Short term thinking in itself is damaging.
But then thinking something is "worth more" because it costs more dollars a year from now is deceptive.. how much did its value increase vs the dollar decrease?
But it's convenient for tax authorities as you're taxed on the gains, regardless of the why/how it changed.
You have missed the point.
Inflation encourages activity because your money is worth less a year from now. Better to get something for it, or invest it.
You do enough work for 1/100th of the economy and receive $1000. You keep this in a box and do nothing for years.
In years time the work done in the economy is 1 million units, but money hasn’t changed. Your $1000 can no purchase 1:100th of the economy you haven’t built, or 1,000 units of work
You receive 900 units of work for free.
That’s immoral.
You’re gonna need to back this up with some reasoning. That’s exactly how every asset works when demand outpaces supply.
The government offers inflation protected securities, matching inflation plus some usually minimal interest.
They use it to fund programs, pay salaries, etc.
That also means that costs are increasing, which may have the opposite effect
That occurs after the primary beneficiaries of inflation (those who receive freshly printed dollars) take their cut.
> Final note, inflation helps encourage people to use their money and keep the economy moving.
This is just something people say. Programming equivalent of a factory class. Sure, it makes sense given Java’s language design, but when you realize the underlying design is awful and (at least for the modern US economy) out to hurt you, you look at things a little differently.
Inflation is just the rate which the population will accept without revolting. Constant inflation is not good nor needed, but we’d have to change a lot of our monetary policy in a way that results in a much smaller wealth gap (and military).
> This is just something people say.
Do you keep your savings under a mattress? Or do you put it someplace where the money can do work in the economy, like a bank account or bonds or stocks?
Reality is that the bank just indexes your loan with inflation, so you have to pay more.
Inflation is just a hidden tax on everyone - and people should protest against it. Great way of the rich (who are heavily invested in assets, not cash) and government (who gets cash inflows from the central bank - and central bank makes money by printing money) to screw the poor.
Also if we look back price stability under the gold standard is a myth. Prices might have been broadly similar in 1800 and 1900 but there were some massive ups and downs in between that lasted decades. Predictable and stable inflation seems like a much smaller issue
It obviously does on the macro level.
On the individual level perhaps not so much. Unless you have a lot of debt as quite a few people tend to do. Then it also has obvious benefits.
Pre inflation standard bond yields were around 4-5%. Combine that with longterm deflation over several decades (e.g. late 1800s) and then consider how severely screwed you are if you have a mortgage on your farm..
How does that follow? The only reason I can afford a house is because the interest rate is near zero. At a 5% rate I’d be priced out of the market, and pay 2x more money eventually.
Inflation benefits borrowers and penalizes lenders.
I would posit that younger people tend to be borrowers and older people tend to be lenders (bond owners).
That said, it's not clear what you meant by "the current generation."
Final note, inflation helps encourage people to use their money and keep the economy moving.