Why Inflation Isn't a Moral Issue | Timothy B. Lee | Cato Institute: Commentary

Why Inflation Isn't a Moral Issue | Timothy B. Lee | Cato Institute: Commentary: "The problem with this line of argument is that even stable money is a bad long-term store of value. That’s because modern capital markets offer you the opportunity to not just preserve the value of your money but dramatically increase it by investing in productive assets. You can buy stocks, bonds, or real estate, all of which generate a stream of income that increases the value of your investment."

Those options have more risk (than zero inflation money), variability, are harder to convert, and have higher barriers to entry. Those options are great for rich but not for poor.

"If I invest my life savings in oil, and then Saudi Arabia discovers a massive new oil well that causes the price of oil to drop by 10 percent, it would be silly to say that Saudi Arabia has stolen 10 percent of my life savings. I just made a bad bet. Exactly the same point applies to money."

Money inflation is different. For one, it is government arbitrarily increasing the money supply.. No one has the ability to just increase the oil supply. Two, the government gets to use all of the benefits of the increased money supply. In effect it is a tax on people who hold money. Three, a massive increase in the amount of oil would hurt owners of oil but would help buyers of oil and would be good for the economy. But since the rate of inflation doesn't matter (as you say) there is no benefit to the economy from inflation. The only benefit is to the organization that inflates.

"if there aren’t enough dollars to go around, people start cutting back on their spending and the economy goes into recession"

There is plenty of money around -- people hardly worry about keeping pennies anymore because they have such little value. If there were problems where people needed to split a penny in order to do a transaction then you could say that there isn't enough money.