Linked Questions

3
votes
2answers
1k views

Why is modest inflation a good thing? [duplicate]

I have been reading a BBC news article about inflation in the UK, which is saying that inflation has recently become negative (http://www.bbc.co.uk/news/business-33147660). The article suggests that ...
1
vote
3answers
671 views

Basic Reason of Why the Money Supply Needs to Increase? [duplicate]

Hello, all. So I am trying to gain a thorough understanding of why the Fed, or any other Central Bank, needs to keep pumping money into the economy as it grows. My question is not asking why ...
0
votes
1answer
468 views

Why do central banks print money? [duplicate]

If a country's central bank prints money, it causes inflation. However, apparently, small amounts of inflation is a good thing. Why is the case? What would happen if central banks stopped printing ...
2
votes
1answer
313 views

Deflation and positive real interest rate [duplicate]

Economists say that deflation leads people to postpone their consumption because it increases the value of their money and gives them the ability to consume more in the future. But if a consumer saves ...
1
vote
1answer
97 views

Why is an inflation rate of 2% optimal? [duplicate]

Learning from different sources I got the impression that the European Central Bank targets at a inflation rate of 2% (not sure along which time scale actually). Can it be explained by general ...
0
votes
1answer
147 views

Inflation vs Deflation [duplicate]

Why is in flation preferable to deflation? I appreciate this is largely due to the fact that deflation causes a large decrease in demand as people continually wait for prices to decrease, but if ...
1
vote
1answer
82 views

Is inflation good? [duplicate]

I was reading that the Spanish received so much gold from their occupation of the Americas, that they had a steep rise in inflation. This caused a rapid increase in investment, as the rich felt that ...
0
votes
1answer
71 views

Why, in general, do product or service prices rise in time? [duplicate]

My question is simple: Why is it, in general, that the prices of products or services (regardless of demand and supply) are always on the rise in western society? For example, the rent we pay ...
24
votes
4answers
7k views

Could eliminating all taxes and only creating new money theoretically work?

Imagine you had the opportunity to found a new country from scratch (in 2020). Value exchange would be digital, where only the state can create new currency units. Instead of relying on income tax ...
4
votes
4answers
1k views

Gold coins as currency?

My question is about gold standard. But not the version I always see mentioned (trading bills for gold at a set price). I mean having gold coins in circulation. For example, new currency consists ...
6
votes
1answer
972 views

What are the consequences of deflation in Japan?

Most of the literature I can find about deflation in Japan takes for granted that deflation is bad for the country. I can also find a lot of literature on why deflation is bad in theory. Is there any ...
2
votes
2answers
425 views

Does Dogecoin or Bitcoin have a more appropriate rate of monetary inflation?

The supply of new Bitcoins and Dogecoins is depicted in the graph below. The Bitcoin inflation rate is currently higher than the Dogecoin rate, but it reduces sharply to a rate close to zero. It ...
3
votes
2answers
498 views

Why is wage-induced inflation a bad thing?

More than once, I have heard on the news how the US Federal Reserve would raise interest rates to counter the risk of inflation, even when they indicate that the potential inflation would be caused by ...
0
votes
5answers
776 views

What is the point of a constant (thus known) inflation rate?

I have read somewhere (attributed to Milton Friedman) that a good practice of monetary policy is to maintain a constant inflation rate (of 3% per annum, say). What is the point of that? If everyone ...
2
votes
3answers
755 views

Why is it that the “right” inflation is positive? [duplicate]

I have read in several places that inflation should be positive, at about 2%-3%. The most recent example was in this answer from another stack exchange site. How is this value obtained and under what ...

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