Topic: Is Inflation Necessary (Read 564 times)

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.

I think you got the highlighted one wrong. Inflation primarily affects the value of money. The goods are going to be the same but the money wouldn’t. Which explains why you’ll have to pay more money to purchase the same goods or you pay the same money but get fewer goods. Outside the government, the other thing I know to cause inflation would be a global economic crisis. For instance COVID did affect a lot of things. But it is mainly the government, so it isn’t as if they are wrongly accused. Lastly, what Bitcoin has is volatility, there’s a difference from inflation.

People who tout the gold standard simply don't understand it. It had a purpose and fulfilled that purpose at one point in history, a time when things were much simpler than they are now. However it would be unfit for that purpose today because there is too much transaction activity. It's the same problem with bitcoin - it can fill a niche, but is not a direct competitor to things like credit card transaction networks that can keep track of much higher volumes of activity in a much more efficient way. It's nice having a decentralized currency but it is restricted in certain ways.

Inflation may not be necessary but it inevitable, countries have gone through inflation, some are still on it and that's it, you just just defined inflation in your own way which is also applicable, inflation happen most times because of the inability of countries to produce in large quantity of what they can consume, this triggers this countries to go for importation of those items that they dont have, the effect of this their act to their currency will result to inflation.
What makes a country currency to lose value is because of the dependent of that country on other nations for survival, sufficient production should be the major priority of every nation that want to lessen inflation, different country currency can not be at the same level because these countries are not in the same level I terms of wealth, knowledge and what they call offer to the global society.

What you find hard to understand is that inflation doesn't affect the money but affects the goods, so blaming the government is not the right thing to do. because inflation can be useful and, at the same time, might be useless. because inflation is just for the purpose of increasing the economy of a country, while at the same time, if it doesn't work well, it will affect the economy of the country, so the maintenance of the inflation depends on the central bank of the country, so the government is not to be at fault at this.
 
Again, comparing bitcoin and banks is not the solution. Because even bitcoin has its own inflation, people find it hard to understand. because if it dumps and rises again, many will have the wish to invest more in it, so inflation is a source of scarcity that will arouse the interest of many other people to join in and benefit from.

This inflation is out of control and a sign of bad economic policies. Market intervention by the government? Maybe try to stop the tide. Bitcoin is more than internet money; it's a new currency paradigm. No banks, no dirty politicians in charge. It's limited, so they can't print more whenever they want. Its value comes from that, not government promises.

Dependent on foreign currency? A temporary repair, not a solution. Bitcoin is truly revolutionary because it redefines money and how it operates. The shift to digital money? That's inevitable, but we must do it well. Using Bitcoin isn't a fad; it's about avoiding the same bad practices in a new digital format. We need genuine financial power to determine the value of our money, not Bitcoin vs. banks.

The problem is the fact that it is physical cash but is that it is continuously being printed. If there was a fixed amount that was printed once and for all (of course that’s not possible as paper money is prone to destruction), it wouldn’t reduce in value. Also, if Bitcoin could magically start increasing in total supply, irrespective of it being cashless and digital, it’ll reduce in value.

Inflation can not be decided by people circumstances make inflation happen and with the carelessness of our government. And it is even getting worst to maintain the value of a currency. It's dependency does not is not in out power and in a free market even the government find it difficult to make certain decisions. And the printing of money excessively have made some countries lose there value in term of currency.

The more the scarcity of money the more value it gets and if not that some countries are really on other currencies in there foreign reserve then it would have been worst. Bitcoin would have been the best and the solution to devaluation of currency. And instead of printing countries should adopt cashless policies, and those are part of trying to maintain the value of currency.

I also agree with you. The way to stop inflation is to abandon fiat and replace it with gold or bitcoin because fiat can be printed whenever they want. Now inflation will increase as time goes by and we as a society cannot only improve our finances in the same way but we must also look for ways to get better finances. because inflation in the future is likely to get bigger, we could be lied to so we have to be more alert and smart in managing our finances.

What I have observed is that humans are now truly modern slaves and today's children are finding it increasingly difficult to have a home. Many people save but are not rich. It felt like being completely fooled. Behind inflation there is a mafia who uses it to enrich themselves, including the country.

