflation in our country is close to ten percent which has made life difficult for middle class and lower middle class people. If corruption is not reduced in my country, it is not possible to reduce inflation, the situation may worsen in the coming days.

[FanEagle]

These type of questions are beyond what we could "solve" in our daily discussions. Like for example, lets say that there is a real answer to this, what I mean is that this question doesn't have an exact number such as two plus two equals four, but for just a moment lets assume that we have considered long enough and discussed long enough and figured out that this question has an exact answer as well, in a theoretical situation.

Even in that situation, if we find a solution here, on this forum, how are we going to get the masses hear this? How are we going to make the finance world see this? How are suppose let the world leaders know about it? We can't, so while sometimes discussing things are fun, this one isn't really a serious question for this place.

[Hopila]

Inflation is needed and equally important for government its economy. because it encourages people to spend and invest their money rather than holding onto it. When the value of money decreases over time, individuals are more likely to put their money into assets or spend it on goods and services, which stimulates economic growth.

[redsun114]

Corruption isn't the reason why inflation exists, that is high taxes. Back in the day people complained about "communism" because it would be a world where everyone would pay super high taxes and get nothing from the government which would be working to equalize everyone.

But right now, capitalism is basically super wealthy people who are using your taxes to get themselves tax brakes or avoid taxes, so you are still paying super high taxes and get nothing in return anyway. So that is not inflation, that is corruption and those are very different two things, I do not think that we are going to get anything like that. We should realize that politicians could keep the inflation to a minimum at times, but sometimes big things happen and we can't avoid it.

[MissNonFall9]

Inflation is needed and equally important for government its economy. because it encourages people to spend and invest their money rather than holding onto it. When the value of money decreases over time, individuals are more likely to put their money into assets or spend it on goods and services, which stimulates economic growth.

There is no denying that inflation becomes essential for the country's economy to achieve the strategic objectives of a country at particular times. But if it continues for a long time then the economy of that country will be destroyed very easily. Therefore to keep the wheels of the country's economy moving or more dynamic the government sometimes resorts to inflation so that more entrepreneurs can be created.

[Abiky]

In the world today with the bad leadership we have, inflation is not something that comes once or twice in the history of a country but it is part and parcel of human existence. In the inflation in this year in Africa is so much high that increasing the crime rate in the world. Everything in the world now is cost. Example. Car. Vehicles that were sold at the rate d $3,000 as of 2019 now it is sold as $10,000.

And the thing that shocked.me.mosy is the Petroleum. Petroleum that was sold as $0.068 now has $1.5 in my location per litre. There are two major people that causing this bad leadership in Africa. The electoral body and the judiciary. These are the problem in Africa leadership.

Inflation came when countries started backing their currencies with debt. They wanted to have the ability to print money out of thin air and steer the economy to their own direction. It's now central banks' (and the Elites') game. And there's nothing we can do about itt. The rich will get richer, and the poor, poorer. This won't change anytime soon. Not even Bitcoin will save the world.

While you can protect yourself against inflation by investing in scarce assets (eg: Bitcoin and Gold), you're limited to what you earn in Fiat terms. After all, the world is stuck in the Fiat Standard. It's the unit of account used for everything. Wages aren't increasing as much as inflation rates are. People are earning less, and prices of goods and/or services are rising higher. Things will only get worse, my friend.

[Mate2237]

In the world today with the bad leadership we have, inflation is not something that comes once or twice in the history of a country but it is part and parcel of human existence. In the inflation in this year in Africa is so much high that increasing the crime rate in the world. Everything in the world now is cost. Example. Car. Vehicles that were sold at the rate d $3,000 as of 2019 now it is sold as $10,000.

And the thing that shocked.me.mosy is the Petroleum. Petroleum that was sold as $0.068 now has $1.5 in my location per litre. There are two major people that causing this bad leadership in Africa. The electoral body and the judiciary. These are the problem in Africa leadership.

