If everyone stopped buying stuff for a day, would that help stop inflation? Or does inflation just keep going forever?
In practise getting everyone to stop buying things for a full day would be virtually impossible to pull off in modern society. It’s not like doctors aren’t going to buy gas to get to work, or air traffic controllers aren’t going to get a cup of coffee, home care workers are still going to buy supplies for clients, etc.
But even if you could put a 24 hour pause on spending, it just means people are going to buy more the day before and the day after. Businesses will still get their money eventually.
However, following a 24 hour pause in purchasing prices are likely to go up (thus making inflation worse). Why? Because we will have added waste and uncertainty into the situation. Food that was going to be sold will rot, cars that would be sold will sit on the lot, fuel that would be pumped will stay in the tanks. All of this raises the cost of doing business slightly.
Even if you could get a large percentage of the population to stay home and not buy anything all you’d do is inconvenience the lowest income earners when prices rise to compensate for the downtime. So the cost of living would go up and minimum wage workers would be out a day’s pay.
As for the second question: if we are lucky, yes, inflation keeps going up forever.
Inflation (in small amounts) is pretty good for our economy. A small amount of inflation means it is slightly better to spend money than try to hold on to it. Basically, the cost of things keeps going up so your money is worth less tomorrow than it was today. There isn’t much reason to hold onto it. This means people buy things (homes, meals, cars, stocks) rather than hording their money. This keeps money circulating and flowing, which is more or less what keeps our economy running, creates jobs, etc.
If inflation stops or reverses then the value of money actually goes up compared to the goods it can buy. At that point saving money causes the money to grow in value over time, which greatly reduces the incentive to spend because things will be cheaper tomorrow than they were today. When that happens the economy slows down. Fewer people buy things, which means businesses don’t hire as many people, which means fewer people with jobs to buy things and the economy spirals downward. Eventually we enter into a depression.
A little inflation is good (not a lot, but a little). The catch is that for it to work smoothly wages need to rise to keep up with the rising cost of living. Historically we haven’t always been good at keeping minimum wage up with the cost of living which reduces quality of life for people at the lower end of the economy. In situations where inflation rises and wages do not keep up it also slows down the economy because people spend less on luxuries, travel, new homes, etc. The two need to rise together for the system to keep running smoothly.
If you really want to fight inflation you’d be better off trying to get rich company executives to take a pay cut (or lower profit margins) and pass the savings back to their customers. That way the business saves money and can keep their prices lower. This means people can afford more on their current wages and don’t need as many raises. The result would be slower inflation.
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