I am new to economics. I’m still in college for electrical engineering. I read the daily articles religiously. And anything else I can get my hands on. Any recommendation would be appreciated.
Is it possible for inflation to be good for the economy? I think that what would naturally come with the bust is the general lowering of wages. But we are not a true free market. There are unions, minimum wage laws, etc. Could inflation serve are a means to lower wages without the explicit action by companies.
Inflation, if the money has a direct-use value (eg gold), is good for the people who use the money for direct use, as they can obtain it more cheaply.
Well, inflation does effectively reduce the effectiveness of the price floors. This is good, but the people who control the price floor can simply raise it.
As a sidenote, note that inflation can occur as a result of two things (I might have missed more) (cerebus perebus):
Yes. There’s a difference between the extraction of gold in a free market, that actually produces wealth as opposed to credit expansion and FRB under the currect system, which systems redirects wealth.
It can be “useful.” However, monetary inflation does act as an invisible, regressive tax that strikes at the poor the hardest.
Everything else being constant, ceteris paribus, debtors also benefit from inflation because they borrow dollars and later pay back the loan with dollars that have less purchasing power. True, the expected rate of inflation is priced into the natural interest rate, but if inflation is greater than what was expected then the debtor’s loan is a little less expensive from his perspective.