Is zero inflation desirable?

Question

Is zero inflation really desirable?To be more precise: Does inflation in real life have benefits that in some situations outweigh its social cost? E.g.: it works as a disincentive against holding money. The treasury derives income from printing new bills, which usually inflates prices.

Answer 1

There are competing interests in the economy that are affected differently by inflation. If I am a debtor, I like inflation because it become easier for me to pay off my debts. If inflation was completely predictable, it wouldn't matter one bit, so macroeconomists argue that there's benefit from controlling inflation. I do not think zero inflation is realistic, because prices typically tend to rise over time, and having zero inflation is not the same thing as having relatively predictable inflation or avoiding hyperinflation due to gov'ts compulsively printing more currency to compensate for poor tax revenue or excessive gov't spending levels.

There may also be extreme cases of public good situations where an increase in gov't spending is justified due to imminent or recent crises and that may require printing currency and accepting an increase in inflation.