Velocity of Money is the term to look into. Governments also like it because as money circulates it generates tax revenue through sales tax/VAT.

I think its more important for investment. If you have $1mil in cash and know it's losing value every day you have an incentive to invest it in some long-term profitable way. Hire more employees, buy some more trucks for your fleet, renovate your store, do some R&D to improve your product, etc. If it's the opposite you don't feel any urgency because your $1mil is gaining value as it sits in the bank.

This (classic) argument is symmetric with respect to the value of money and quantity of goods. As in "if you know money will buy more in the future, it increases your incentive to sell now rather than wait for higher prices. And if you know prices will increase, you will hoard products." The argument doesn't favour either side.

One mechanism of inflation is that it effectively lowers wages (and other contracts) without negotiation. Asset prices are valued by markets and increase with inflation. It effectively transfers wealth from wage earners to capital owners.

Deflation would effectively increase wages instead, and require occasional renegotiations if productivity isn't keeping pace.

Right, a steady low level of inflation is a driver for risk taking, which drives investment cycle, hiring, etc. This cascades thru economy from firm to firm, in a virtuous cycle of growth.

Zero inflation even as a target would be hard to hit, as it would imply some absolute perfect match of supply/demand for goods.

Deflation leads to the opposite behavior - hoard your resources, don't invest, don't lend, don't hire. This then cascades through economy in a downward spiral.

Sure 10% deflation would be a problem but so is 10% inflation.

What about 1 or 2% deflation? People would still need food, to replace or repair cars. People would still want and need to buy houses.

Inflation to my mind supposes that we have to have perpetual growth, which is something that is not realistic.

If we grow 3 times the amount of corn that we need this year, do we need to plan to grow 3.1 times next year? Or decrease the cost by 2%? If all the inputs stay the same, where do you get the gains from(assuming that the process is as efficient and automated as possible)?

I think that by printing money and expecting a 1~2% gain every year we just end up robbing ourselves. Companies play games by not giving raises right away, moving production to areas of LCOL or shrinking goods and services but our retirement portfolios go up. Then at the end of the day, you are on a fixed income and having to squeeze down on your consumption.

As I said to a sibling, it is easy to say companies are greedy but how many of us are buying a more expensive product because we know that they treat their employees well? Or do we look at something then try and find it cheaper on Amazon?

In the 90's there was a large amount of disdain for lower income people who were shopping at Wal-mart because they were buying cheap plastic goods from China. The reason they were is because companies were offshoring their jobs. They weren't buying from Wal-mart because they like the products, they were there because they were trying to keep the same lifestyle they had before they lost their higher paying jobs. Companies that did not offshore were driven out of business as their customer base collapsed. We cheated our future selves to keep our inflation targets.

> In the end it's really just greed.

Yeah, well their job is to get the best price for their product. Just as it is your job to get as much money as possible for your product, i.e. your talents and labors.

In a competitive economy with informed buyers this greed is what makes things cheap and high quality. Think about two grocery store owners in a small town. They've settled into an equilibria with each other to keep the status quo and not get greedy for a bigger share of the market by competing on price or quality. Then one day, seeing an opportunity, a new grocer moves in with fresher fruit, a wider variety of products and most importantly lower prices. All the customers go over to that grocery store and the old grocers have the choice to improve or die. From the point-of-view of the previous grocery store owners the new grocery store is "greedy", but it ends up benefiting everyone else.

> In the end it's really just greed. Companies always want to charge as much as they can get away with.

Is it also greed when consumers want to pay as little as possible? (In some ways, of course it is, but at some point, the loaded term greed isn’t particularly helpful towards understanding perfectly ordinary microeconomic behavior.)

Do you ask for/expect a raise every year? Even if your job responsibilities and workload doesn't change?

It's easy to boil it down and say greed or capitalism but I don't think it is a very reasoned position.

>Prices for goods in Europe in the sixteenth century rose to about four times the level that had prevailed during the preceding three centuries, increasing poverty levels but also raising the profit potential for those who were in a position to exploit an economy that was suddenly based primarily upon money and credit rather than labor and trade. https://www.ebsco.com/research-starters/history/worldwide-in...

Not sure if they were fully capitalistic by then but that was a long time ago.

I also know that Japan has had inflation for a long time, reading history about coins and looking up the worth of a mon that would be 10000 to 1 yen.

https://en.wikipedia.org/wiki/List_of_Japanese_cash_coins_by...

IMHO, inflation is driven by both greed (not just companies, everyone wants their retirement portfolio to go up) and increased money supply. The USA has a large amount of deficit spending, this is money that we just magic into existence. We have used it recently to try and manage crisis like 2008 GFC and COVID but I don't think that it is a coincidence that after those two events the costs of everything went up.

Worldwide the prevailing economic theory is that deflation is bad, I am not sure but unless we are willing to allow for some deflation you will only every have inflation.

This is the gospel that is taught. It seems to help people tolerate the fruits of their labor being quietly separated from them over time. Just another tax, except the people have even less of a say in this one.

Population growth is ending globally, so I suppose the strategy is to issue debt for clean tech, affordable housing, and similar at the lowest yield for the longest duration you can and let those loans devalue over time as the population declines. China is the closest model I can put forth in this regard: their property sector is imploding for investors, but housing is affordable, for example.

China Home Prices Fall at Faster Pace in Setback to Revival - https://www.bloomberg.com/news/articles/2026-06-16/china-hom... - June 15th, 2026

China Housing Demand to Stay at 75% Below Peak, Goldman Says - https://www.bloomberg.com/news/articles/2025-06-17/china-hou... | https://archive.today/LkbCF - June 16th, 2025