The impact on the lower classes and ordinary people is truly extraordinary if inflation hits a country. In my opinion, what small and medium communities have to do is generate additional income so that we don't fall when inflation comes. Yes, because the system has been moved or changed from gold to fiat, and fiat is no longer backed up with gold. This is where this game started in 1971, played by Nixon, who was controlled by the elite family there. Since it was legalized in the Nixon era, money printing has continued and this means that every money printed will produce double the dollar, this is what causes inflation. So even though the dollar is exposed to inflation, the dollar remains strong because it is a currency that pays credit through foreign debt.

Inflation being "needed" is about 2 percent or so, not 10 or more. There were a lot of nations, even as strong as USA who had super high inflation compared to past, and that wasn't what they needed. Don't get me wrong, if you have a nation with 2% inflation and 3% interest or investment whatever, it is a small and steady growth that they will be very happy about and if a nation can do that for like 50 years, that nation will become one of the richest nations in the world and best to live in.

You have to be in Zimbabwe or something to not be a great nation with that type of consistent good growth for 50 years. But if you look around, you will see that during pandemic period most nations had about 10%+ inflation rate for a very long time and that is the biggest problem in the world.

yep it would be great to escape it. but we as citizens cant exactly request those governing us to change. they own and control and set the limits of the monetary system we are slaves to and our 4-year vote doesnt really give us much voice over change.. just a 4 year vote on the management people that manage us

The biggest reason behind inflation in many countries is the baking system that was developed on the basis on interest back in the history by Jews. This system is such a thing that the world bank and IMF will get benefit from it but the people and the deprived ones will face the repercussions.

We need to get out of this system that's the only solution we can propose to the inflation we are facing. If we continue to live under these situations we will never get the benefit of living a wealthy and healthy life.

nooo
your getting your chickens and eggs in the wrong order..
look at the topic question
i gave an example of it being necessary(when its controlled)

the separate question of excessive inflation is when its not necessary(not helpful, not beneficial, not needed)

the printing of money does not happen at the same time as the population growth so there is always an over supply of money before it trickles out to the population need. and peoples needs expand as technology and products get invented. so the amount of money needed expands
(its cyclical)

in a controlled system these increases would be small. .. but still necessary

EG markets will compete for peoples money and markets then need to pay people for the work so they can then spend to consume those products
(everyone always want more in the fiat system)

(chicken)
EG a couple about to have a kid know their household income would need to increase so they need a pay rise. getting a pay rise incurs extra costs on their employer.. which means although parent is less productive than their younger selves(age slows people down) their income:productivity rate changes where they need more income for less production

 so their employer needs to raise price of goods before the families child grows up to become an independent productive member of society, earning their own income and consuming from that separate from the parent,
so for many years of adolescence. the parents will need more income for each parent. meaning each parents employer will need to pay each parent more which means the price of goods goes up but the productivity does not
and with more money needed in these child developing years(population growth) there is a need for more money in society until the child becomes a productive member of society to then circulate the money increase to stabilise the inflation..

but with that years later(egg)
EG the amount of money a young single adult needs to live on whilst living in parents house with no kids of their own is less for the young adults than the amount a middle-aged parents needs who has a family where parents income needs to be higher to cater to his growing family,

by which time the cycle starts again with the young adult then starting a family

do you now see the whole picture...

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yes in a different universe that was not FIAT based.. inflation is not needed and we would live in a deflationary system where each year our average savings/income would be worth more produce per unit, so would spend less units per product..

but the reality of the real world we actually live in, of the real world systems of fiat which does exist outside of our dreams/outside the crypto communities.. inflation is needed to keep the fiat system running.
we as individuals do not own the fiat system, we are the slaves to it. but its the system that is most active amongst populations so we have to admit its existence and relevance to the greater population utility

we may not like being slaves to the fiat system, hence things like bitcoin are an genius asset that was created for those who want something better. but bitcoin is not the system used by the legal systems and government of the lands we live on
and in the world of admitting fiat exists and is used by the majority, that fiat system needs inflation to operate. however the amount of inflation can change from good(necessary) to bad depending on the amount of inflation

the fiat system would crash if it was 0% inflation and humans would notice financial issues affecting their lives if it was 0%

That would justify circulating supply but NOT the inflation. Inflation happens when there is more supply (of fiat) than demand and it only happens when they print more money than they should. Otherwise population growth is only a small contributing factor to the demand for more fiat in circulation (still not for inflation).

in several countries in the world, there are some who have managed to maintain their inflation rate and even make it minus, but the problem is that when inflation becomes minus it will become deflation which will affect the price of goods which will decrease and that makes many people lose money and delay their purchases. this will also affect domestic investment, because the decline in a company's income will make investors think about investing in that country. and many other risks if inflation does not occur.

therefore, inflation needs to exist in a country, but positive inflation, for example 1 or 2 percent a year. with this, it will be able to keep the country's economy from declining and impacting many national sectors.

