don’t be afraid of inflation

[sleepfirefly]

many hear inflation rates rising and immediately jump to the conclusion that it’s bad but what people don’t understand is that inflation can actually be good for a nation. here’s why:

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

it’s important to note that inflation is only harmful depending on its level and the reason why. if the salaries of the people are not increasing alongside the prices of goods at the same time then it’s bad. on the other hand, deflation is actually worse than inflation. deflation is when there’s too much supply but not much demand here’s why it’s worse:

1. deflation discourages spending
- people wait for prices to fall instead of buying today

2. businesses, employees, etc earn less
- since people won’t buy their goods, they are forced to make things cheaper just to make some kind of profit but still not enough to actually cover capital

so. to understand simply:

inflation: GOOD

hyperinflation: BAD

deflation: WORSE

[Charles-Tim]

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

Are you sure? I can mention many coins that was created more than 5 years ago, they got to all-time high, fall and not get to all-time high again till today.

Only few coins like bitcoin are store of value. Most coins are pump and dump if not dump and dump.

Inflation is not something I can encourage, the world was not like that before until the government started to created fiat which they regulate its price themselves. It is never going up but going down.

[Alpha Marine]

it’s important to note that inflation is only harmful depending on its level and the reason why. if the salaries of the people are not increasing alongside the prices of goods at the same time then it’s bad. on the other hand, deflation is actually worse than inflation.

This is not entirely true. Even if your salary increases when inflation is too high, you won't have any purchasing power. In this case, your quality of life is not increasing even though your income is increasing. The same things you cannot afford when you were earning $1k, you won't be able to afford them when you earn $1500, because the price has increased, thereby making your purchasing power remain the same or even reduce it, depending on how high the inflation level is.

Any inflation that is higher than 2% year is not ideal. Inflation should stay within this rate to make sure the economy is growing, and people are making enough to afford things even when they increase by a few dollars.

[Hewlet]

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

This does not make inflation a good thing even with this analogy. it is just that we are getting used to quick adaptation to things that is the reason why when inflation hits, it becomes an easy option that we have to find a way of dealing with it. even if you are afraid of inflation or not when it comes, you have to find a way of dealing with it and that means that  the need not to hold your money for too long and also double your hustle so as to meet up with the pressing challenges will still become a core necessity.

[Uhde]

i live in a country where the announced inflation rate is 48.7 but the real inflation is around 100%  . And believe me, inflation is a really shitty thing.
Everything has become so expensive that almost all the people are poor now. Only a very small minority is extremely rich. Also our government keeps the foreign currency artificially low. because of this country has become very expensive in terms of dollars as well.

[tabas]

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

I think it's with both sides, people also don't want to spend that much because they know things are more expensive. On a case of having that much inflation, that's hyperinflation and people would assume that if it's expensive today, next week is going to be more expensive. There are few countries that are experiencing that and so, I think that it's more of the bad side and people would still like to save more while they can and in plain cash if they can. What people makes spend more is if the economy is good because they know that the value of their money is high and they're not problematic of inflation if it's slow.

[Lamtel]

inflation: GOOD

hyperinflation: BAD

deflation: WORSE

Are you been serious OP, I choose to disagree with you on this, what is the essence of the inflation when the citizens or the final consumers cannot afford things for themselves and their families. No country should pray for inflation, take country A for instance, where the citizens cannot afford some of the things they need because of inflation don't you think it will eventually escalate to increased in crimes and frustration due to the quest of them meeting up their demands and basic needs.
If you should observe the nature and kind of inflation such as galloping and stag inflation then you will get to a new conclusion that inflation is actually bad. I think the better way is for the price of stocks and commodities to be standard and stabilized.

[d5000]

I agree somewhat with that low inflation (~2%) is often demonized a bit too much in the Bitcoin community and in the traditional view it is better than deflation.

But there are catches and I would definitely disagree that deflation is worse than HYPERinflation!

The reason is here:

1. deflation discourages spending
- people wait for prices to fall instead of buying today

People have different types of necessities and different priorities.

They will never cease to buy their basic necessities. But they may delay spending of luxury items or everything else that has low priority for them in a deflation.

To what does this lead if a deflation lasts for a long time?

The answer is: To an economy where companies fulfilling basic needs are more successful than those trying to create some hype on a product nobody really needs but spend because "money will be worth less tomorrow".

We will thus still have innovation, but in sectors that matter and where real demand is located. And we will likely have to work less for a similar life standard (but without these "products nobody needs").

There would also be less financial bubbles. For example, real estate is expensive currently due to being used as a tool to hedge against inflation. Would not be necessary in a deflationary economy. Instead, the prices would reflect real demand for living and work space.

[Agathamay]

inflation: GOOD

hyperinflation: BAD

deflation: WORSE

You have givens some valid points from your point of view but the truth is that, no matter how you put inflation, it should still been seen as bad and that’s because, the moment the disadvantages starts outweighing the advantages then it is bad and vise versa. Should know that in most cases, when there’s inflation, salaries don’t automatically increase because the business might directly or indirectly also be suffering from the inflation.

[Fiatless]

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

This has led to a scarcity of some goods since people are rushing to buy goods that will be stocked for future use. After people stock their homes, demand for goods will drop in the future.

2. stocks, crypto, other assets will be rising

- since fiat is falling, people will seek other safer ways to hold their money

Bitcoin has proved to be a good hedge against inflation. But when inflation increases, the SEC might fail to cut interest rates. And from the current trend, interest rate cuts affect the price of cryptocurrencies in a good light.

