it is a matter of common observatio

it is a matter of common observation that although incomes keep going up over the years, we never seem to become much better off! prices are rising continuously. this condition is called inflation; because the money supply is becoming inflated, each unit is becoming less valuable. in recent years we have become used to higher and higher rates of inflation. what could be bought ten years ago for one dollar now costs over two dollars. present indications are that this rate of inflation is going to rise rather than to fall. if in the real world our incomes go up at the same rate as prices, one might think that inflation does not matter. but it does. when money loses value it lacks one of the qualities of good currencies-----stability. it is no longer acceptable as a stored value. nobody wants to hold a piece of property which is becoming less and less valuable, so people try to get rid of money as quickly as possible. inflation therefore encourages people to spend, and keeps people from saving.