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Comment by vinyl7 | Hacker News Reader

To encourage growth. If money is continually losing value, you have to continually work harder to outpace the loss. This encourages workers to keep working, and encourages businesses to keep innovating.

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And the law of unintended consequences gives a huge unintended consequence here.... Rather than worker harder forever, which people really want to try to avoid, things other than money will be used as a store of value, since money is by definition leaking value. Housing, stocks, gold, crypto, etc.

Investors look for a return after accounting for inflation. If inflation is 5% and interest rates are 10%, the return is the same as if inflation were 0% and interest rates were 5%.

Although recent years have been a puzzling exception, it is typical for real interest rates (nominal rate minus inflation rate) to be positive. If someone is inclined to just live off their accumulated savings, this is just as possible with inflation as without, as long as the real interest rate is the same. It is true that the value of savings tend to be destroyed in episodes of hyperinflation, when real rates don't keep up, but hyperinflation is certainly not a road to a well functioning economy.

Growth, like any good Ponzi Scheme

Except in this case the growth comes from building and selling real things.

Can you explain how economic growth is like a Ponzi scheme. Lets take an example, lower income people being able to afford buying computers and use them, so computer sales go up. How is that a Ponzi?

The finite supply of resources on earth.

How do you prove they are finite?

Were they finit 2000 years ago as well?

If there were an infinite amount of matter in a finite volume, we would be infinitely dense (well, some are anyway, but that's a different definition altogether), which would make Earth something that it is altogether not.

Are you infinitely dense? (I am not; I can't prove it, but I suspect you are less than infinitely dense.)

What matter density has to do with resources required for people?

Stop spreading this shitty nonsense about limited resources please.

Luckily wealth isn't just a function of resources extracted from the earth. People create wealth.

And paradoxically, the much-maligned conspicuous consumption attributed to Western-style capitalism - buying things you don’t need - actually seems like a result of heavy-handed government policies such as lowered interest rates.

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