It's not good at all,it just sweeps us all from all our plans leaving us with no other option but been helpless.Just so unfair to us,and its inevitable,iit just comes from nowhere and strikes someone so hard with damages and repairs.
Inflation as economists have it,triggers more production to meet that demand;as they say it does.Some economist also pointed out that
Inflation plays a better role to the economy than the effects of its counterpart 'deflation'.
We're all in this together and it seems there's no solution yet for inflation,its a really hard method and economical system for people to survive.

Are you sure and can you explain better how things would work by simply using assets with limited supply like gold or bitcoin as currency, inflation would disappear completely? And as I know, or you can also refer to @Zaguru12's explanation of inflation mentioned above, inflation is not only caused by the government printing money but there are many causes of inflation.

So what solution can you offer for the sudden increase in goods due to the large gap between supply and demand? Because this is also the reason that will cause commodity prices to increase and inflation will also start from there. Don't blame fiat or governments when we don't even understand how this world economy works.

Inflation is not optional where you can choose or not choose it based on its necessity. The reason why we can’t keep the currency at the same value is that we can’t. How do you keep printing money and expect it to maintain its value? Imagine if Bitcoin wasn’t capped at 21M, do you think it wouldn’t be reducing in value? It definitely wouldn’t go as far as it did. A cup of coffee will someday be sold for $20. Why? They keep printing money and making it worth less (not worthless )

Gold goes through inflation too, as every bit of gold that is mined is gold that was not on circulation before, and the same is true for bitcoin, as new bitcoin gets mined every single day, it is just that when it comes to gold or bitcoin there are some natural or artificial limits set in place which do not allow for the inflation to be very high, however no such thing exist in fiat, which allows central banks to print as much money as they want and then cause the massive amounts of inflation we have seen in some countries over the previous decades.

Inflation is inevitable for sure and probably necessary but high inflation I think is surely going to be a problem when the economy cannot keep up anymore with the inflation. Its a part of the system already and there was nothing we could do to remove inflation because its already part of the fiat system, with the right increase in inflation I think it is going to be manageable with the growing economy of a country, but the problem for sure is the government can just print and print money whenever they wanted do leaving this whole fiat system to a whole pyramid scheme if your gonna ask me, we are working full-time jobs just to earn money, then just ended up with this kind of system is just unfair to everyone.

Still, the main point is there was nothing that we could do about it, the only thing we could do was to adjust to it, The main advice here is to invest your money in order to fight inflation, one of the common things that we advise for sure is investing on Bitcoin, because of the decentralized structure of it, with a limited supply it's the complete opposite of what a fiat money is. Or else put it on other investments like real estate, passive incomes, businesses, etc. main point is don't hold much fiat money because its decreases its value overtime.

The only way to stop inflation is if we can abolish the use of paper money and return to something real and valuable like gold or Bitcoin. Inflation simply exposes the weakness of paper money and will always happen as long as fiat is in operation because the governments will keep printing unlimited quantity of fiat whose value will diminish over time. Government might device different terms as the causes of inflation but the reality is that inflation is inherent in the fiat system, therefore we can say it is compulsory.

Low inflation is necessary because it makes the economy move. Just like the earlier reply stated, without inflation the economy will become stagnant. Low inflation can make a country more stable because they can take advantage of the positive impact such as:


High inflation is not necessary because it can destroy the economy of a country and forces the government to print more money due to the shortage of resources to pay for the ever-increasing price of the material for government projects.  Even though this high inflation is not necessary, it often occurs due to lax monetary policy[1].

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[1] https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Inflation

Among every other factor that contributes to inflation growth, I strongly believe overprinting of money by CBN increases the supply in the market, and when the supply in the market is too high, it will in turn decrease the value of the money that is in circulation, and purchasing power will reduce.
 
One of the things I believe contributes to the high inflation we are facing in the world economy today is the nonstop printing of local currency by the various central banks of each country. They are gradually devaluing the currency through that action.
 
