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Comment by kadomony | Hacker News Reader

This is a question of curiosity/naivete:

Why hasn't the human civilization found a model that counters inflation altogether? Is it because we can't plan for the demand new adult consumers bring? The birth rate? We keep printing money? Someone somewhere (probably in commodities/real estate) will ALWAYS affect greed and see how far they profit at the expense of others?

Like, who keeps pushing the rising prices? Can't we just say "stop doing that", make it illegal, and just print more money when a new person enters the world?

I have some suspicion that all of this wealth transfer to the elite doesn't help jack since they just let it sit in their accounts, earn dividends, and not really circulate inside the economy.

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Inflation keeps the velocity of money high, which increases the general economic welfare (compared to having a low velocity of money)

And you can ban people from raising prices. It's called price controls, and it creates awful shortages.

> I have some suspicion that all of this wealth transfer to the elite doesn't help jack since they just let it sit in their accounts, earn dividends, and not really circulate inside the economy

I have some suspicion you don't understand how "the elite" end up getting (and staying) wealthy

They rarely have much in the way of liquidity - almost all of their wealth is on paper in the form of investments in opportunities (stocks, bonds, businesses, real estate, etc)

By investing in those things, they encourage/enable others to do things that bring them wealth, and bring the investors added wealth, too

Lots of things can cause inflation, but the main reason we have inflation is because we deliberately cause it by (effectively) printing money. Some economists have decided that a target of 1-2% per year is ideal to keep people spending and investing rather than stuffing their money in the proverbial mattress and hoarding it. Deflation is meant to be avoided at all costs. This has been decided to be the ideal balance to keep the economy as strong as possible. Personally, I am sceptical that there is much difference between 1% inflation and 1% deflation, but I am not an economist.

I'm no economist, but my understanding is that inflation was pretty minimal for hundreds of years prior to the late 1800s. Inflation appears, though, to be reasonably beneficial and (this is totally not economics language) motivates the circulation of money, in moderation – enough so that they have a target for it.

There seem to be numerous economic theories and inflation plays a different role in most of them, that I can tell, both good and bad.

Inflation incentivizes spending, money sitting in a bank account doesn't make the charts go up.

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