Does Inflation Affect The Price Of Money

Did you ever think about inflation? Inflation is a continuous increase in the price of goods and services. It means people use the same unit of currency but buy fewer goods and services. In the other word, inflation reduces the purchasing power per unit of currency. Currency is the medium of exchange, including banknotes and coins. People use currency to buy goods and services. We can say, in almost all situations, the value of the currency as the medium of exchange is more than the value of the currency itself. For example, one dollar banknote is more valuable than the same size of paper.
Now we think about a special situation. If inflation keeps for a long time, is it possible that dollar-size of paper is more valuable than one dollar banknote?
In this special situation, the value of the currency will be very different. For instance, a person has a one dollar banknote, he wants to get some cookie. If he …show more content…
As buyers, consumers tend to monopolize their wealth. For example, someone has one dollar. Now he is more willing to sell it so as to get two dollars. In this situation of infinite repeated this action. He will gain an enormous of amount of wealth as a big fortune in a long term. That case will make big benefits for people who have a lot of wealth already. Like, the monopolists will monopolize their wealth greatly by making money with money, which is increasingly widening the gap between rich and poor. However, at the same case, as sellers, they have no incentive to supply more goods because of continuous deflation. They could leave the labor market and search new ways to make wealth. The way people make money will force the government to stop issuing currency. The circulation of certain currency will have no effect on the current economy. But in a long term, as GDP is not going to increase, the market will go into