Why central banks insist on a 2% inflation target

Re:Why central banks insist on a 2% inflation target by gottorf on Sunday September 24, 2023 @08:48PM (#37638548)

I always thought that the argument against the gold standard/BTC/whatever (relatively) stationary or deflationary currency is that the money supply needs to be elastic to account for the change in the size of the economy. That is, as the economy grows, there needs to be more currency to support it.

No arguments against the idea that inflation is effectively a tax.

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Re:Why central banks insist on a 2% inflation target by lovvtide on Sunday September 24, 2023 @09:06PM (#37638625)

My understanding is that everyone agrees that expanding the money supply under conditions of economic growth is necessary to avoid deflation.

The contention centers on whether price deflation is a good or bad thing.

If you're a "grow the pie" kind of person, you probably think that it's a good thing because falling prices without falling demand is simply a sign of the pie having grown.

If you're a "redistribute the pie" kind of person, you understand that deflation is an opportunity to control where newly created wealth is funneled to without the people who create the wealth noticing.

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