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Inflation
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Inflation

Inflation is the loss of cash's buying power. If Inflation goes up 2%, that means everything just got 2% more expensive. That's a total bummer. If inflation is a negative number, then we have deflation, where things get cheaper. At first glance deflation sounds AWESOME! Except there are reasons why.

When I first learned that the US government is actively trying to keep Inflation at 2% a year, I was like that seems dumb!

There is a really good reason we aim for 2% a year inflation. It's to keep our wages growing, instead of shrinking or stagnant.

If we had deflation, and prices were getting cheaper, that means our wages would also decrease, because cash is worth more, businesses can get away with paying us less. That's not something anyone wants!

The other option is no-growth, or inflation at 0%, which means our wages practically never grow either. Also not so good.

so a stable, low but positive inflation rate is good. There is also a corporate/business reason for a stable inflation rate, it makes future planning a lot easier.

Also it's important to note that inflation is not a perfect 2% a year, and inflation isn't steady across different markets. Groceries might grow inflation slower then say health care(which has been growing inflation wise pretty crazily lately).