Inflation came when countries started backing their currencies with debt. They wanted to have the ability to print money out of thin air and steer the economy to their own direction. It's now central banks' (and the Elites') game. And there's nothing we can do about itt. The rich will get richer, and the poor, poorer. This won't change anytime soon. Not even Bitcoin will save the world.

While you can protect yourself against inflation by investing in scarce assets (eg: Bitcoin and Gold), you're limited to what you earn in Fiat terms. After all, the world is stuck in the Fiat Standard. It's the unit of account used for everything. Wages aren't increasing as much as inflation rates are. People are earning less, and prices of goods and/or services are rising higher. Things will only get worse, my friend.

Nice comment Abiky, this need merit but I'm out of it. My country's debt profile is reading billions of dollars and now the government is doing all the they can do to pay it off so taxation is very high, and since the tax they are collecting from the manufacturers and duty tax at the boarders increase the prices of goods and services so the customers are the final bearers of the taxation.

Yes I agree with you, inflation is an agreed plan from both the government and the elites. Inflation started late last year in my country, and became on the peak in this year then the president of the country formed economic team to reduce inflation and appointed the richest man in Africa as the leader of the team and other economic elites, guys inflation is increasing the more. The poor are crying and the rich is laughing. And because of that the poor can't afford good food to eat again so cholera pandemic breakout in the country and killing people everyday. Yesterday, Lagos state in Nigeria recorded 21 dead.

[serjent05]

In the world today with the bad leadership we have, inflation is not something that comes once or twice in the history of a country but it is part and parcel of human existence. In the inflation in this year in Africa is so much high that increasing the crime rate in the world. Everything in the world now is cost. Example. Car. Vehicles that were sold at the rate d $3,000 as of 2019 now it is sold as $10,000.

And the thing that shocked.me.mosy is the Petroleum. Petroleum that was sold as $0.068 now has $1.5 in my location per litre. There are two major people that causing this bad leadership in Africa. The electoral body and the judiciary. These are the problem in Africa leadership.

Inflation came when countries started backing their currencies with debt. They wanted to have the ability to print money out of thin air and steer the economy to their own direction. It's now central banks' (and the Elites') game. And there's nothing we can do about itt. The rich will get richer, and the poor, poorer. This won't change anytime soon. Not even Bitcoin will save the world.

While you can protect yourself against inflation by investing in scarce assets (eg: Bitcoin and Gold), you're limited to what you earn in Fiat terms. After all, the world is stuck in the Fiat Standard. It's the unit of account used for everything. Wages aren't increasing as much as inflation rates are. People are earning less, and prices of goods and/or services are rising higher. Things will only get worse, my friend.

I got curious on why we are blaming the government for inflation so I made a short search about the cause of inflation and it gives me these three factors:

demand pull -

As their names suggest, ‘demand-pull inflation’ is caused by developments on the demand side of the economy,

cost-push pull -

cost-push inflation’ is caused by the effect of higher input costs on the supply side of the economy

inflation expectation -

that is, what households and businesses think will happen to prices in the future can influence actual prices in the future

We can read the detail explanation in this link[1]

Despite of the bad view on inflation, it is said that inflation has a positive effect which is stated in this article[2]
To list the good effect of inflation:
1. Inflation aggregates demand
2. Inflation helps increase production
3. Some inflation was necessary to prevent the Paradox of Thrift[3]
4. It is also believed that inflation can help reduce unemployment
5. Benefits to Borrowers[4]
6. Better Investment Returns since investors and entrepreneurs receive incentives for investing in productive activities[4]
7. Shareholders can earn a good income since companies book more profits and tend to share it with their shareholders via dividends[4]

In short controlled inflation can help stabilize an economy so whether we like it or not inflation is necessary for the economy to move forward.


[1] https://www.rba.gov.au/education/resources/explainers/causes-of-inflation.html
[2] https://www.investopedia.com/ask/answers/111414/how-can-inflation-be-good-economy.asp
[3] https://www.investopedia.com/terms/p/paradox-of-thrift.asp
[4] https://www.toppr.com/guides/fundamentals-of-economics-and-management/money/impacts-of-inflation