Topic: Is Inflation Necessary - page 5. (Read 1373 times)

A high level of expenditure or inflation plays an important role in maintaining the economic growth or progress of any country. That is why after any type of disaster, the disaster-affected countries use inflation as a strategic objective to boost their economy. Incremental and limited price increases keep any business profitable because inflation prevents any buyer from waiting to buy at a lower price. So the economy of the country where the business institutions and companies gradually improve becomes stronger.

Not only every time there's a natural disaster. Actually, it happens yearly and for most, it happens monthly. The world is in interconnected to each other mostly to the countries that import their products.

But to those that have their own sustainable way of living and they don't need products outside their country then, they're the ones that likely won't get that much inflation.

Every country, affected or not by the covid-19 virus got their own rates of inflation.

Inflation has happened in almost every country. It usually happens after a natural disaster. Currently, most of the underdeveloped countries that have inflation are also affected by corona. The countries that could not recover from the shock of corona are now the victims of inflation. Moreover, countries that are dependent on other countries for various products and grain products are also affected by inflation very quickly. Because when the import of goods is stopped, the demand increases and when the supply is less, the price of goods increases and the money man decreases.

Inflation is a constant process that occurs in all countries of the world without exception. The only difference is that the inflation rate differs depending on the economic state of the country. In developed countries it is less, in developing countries it is more.

It is not the price of goods and services that increases, but the purchasing power of money that decreases. That is, the same unit of money can buy fewer goods and services. This would not happen if the amount of money in circulation were constant, but new money is printed almost every day, therefore, its value decreases.

Inflation is not a removable part of the modern world economy. Because only money has no limit to its creation.

Gold was used as a currency up to a certain point, but this prevented the world economy from developing more intensively (due to lending with unsecured money).

Governments have no alternatives other than the existing economic model.

There is such a thing as an "inflation tax", so in a sense, governments benefit from this situation (by making citizens' money cheaper and printing money out of thin air as much as they want).

Inflation may be something necessary with the way of operations and use of fiat currency and economy but i don't think its a good idea on the crypto currency network, with the use of inflation, government generate on how their interest rate increases as well and the market economy increases at the expense of the masses while the centralized government are making profits from the people and this bring about the devaluation of the worth of their currency they have in fiat, the whole of this doesn't applies with crypto.

When we hear about inflation, it seems to us that the economy of that country is weak. That's not the case at all. A country's exports increase during inflation. This creates additional demand and requires additional manpower. At that time employment opportunities were created for many unemployed people in the country which is a very good thing. The foreign exchange reserves of the country increase a lot through exports. However, low inflation can lead to economic recession and is more common in developing countries.

Inflation stinks. Your money is stolen by this invisible tax. It feels like you're trying hard to stay put. But inflation isn't that evil. It's part of the crazy economy. And no one person controls it. Globalization, supply and demand, and spending habits all factor in. Yes, stagnant wages are awful. It's much more complicated than government reform. What companies do with costs, foreign trade, etc. It causes this chain reaction beyond those in charge. So, don't get mad. Be smarter. Discover how this system works. No blame, just facts and links. We must master inflation's movements to win

Inflation is important and needed in the economy at a minimum rate but high inflation destroy the economy of the country. Imagine a country without inflation, that country would have a stabilized economy and nothing will be moving forward but stagnant. What happens when there's price stability, security will be granted and everyone will be relaxed which will not be healthy for the growth of the economy. Inflation encourage spending and that's way a little inflation is important. Without inflation, people will be saving instead of putting their money to work and helping the economy grow.


Exactly, if the currency was stable, saving will be the easiest way to wealth accumulation as it was in the days of gold but since the currency we're using isn't backed it becomes difficult to keep the currency stable. The government keeps printing new money knowing fully well it'll only lead to more inflation but they won't stop. They're creating a problem knowingly and they spend more money trying to resolve a problem that they know is irresolvable with the current currency system.

For me, I don't think so, it's just that I don't see how inflation can benefit any of us right? Raising the prices of goods is just the reason why stocks are a profitable thing, because without inflation, their market value would stay the same and they would have the same amount of money in terms of value with everyone and rich people don't want that to happen. Imagine if there's a fixed price on everything consumable, it would be a paradise for us normal working people because our salary would be enough to buy ourselves the basic needs that we desperately need during the times when inflation was non-existent. It might also be argued that inflation (if controlled) is a sign of economic growth in a country but the only reason that you'd want the country to grow is to gain influence over other countries, you've got more money means that you can buy more bigger favors.

Controlling inflation isn't an easy task and it can be really challenging even for the governments, you need to also understand that inflation isn't totally a bad thing because when inflation is moderate in a particular economy, it'll have positive effects on that economy because it'll encourage people to spend and also to invest too, because when prices are gradually rising in a moderate way, people would be forced to either spend their money or invest them to grow them rather than holding on to them. Money is meant to be circulated, so holding on to it would stop the circulation thereby leading to devaluation.

Yes, minimal inflation is also very unbearable for the marginal people of the country to live. But sometimes small interests have to be sacrificed for big interests. From that point of view, even if the inflationary policy is adopted to protect the economic stability of the country, its duration should be very short and it is very important to take necessary steps to transition from inflation quickly. But when a country is highly corrupt and the government does not care about the people, the rate of exchange rate increases and inflation becomes chronic.

Would love actually some in-depth discussion of this topic, because it's crucial to the question: how would a economy with Bitcoin as a leading world currency would look like?

Yep, that's the traditional Monetarist explanation supported by major schools of Economics. But is it correct?

