Defenders of the FED say inflation at 2% (or whatever they set) is to match productivity increases, otherwise prices might fall. This is a man made policy That 2% inflation is a dilution of the "money" supply, a form of a pernicious tax, which at once benefits the first to get the fresh "money" at the expense of the last, while taxing the last.
It is only possible as a positivist policy. It was once a crime in both secular and religious realms, but the religious realms benefit from the policy the closer they get to the state, so the policy now gets a blind eye. Anyone who is harmed by the policy is directed to Romans 13, and a tendentious reading thereof.
If we did not have this man-made policy, then what? Prices fall - a natural phenomenom.
Falling prices benefit everyone. It makes extension of credit on sales of goods and services attractive to merchants because the longer they wait for payment the more buying power they get when paid. Interest is not necessary to encourage payment, the naturally improving ecnomy provides incentive enough.
If and when someone gets in a jam, then merchants cut off credit, and people settle up in gold or silver. If they cannot do so, they appeal to charity. Charity is harsh: bail-outs depend on self-improvement. Charity is two-sided: the goodness of the benefactor is matched by the alacrity of the beneficiary.
But falling prices means business must watch costs and manage more intently, narrowing the range of possibilities of a given entrepreneur since management on core functions gets more intense.
By abandinoning some lines, more opportunity opens for others to start up. Division of labor increases, opportunity, and thus prosperity widen. More gooods and services, inventions, for more people at ever lower prices.
So the natural free market activity of falling prices benefits everyone, whereas inflation manipulation benefits extremely few, the usurers. It all depends on your definition of wealth which you prefer. And your definition of money.
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