When the currency in the market is higher than what the citizens demand, it will only result in a high price of goods, which means using more money to buy goods you could get with less currency before due to the low value each of those currencies possesses.

In my opinion, yes. Because inflation is the government's way of taking our money, because with every inflation our money decreases in value. As long as there are countries or anything that owes money to the IMF/World Bank, inflation will continue to exist until it reaches its worst point, now the debt of all countries in the world is very large and impossible to pay off.

The situation will improve if the world bank will forgive the debts of all countries or there will be a major reset and maybe there will be a new currency that replaces paper money. The whole world has been trapped in this chaotic system and will not be able to get out, and some of the rich people in this world are just a speck of dust compared to the people behind this system, because they can create a future world crisis in just a matter of hours which results in inflation.

Inflation will always be their as far as a country depends on other countries in one way or the other.  Their will be nothing like inflation if every have everything and nothing like trading with other countries. Even if your country is a country that has everything you still need to trade the products that your country has and completion in the market can also lead to inflation too. Their are so many factors that the cause of inflation.  I think inflation is part of humanity that we can't do without.  Every country having a different economy is also a reason why inflation exist.

Almost every country experiences inflation at some time then later on they bounce back but it mostly happens to countries that have good economic system just that at some point due to mismanagement of the country's Treasury by a particular government and continuous importation of foreign products may lead to inflation because as they are patronizing foreign products that's how they are giving more value to that country's currency. Just like the question you asked, it has always been the problem because sometimes a country's currency depreciates and also appreciates can't this currencies just be at a stabilize value? This is the more reason why we should embrace Bitcoin because it will be the end to inflation.

I think this is the best definition given in this thread so far! As someone who has studied economics and the principles of inflation, I can confirm that a minor increase of 1% to 2% per year is healthy and contributes to the economy, showing signs of growth.

People, including the OP in this case, are often portraying inflation as something negative; this is true when it gets out of hand. The economy became stagnant during COVID-19 due to quarantine measures and was then abruptly met with increasing energy prices that occurred before the Ukrainian-RRussian war broke out. It quickly became a vicious cycle, and inflation has now tremendously increased while salaries have seen no major improvement.

In a normal world I don't think we can say it's necessary...

Otherwise you know how they say one man's food is another man's poison...I guess the same theory can apply here because when consumer's are complaining about how money has lost its value, the manufacturer and merchants here will be the main beneficiaries as even the old stock that was valued for less will gain without any value addition which shows there is a winner in this after all.

I look more at the smallest object, inflations makes many people whose economy is the lower middle class suffer, especially those who live a day of work only enough for a day's needs even if it goes well. But from their point of view business people are good and inflation drives economic growth in normal quotes.

About why it should go to fiat instead of gold, I think in naming and instrument, it is different, especially if we look at the value factor and why it often happens, only one reason they always convey to the public, maintain price stability and achieve balanced economic growth and the government always wins.

Inflation being important is more of a hypothesis, from what I understand, and it's based on the idea that a gradual loss of value of fiat is supposed to motivate people to spend it instead of hoarding it. Too much inflation, is of course, a bad thing, because it often means that your purchasing power gets lower. Major growth in value, I believe, can also be a bad thing, because, as we see with Bitcoin, when something's growing, people treat it more as an asset than as a currency.
But I think that zero inflation should be okay, as well as minor annual deflation. I mean, Japan has been doing pretty well with decades of mild deflation.

Creating inflation is like opening a Pandora box that is non stop and I agree with you that it stimulate spendings, economic growth, prevent stagnation but I disagree with you that it creates healthy and stable economy.

It has opposite effects and negative ones are creating chaos in their economy and many banks, companies can collapse as consequence of inflation and policy changes from governments and central banks. If inflation is helpful for a healthy and stable economy, no one will worry and be fearful about inflation.

Inflation is necessary to maintain a healthy & stable economy. It encourages spending & investment by reducing the value of money over time. This stimulates economic growth & prevents stagnation. Inflation also allows for adjustments in wages & prices ensuring that they remain in line with changing market conditions. A moderate level of inflation can help to reduce the burden of debt & encourage borrowing which can be beneficial for individuals & businesses. Excessive inflation though can be detrimental leading to uncertainty & erosion of purchasing power. It’s important to strike a balance & maintain controlled inflation. We are here on a Bitcoin forum though, we know the antidote for inflation & loss of purchasing power, i.e. buy Bitcoin.

