Quote:
Originally Posted by MrMaxwell
I just want to know where the stolen value goes... every year money you hold onto is worth less value. Well. That value goes SOMEWHERE. Right. Make sense? It doesn't go to the bottom 99.9% of us, as we're not the one printing it and loaning it
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We lose it through lost purchasing power. Everyone loses it. Obviously, savers lose more because even under normal conditions (say 1-3% inflation) their purchasing power is decreasing. Of course, unless a saver sticks the money in his mattress, there is some return in even the most basic instruments, which is what is designed to offset or exceed the loss due to inflation. This is what a creditor aims to receive in order to be willing to loan the money in the first place. Borrowers put that money to work creating wealth (or attempting to) or by blowing it.
Ideally, we would have 0% inflation, but that is too hard to achieve and it runs the risk of deflation. Deflation causes individuals and businesses to postpone purchases and investment because of falling prices. It can then spiral.
Therefore, moderate, controlled inflation has always been the
goal. Inflation prompts borrowing and investment. That's the idea, anyway.