Re: Could Someone Please Explain the Money Supply?
[ QUOTE ]
[ QUOTE ]
But remember, inflation applies to prices and wages. So a little inflation is a good thing, but too much is a very bad thing.
[/ QUOTE ]
No amount of inflation is ever a good thing. Inflation only doesn't affect you if you spend your wages immediately, or get paid with some other good (kinda the same thing).
If, however, you want to save some money (which is perfectly rational), then any amount of inflation is a bad thing.
[/ QUOTE ]
How do you think your savings grow? They grow because a large part of them will be loaned out at a profit by the bank. Part of this profit is returned to you as interest on your savings. Whilst these loans lead to inflation, they also lead to an actual increase in the numerical value of your savings, which normally outstrips any devaluation due to inflation. If there was inflation of 0% you would only get about close to 0% interest on any savings.
|