Linked Questions

1
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1answer
80 views

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
5answers
2k 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 ...
4
votes
2answers
142 views

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
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 ...
5
votes
2answers
12k 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 ...
0
votes
1answer
82 views

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
3answers
126 views

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
2answers
177 views

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
1answer
72 views

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
1answer
80 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 ...
6
votes
1answer
1k 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 ...
0
votes
5answers
907 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
1answer
144 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 ...
2
votes
1answer
344 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 ...
0
votes
1answer
526 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 ...

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