In the game of economics, I think it’s a good idea to assume all participants are greedy and act in their own interests first. That “own interest” may look altruistic if the participants have Mirror neurons strongly influencing their choices. But in the end, we can only feel what is in our own brains.

This greed means corporations will want to increase prices. One way is to keep supply down (e.g. de Beers’ diamonds and OPEC.) If you have spare capacity, another way is to keep raising prices until demand and capacity are matched (e.g. various Internet services.) When prices go up for the same product/value, that is inflation. When wages go up for the same work, that is inflation. (The right way to get a raise, is to do more/better work and then demand a raise. If you don’t and everyone else also acts greedily as you, the increase will eventually be zero in real terms. There is no free lunch.)

So increasing prices/wages without doing more is great for short-term profits, but will eventually lead to suppliers also wanting to increase profits. And we’re back to net zero. What is lacking in this picture is innovation. This doesn’t have to be “increasing productivity” as is so often touted! It can simply be inventing a new type of product, one where price discovery has not yet set in, and the demand/supply equilibrium hasn’t been found. The important thing is that if prices change, so must the perceived value. Otherwise, we’re just inflating away the increase, causing pain to everyone for no real gain.

When you’re adjusting price, please consider changing your value proposition. Inflation really sucks, because it’s a slowly adapting and mostly invisible tax. We need innovation if we want to allow people to be (greedy) people, and at the same time have stable currencies and peace.