Because money is a medium of exchange, and has no inherent value. Hoarding cash is equivalent to destroying production-- by then time you try to spend it, there won't be anything left to buy. Inflation encourages people to be active in the system, exchanging to produce real value, not staring a the charts of growth of imaginary wealth that means only as much as a video game high score board.
That sounds awfully counter-intuitive. Before there'd be nothing left to buy, the prices of things to buy would go up (i.e. inflation), which would discourage further hoarding.
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Because money is a medium of exchange, and has no inherent value. Hoarding cash is equivalent to destroying production-- by then time you try to spend it, there won't be anything left to buy. Inflation encourages people to be active in the system, exchanging to produce real value, not staring a the charts of growth of imaginary wealth that means only as much as a video game high score board.
That sounds awfully counter-intuitive. Before there'd be nothing left to buy, the prices of things to buy would go up (i.e. inflation), which would discourage further hoarding.
Hoarding cash does not destroy production, as the number of units of cash in circulation does not affect economic productivity.