Linked Questions

3 votes
1 answer

Do we have an authoritative reason why inflation is bad?

We all know high inflation is bad. Bad things happen. However: Do we have an authoritative source explaining why inflation is bad and should be prevented? Has anyone pinpointed the main root cause or ...
0 votes
1 answer

Is is possible that two economies have the same real interest rate, same GDP growth, but different inflations?

This is just a conceptual thought experiment. Is it possible that two countries have the same real interest rate, same GDP growth, but different inflation, one higher, one lower? If that's possible, ...
0 votes
0 answers

Why is zero or negative inflation such a bad thing [duplicate]

Wikipedia states that inflation rate is In economics, inflation refers to a general progressive increase in prices of goods and services in an economy.[1] When the general price level rises, each ...
1 vote
1 answer

What is the rationale for setting a 2% target rate for inflation

I have what I think is a simple question, but just like 'how do you balance a checkbook' they don't teach it in school. The only similar question I found was this: Is there any scientific proof that 2%...
4 votes
5 answers

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 ...
4 votes
2 answers

Relation between budget deficit and inflation?

In Iran we have had a high inflation rate for several decades (usually above 20 percent). Some of the top economists of the country say that it is mainly because the government spending is ...
26 votes
4 answers

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 ...
5 votes
2 answers

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 ...
1 vote
1 answer

Why isn't high inflation along with robust welfare a 'good' system?

High inflation, by definition, means that the demand for goods and services is higher compared to the demand for currency. In other words, people are more willing to give up currency for goods and ...
1 vote
3 answers

Why is deflation bad for economy? [duplicate]

As now many people are talking about the inflation of US dollar on the account of the COVID-19 pandemic and the printing of trillions of US dollar bills, the price of decentralized cryptocurrencies ...
2 votes
2 answers

Why should prices come down (in theory) in an educated society with a well-run government?

In Chapter 1 of Robert Kiyosaki's "Rich Dad, Poor Dad", the rich dad says: "In an educated society with a well-run government, prices should actually come down". Is there any ...
1 vote
1 answer

How did the silver standard "insulate" China from the beginning of the Great Depression (1929-1931)

There is a segment from this article that I want to unpack: The Great Depression was a global crisis—almost. Every significant economy was devastated, with one notable exception: China. The reason ...
1 vote
1 answer

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 ...
6 votes
1 answer

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 ...
0 votes
5 answers

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 ...

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