People would expect the government to always be doing everything it can to prevent and stop inflation. However, this is not always the case. Something interesting that I learned while reading this chapter is that corrupt governments will sometimes intentionally cause inflation for their own benefit. This often occurs when governments are in large debt. By allowing inflation to increase, they devalue the money that they owe and therefore make it easier for themselves to pay it back. However, the increase in inflation hurts the average citizen, as well as whoever loaned the government money.
Governments also benefit by imposing the inflation tax. This tax involves the printing of more money and the using of this new money to pay for a government function. Therefore, the government indirectly taxes people by devaluing their money instead of taking money directly from them.
I never knew prior to reading this chapter that the government may intentionally cause inflation for their own good at the cost of everyone else. This notion seems backwards since we would hope that the government is always working for the good of the population.
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