Most people don't actually understand inflation. In theory, inflation doesn't matter but it does matter because of the timing of when inflation occurs.

Basic example of the in theory inflation that doesn't matter: Inflation goes up by 2%. Your wages go up by 2%. In effect, nothing changes.

Basic example of what actually happens: Central bank lowers interest rates to increase inflation. The lower interest rates reduce the cost of borrowing. A business takes on more debt to invest in a new project due to the lower cost of borrowing. Now keep in mind, banks are collateral based lenders and don't generally lend for labour costs because there's no security. That means the first people to benefit from lowered interest rates are the businesses who purchase equipment, etc... to expand their business and that money then circulates to other products and services thus impacting inflation. The last people to benefit from money entering the economy this way is the labouror. By the time inflation catches up to the labourer, the owners of businesses have already benefited from additional money at reduced costs and non-inflationary prices for the capital they've invested in. Meanwhile labourers haven't had their wages raised until after prices of the products/services they purchase have already gone up.

The end result is that in theory inflation doesn't matter but in actual practice inflation when managed by a central bank benefits the business owners at the expense of the labourers. This problem is compounded when the labour pool includes immigrants because the supply of labour is so large that wage simply don't adjust to accommodate what the other inflationary pressure are.

Most people don't actually understand inflation. In theory, inflation doesn't matter but it does matter because of the timing of when inflation occurs.

Basic example of the in theory inflation that doesn't matter: Inflation goes up by 2%. Your wages go up by 2%. In effect, nothing changes.

Basic example of what actually happens: Central bank lowers interest rates to increase inflation. The lower interest rates reduce the cost of borrowing. A business takes on more debt to invest in a new project due to the lower cost of borrowing. Now keep in mind, banks are collateral based lenders and don't generally lend for labour costs because there's no security. That means the first people to benefit from lowered interest rates are the businesses who purchase equipment, etc... to expand their business and that money then circulates to other products and services thus impacting inflation. The last people to benefit from money entering the economy this way is the labouror. By the time inflation catches up to the labourer, the owners of businesses have already benefited from additional money at reduced costs and non-inflationary prices for the capital they've invested in. Meanwhile labourers haven't had their wages raised until after prices of the products/services they purchase have already gone up.

The end result is that in theory inflation doesn't matter but in actual practice inflation when managed by a central bank benefits the business owners at the expense of the labourers.