Inflation is not as big of a deal as people make it out to be, and a 2% inflation target makes no sense

Inflation is a less of a problem than deflation.<br><br>A moderate amount of inflation (3%-5%) can lead to slightly higher wages (as prices rise), increased consumer spending (if people know prices will rise in the future, they're more likely to spend now), and more investment in new opportunities. <br><br>The biggest problem with a 2% target is that it leads to people saving way too much of their money. This leads to hoarding, which reduces the amount of money available to be spent in the economy, leading to lower economic growth overall.<br><br>There is also a psychological component to inflation. People simply feel better off and more inclined to spend their money if they get a 3-5% raise, even if inflation is 2%, than if they get a 1% raise with 0% inflation. This leads to a decrease in savings, and an increase in spending, which is good for the economy.<br><br>The main argument against higher inflation is that it is a stealth tax and a transfer of wealth from the rich to the poor, since inflation decreases the purchasing power of money. However, this neglects the fact that the rich have most of their money invested, where is earns a rate of return much higher than inflation. It's the poor, who don't own as many financial assets, who have trouble keeping up with inflation.<br><br>Furthermore, a moderate amount of inflation would force the rich to invest their money more, which would lead to more economic growth overall.<br><br>Overall, I think the biggest indicators that our economy is not performing optimally is that people are saving way too much of their money, and there is way too much wealth inequality. A higher inflation target would help with both of these problems.<br><br>Edit: Thanks for the feedback, everyone. I'll try to post more quality content in the future.<br><br>Edit 2: I just want to clarify, I believe in a higher *target*, not necessarily that the rate of inflation should be higher right now. I know that with the way supply chains and the labor market are currently, a 5% inflation rate would be way too high. However, a target of 5% would allow us to get out of the next recession more quickly, which is the main benefit.