@kryptqnick has mentioned the case of Japan, which has had often zero inflation or even deflation during long time stretches [1], and that despite of having invented the Quantitative Easing "money printing" method which is now used across the world. And they're doing quite well: while economic growth is not exorbitant the country is also not in a permanent depression, and is often seen as a technology leader. [2]

That brings us to the question: would a Bitcoin world currency, deflationary by nature, bring us to such an almost steady-state, low-growth economy like Japan?

By simple logic we could think that a deflationary economy could boost productivity and thus better incentives to increase wealth, because to make profits you can't rely on inflation as "helper" but instead need to be a "productivity leader" in your market. As consumers would not accept higher prices like in an inflationary economy (where companies often try to find creative ways to justify price increases) your only chance to compete is to reduce costs, and thus increase productivity and lower resource usage.

It's interesting that while we could thus imply that Japan's near-zero-inflation economy could lead to a high productivity  this is actually not true -- Japan has the lowest labour productivity of the G7 nations. [3]  There seems however also to be related to a rigid culture in some sectors like services, while manufacturing productivity seems to be growing at a good pace. [4] So this particular problem is perhaps not related to Japan's zero inflation rate.

I also found this interesting Investopedia article about deflation in Switzerland [5] with this conclusion:


So I can imagine that basically "good deflation" can happen in a "Bitcoin world" if the economic actors manage to keep productivity growing.

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[1] They had actually some years with moderate inflation rates, mostly below 1% but with a few peaks between 2-3%, but on the whole we can say that the average rate since ca. 1999 is close to zero, as you can see here.

[2] As you see here, Japan's economic growth is mostly positive - the average is in the low single digits but there were peaks of up to 9% as recently as 2009.

[3] See here for 2020 data.

[4] See [https://medium.com/@kiyoshimatsumoto/japans-low-economic-productivity-1e41d1f7ca29]here[/url].

[5] See Can Deflation be good?

Inflation is needed in the economy because there is an increase in the economy, although it is not good, inflation is really needed, but the inflation rate should not be too high which is not good, it must be at a stable number to be called good, with inflation stabilizing the economy when prices are no longer reasonable, Sometimes inflation is evil when the numbers start to rise too high, making the economy unstable.

However, what is unfortunate is that in lower middle class society, when the inflation rate rises too high, it will make people scream. With high inflation, the prices of basic necessities are unstable and will also rise, therefore the inflation rate must be stable so that people do not scream about all goods going up, because they are low economic communities below average.

Yes I believe that life or health of anything needs ups and downs like blood circulation for survival. In order to normalize the economic situation of any country the value of money is sometimes increased and sometimes reduced. Again to maintain the economic condition of the country, the reserve of the country has to be controlled, in view of which the currency value of the country is increased or decreased. Inflation can also be a necessary step to maintain the flow of goods and services within the country.

To me inflation is a negative word so I consider it to be harmful. But in other hand we were thought in school that a creeping  inflation can help drive economic growth.

The soul aim of inflation is decreasing purchasing power or devaluation of it currency in relation to price of goods which make is hard for the common man to survive.

A times the government manipulate the economy inflation to keep the people in poverty, for instance, a government worker might be earning #50,000 and the cost of his living is #40,000 the day the government increase his salary to #70,000 you'll see that his cost of living will increase to #60,000 immediately and i began to wonder while the value of money remains the same but it purchasing power fall drastically.
So I don't really think inflation is necessary, because it is a big disadvantage to the common man.

That depends on each item, there are still some goods whose prices have skyrocketed, not because money is devalued, but because the gap between supply and demand is too large. The gap between supply and demand is also the cause of rising commodity prices, don't just blame the currency for losing value every time commodity prices increase.

Investing is better than depositing money in the bank, but not everyone likes that because there is no guarantee that the investment will definitely bring profits. Storing money in the bank for a short period of time is not a bad thing because it can help us handle emergencies or when our investments lose money.

The government may be trying hard to control inflation but it will not be possible. Inflation can have both positive and negative effects on economic growth a moderate level of inflation can encourage spending and investment as people are more inclined to use or invest their money rather than hold it. High or unpredictable inflation can lead to economic instability and reduced consumer confidence which can hamper growth. Ultimately balancing inflation is important for sustained economic growth.

Exactly! This has always been the misconception that a lot of people thought It was the product and goods were becoming expensive due to several factors with the leading cause as the inflation.
There were actually this so called healthy inflation that encourages people to invest their money rather than keeping it in a bank. It will also bring positive impact to the economy that could benefit people from all different sector. However, what we usually experience of todays are nothing but hyperinflation, which means too much inflation causing our fiat value losing it's purchasing power rapidly that we never felt it was beneficial to the economy but it'll only bring chaos to our financial stability.

You might perceive it that way because the money is used to purchase goods and you feel like the goods are becoming more expensive when in reality it’s the value of the currency that is decreasing. Its purchasing power is lowering which means we can buy lesser stuff with it.

Since money is devalued, economic activity is not driven since investors or just people in general aren’t interested in any kind of economic activity.

The hike in the inflation rates started to go up more from the time of COVID-19 Well the answer to your question is that dear saving is fiat one should save his/her amount in the form of assets there your savings will return you profits instead of decreasing value of your savings Although we all have seen some people stick to save till the long time so that he/she can use his money in the age when they gets old so what happens that saved fiat money loses its value and in results they would not be able to enjoy their savings.

That is why I think one should save his/her amount in the form of Assets, these assets can be land, these assets can be gold, Digital currencies, or whatever idea one has... One should implement/adopt a good idea so that they can make a good amount of money at the end of the day when needed.