As far as the game is concerned, it's probably just a game balancing issue. I does not reflect what inflation really is. I think it is stupid because you can't do anything about it. Why even bother to tell us it's there? It's not like it's doing us a favor. I don't pay any attention to it. On to the issue of inflation...
Inflation is something that occurs when fiat money is introduced. The reason this happens is because when money is put into circulation backed up by nothing of intrinsic value (like gold), there is no real standard. So picture this: You want to start a business, so you take a loan. When the banks give you a loan, they create money out of thin air against other deposits and then CHARGE INTEREST on top of that. These notes cannot be converted into anything of real value, so it's literally out of thin air (monopoly money). Not only do you have to come up with the money to pay the principle, which is usually produced by hours of labor at a job (you certainly dont want to take another loan), you have to pay the interest as well. This is fractional reserve banking.
The "Federal Reserve" works this way, except it's not Federal at all. Now you're going to have to raise prices to make any profit to pay the loan, let alone try to eat and pay your rent (the landlord has loans to pay as well). Whenever you raise prices, you effectively weaken the buying power of said currency because when prices rise, other businesses will have to raise their prices to make any profit, thus creating the need for larger loans, higher interest rates, and bigger wages. In some cases, the only way is to create profit by budget cutting, or worse - take more loans to cover losses. If there was no inflation (and it's impossible to get rid of, as you can see), everyone would be rich because the amount of money the banks are allowed to put into circulation is nearly unlimited. This is all just a simple explanation, it's more complicated than that.
An alternative to the banking system once existed, and it was used in the American colonies. In this system, people wrote notes against items they owned (person creates the money, not a third party), promising to pay with said items to whoever wanted to redeem the note. Unlike our current economy, which is monopoly money that evolved from using receipts from gold deposited at a local blacksmith, "the power is restored to the people" (quoted from Thomas Jefferson). The monopoly game came about during the great depression, and is rumored that the "Rich Uncle Penny Bags" character is J.P. Morgan. A quick (but good) crash course is here at his link http://www.lewrockwell.com/rothbard/frb.html.
Also, check out http://www.perfecteconomy.com/ for a mathematical perspective. This site explains how mathematically this system cannot work forever and sooner or later (much sooner) the central banking system will terminate itself under insoluble debt. This is what drives our economy: debt. The only reason you want to make money is to be "financially independent". So, what are you trying to be independent from? Think about it...
Inflation is something that occurs when fiat money is introduced. The reason this happens is because when money is put into circulation backed up by nothing of intrinsic value (like gold), there is no real standard. So picture this: You want to start a business, so you take a loan. When the banks give you a loan, they create money out of thin air against other deposits and then CHARGE INTEREST on top of that. These notes cannot be converted into anything of real value, so it's literally out of thin air (monopoly money). Not only do you have to come up with the money to pay the principle, which is usually produced by hours of labor at a job (you certainly dont want to take another loan), you have to pay the interest as well. This is fractional reserve banking.
The "Federal Reserve" works this way, except it's not Federal at all. Now you're going to have to raise prices to make any profit to pay the loan, let alone try to eat and pay your rent (the landlord has loans to pay as well). Whenever you raise prices, you effectively weaken the buying power of said currency because when prices rise, other businesses will have to raise their prices to make any profit, thus creating the need for larger loans, higher interest rates, and bigger wages. In some cases, the only way is to create profit by budget cutting, or worse - take more loans to cover losses. If there was no inflation (and it's impossible to get rid of, as you can see), everyone would be rich because the amount of money the banks are allowed to put into circulation is nearly unlimited. This is all just a simple explanation, it's more complicated than that.
An alternative to the banking system once existed, and it was used in the American colonies. In this system, people wrote notes against items they owned (person creates the money, not a third party), promising to pay with said items to whoever wanted to redeem the note. Unlike our current economy, which is monopoly money that evolved from using receipts from gold deposited at a local blacksmith, "the power is restored to the people" (quoted from Thomas Jefferson). The monopoly game came about during the great depression, and is rumored that the "Rich Uncle Penny Bags" character is J.P. Morgan. A quick (but good) crash course is here at his link http://www.lewrockwell.com/rothbard/frb.html.
Also, check out http://www.perfecteconomy.com/ for a mathematical perspective. This site explains how mathematically this system cannot work forever and sooner or later (much sooner) the central banking system will terminate itself under insoluble debt. This is what drives our economy: debt. The only reason you want to make money is to be "financially independent". So, what are you trying to be independent from? Think about it...