There is one common and agreeable necessity of inflation in the economy. By simple explanation, inflation is when the value of money is lesser than the cost of product and that can lead to increase in demand. Therefore, one benefit of inflation is that it can lead to increase in production if properly planned and that means there should be employment because of the production and manufacturing purposes.

Another benefit is that it can be used to control the circulation of money in the system. An economy that is experiencing inflation means they have low value of money in the system or the money is not used irrationally as everyone goes to money management.

you got things completely the wrong way round

populations grow first and naturally so
this then causes demand which needs a supply to meet demand (even before productivity)
good inflation would stay at 2% IF money printing matched population growth and its economic productivity rate

however when they aimlessly over print more than the rate of population+REAL productivity.. that then makes businesses see an influx of too much cash so they raise their price and thats when inflation turns bad

I don't naturally see this as result of government trying to mortgage it's citizens or control citizens with the use of inflation but as long as demand and supply remains inflation must be unquantifiable situation, the facts remain that the more the government introduce or adopt New currency as legal tender the more it create some issue value fall if the the current currency previously adopted.

The explanation is very good and very convincing. Most people just blame the government and think it's because they print money uncontrollably. Most people just blame the government and think that the reason is because they print money in an uncontrolled way, but what people don't know is that with rapid population growth as well as balancing supply and demand, something that is almost impossible to control. This will also cause inflation, not the main cause being the Government printing money indiscriminately. The world population is up to 8 billion people, each country has different economic policies, so inflation is unavoidable.

The actual reason for inflation is when government prints more money so the purchasing power of your fiat depletes thus resulting in value of goods and services increase. Rich people says inflation is good because they're the one borrow the most and when inflation hits harder it gives opportunity for them to pay the debt easier.

We moved from gold based monetary system a long way back and there is no point of comparing it now.

The richest countries around the world have the biggest national debts. They have to print more money(dollars, euro, etc.) to pay their debts.
Imagine what will happen if the richest countries stop with the money printing and they don't have enough money to pay their debts.
A global default would most likely put and end to inflation, but it will cause a new Great Depression, with massive waves of companies and banks going bankrupt and millions of people losing their jobs. With that being said, I think that inflation has become kinda necessary for the rich countries.

Saying inflation is a manipulation from the government is not entirely true. In a free market, demand and supply determines price. If the demand is high, the price will increase. Also the cost of production also determines the price.

Inflation is not totally a bad thing, it's when the inflation becomes too much that becomes a problem. It doesn't totally mean the value of the currency becomes useless. Inflation becomes a problem when the rate of inflation is high within a period. For example, if inflation in a country increases by 3% within a year it becomes a problem, but if it increases by 3% within 5 years then it can be favourable for the economy.

When there's a 2-3% inflation in 5 years, it beneficial to the economy in the sense that the producer's profit will increase. This can also affect the investment returns of investors because their returns will increase.
There will also be higher production and to do that businesses may need more employees which would then improve employment.

The lack of inflation in Japan was a problem (don't know if it still is). I read a report sometime that people wouldn't buy a product if there was a $2 increase in Japan and this took its toll on the economy.

No matter if we want it or not, inflation will be there. You should not question if it's necessary or not. Haven't you heard about countries like Zimbabwe and the worst decisions of their country? Their Prime minister thought they would print money they will pay the debt to all the countries and build the country by printing money. A county must follow some rules when they print money. They have to think about their foreign reserves as well. It depends on many other things that I am not aware of.

They say inflation is a good thing because the more people believe it, the more money they i.e. government can earn.

Banks makes money from lending, custodian and fees, they need to print new money in order their lending service can work. In other hands, they offer custodian service i.e. savings, many people think they can get benefit over banks protect their money and they will earn from that small % APY. But actually the inflation rate is way more higher than the interest rate, which make them in loss instead of profit.

So, either you ask a loan or save your money, you're in loss.

If inflation does not happen, then the economy will actually spiral even more. Inflation even though seen as something always negative can actually be used to stimulate economic growth. We can’t keep the value of money the same because prices of goods increase due to many different factors.


That is because of the difference in supply. Gold is limited even though we don’t know how much of it is left out there compared to money where we can easily print out a few or more.

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.

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.

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.


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.

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.

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.

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

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

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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?