[Josefjix]

The worst thing about inflation is when prices are increasing while salaries remain the same for longer time, that's the reasons most countries sees inflation as a killer of economy, it's certain that the price of goods and services won't remain the same like it had happened many years ago, but the inability for the government to put an increase in salary at every sector would absolutely suffocate the lives of the citizens.

This is exactly what is happening in my country, it takes lot of years and many signatory to approve the increase in salary request before implementation. It sucks

[Y3shot]

Inflation is something that will keep existing and their is nothing anyone can do about it. No need to be worried about it but the best thing to do is to prepare and know inflation is always at the corner. Despite the high rate of inflation their are people who are still making money and their business is still doing well. Such people understand what economy is all about and know how to sustain despite the serious economy. If you allow inflation to be your limitations you will never know how to be successful during serious inflation.  I know inflation is a serious challenge but it doesn't mean people should just fold hands and do nothing about inflation.

[ShowOff]

Inflation is something that will keep existing and their is nothing anyone can do about it. No need to be worried about it but the best thing to do is to prepare and know inflation is always at the corner. Despite the high rate of inflation their are people who are still making money and their business is still doing well. Such people understand what economy is all about and know how to sustain despite the serious economy. If you allow inflation to be your limitations you will never know how to be successful during serious inflation.  I know inflation is a serious challenge but it doesn't mean people should just fold hands and do nothing about inflation.

That's true, Only the government has control over regulating inflation, we have no choice but to adapt and make use of every available opportunity to generate profit. Simply put, this is the art of survival, we must be smart in managing our wealth so that it does not lose its value. Fiat currency cannot maintain its value for long, and that is the reality.

One wise solution is to invest in safe assets that carry minimal risk and provide long-term returns. Gold and real estate are among them, and I would also recommend considering investing in bitcoin. Inflation, hyperinflation, deflation have the potential to always occur, and perhaps no country can handle them perfectly.

[Spaceman1000$]

Economic stability is for the betterment of the economy, it allows for stable exchange rate, and purchasing powers of citizens is not be disturbed. Nothing beats a stable economy because investors are confident of their investment and return on investment, but inflation erodes the purchasing powers of citizens because in most cases employers of labor don't pay in accordance with minimum wage and workers are also underpaid in some economy, so inflation Will see these set of persons struggling and not meet up with their bills.

[Salahmu]

many hear inflation rates rising and immediately jump to the conclusion that it’s bad but what people don’t understand is that inflation can actually be good for a nation. here’s why:

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

There is no good thing from inflation if this is what we should expect, if it makes people to spend don't you no that the expensive nature will make the money not even worth much goods?. The impact in crypto is what I no might happen but it will only last for a while because if you have invested the amount you can, you might not have another money again to invest so it becomes only the one you had already put, so it still has a way to affect crypto again. How could inflation create a way you can settle your debts?, if there is time too difficult to return your debts is during inflation.

[Joy_learns_crypto]

inflation: GOOD

hyperinflation: BAD

deflation: WORSE

Inflation is not good, you made some point you think are right and makes inflation good but those point are already disputed and could be incorrect.
Inflation has it causes .
Inflation builds a resistant for people to an easy life.

easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

The value will be worth less from the time the debts was taken in an inflated market so will your profit on the loan be worthless, people take loan to make use of it for profit but the purchasing power will be less because of the inflation.

[Renampun]

Inflation is healthy, but if it is controlled, because with inflation it means there is an increase in demand for goods and services which indicates economic growth, but if it is not controlled the impact can be very bad, uncontrolled inflation can lead to a decrease in purchasing power, as the value of money erodes over time, and that can cause economic and even political chaos. as for deflation, this is also not a good condition, because the continuous decline in prices indicates weakening demand and it will cause the economic conditions to worsen because many businesses are laying off their employees, cutting production, etc. so what the government needs to achieve is healthy inflation which must be balanced with economic growth and people's salaries that increase proportionally.

[Alone055]

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

BS! What do you think people do in countries where is no inflation? Do they starve but don't buy anything? Forcing people to buy more only because of the fear that the price of those products will be higher is not a way to help the economy, it's disturbing the financial condition of individuals.

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

And how does that bring any benefits for the country where inflation is rising constantly? If the local currency is falling or losing value, the economy is getting worse, and I don't see how trading stocks or crypto will change that.

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

Can you explain this point? How will the loans will be worth less in the future if inflation is rising? If their currency is losing value, they will only have to pay higher in the future if they are taking loans.

[Fortify]

A real investor will already account for inflation increases within their portfolio - if you are invested into companies (most people will be indirectly through their pension contributions at least) then those companies are often raising their prices to match or even beat inflation. That softens the blow and means your money will keep up. It's only when you look at assets which do not rise with inflation, you should judge how much you're holding and whether their price will change enough to beat the effects of inflation. Ideally inflation maintains a stable rate and has in many developed countries, we almost became immune to it, so it's good that turbulent times wake us out of that steadiness or it becomes more of a shock later on and we wouldn't necessarily be prepared to adapt as quickly.

[Hispo]

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

That is not actually accurate, though.
Nobody would give a loan in order to lose their wealth to inflation, in reality people and banks which give loans, adjust their interest, so it will be always higher than inflation. That is specially true in economies which experiment high depreciation of their FiAT currency, here in Venezuela people and institutions don't even give loans in our local FiAT anymore, but in dollars and with an interest, so that point about debt needs more context and clarification.

If it was true that debts are better when living in inflationary economies, when the demand for money would be very high on those countries, which is not the case.