In the economy a low inflation rate is always considered not only a good thing, but also necessary to the economic. Because in zero or negative inflation rates people may tend to hold their money and not to spend them and it's not desirable in most cases. So by having a low inflation rate, people are encouraged to convert their money into goods and services and it's beneficial for the growth of economic.

But is it morally correct to maintain inflation rate in a low but positive rate to motivate people to buy things? Positive inflation rate means that the currency's value is reducing and it means value of all coins and banknotes in people's pocket is reducing. So we are forcibly destroying an small amount of people's wealth to encourage them to buy. It's completely like forcing people to buy things.

  • 1
    I suspect that answers to this question are likely to express only personal opinions, but I will let the question stand - to see what other users think.
    – Geoffrey Thomas
    Jun 2, 2022 at 13:30
  • Different people may be able to defend both positions (ie is and is not ethical). Of course these people will assume different moral values as starting points. So what gives? Is it ethical according to which base values? So far people have not reached a global moral code. Maybe people should implement systems where such dillemas are absent altogether.
    – Nikos M.
    Jun 3, 2022 at 20:52
  • i'd imagine that the ethics of economic decisions are entirely consequentialist.
    – user64727
    Feb 24 at 19:07
  • Honestly your question is complicated on the economics side. The US Fed is trying very hard to tame inflation at present.
    – Gordon
    Feb 24 at 20:24
  • The danger is that our Fed will go too far and cause a recession.
    – Gordon
    Feb 24 at 20:27

3 Answers 3


“It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God." - Matthew 19:24

Because receiving wealth was regarded as a blessing or sign of God's favour, this has been understood as guidance for those who have wealth to use it before they die, and in terms of not being attached to wealth. Trade exchanges and the movement of currency provides mutual benefits, hoarding often causes problems and poverty. We also see such ancient guidance in the fifth pillar of Islam Zakat, which means paying a tax or tithe on savings. The book Debt: The First 5000 Years by anthropologist David Graeber goes into the dynamics of debt and hoarding over the long view. I find it interesting that we don’t seem to have the category of miser anymore, perhaps hoarding was more key in more uncertain times.

I would argue following Hume on Is/Ought, that we use moral reasoning from our values, but the values themselves are unreasoned. I would look mainly to game-theory as having shaped our intuitions there evolutionarily, eg about the social contract Is the tyrannicide perpetrated by William Tell morally legitimate? And I would look to Moral Foundations Theory about core values, as enabling systems of cooperation.

Setting a target for inflation, is about the process of balancing competing interests. I’d argue the UK making the economic levers to control inflation under the control of an independent central bank with a clear policy they are accountable to, was a moral improvement. Otherwise especially in election years, there was a danger of political decisions, eg that favour pensioners that vote at higher rates.

We begin our moral reasoning with intuitions about fairness and justice (moral foundations). We also prioritise our own interests and those of our groups, for various reasons, like depth of knowledge of what’s local, and Darwinian pressures. These need a process to balance, eg we need to avoid free-rider problems that destabilise systems, if we value the system.

Inflation is a high-level emergent property, that cannot be set directly, only impacted by policies that have a mix of consequences. The moral choices are about applying our values, balancing the interests of different groups for best net benefits. Power and leverage cause compromises to that, which social progress sees increasing mechanisms to manage. It comes down to practical experience that a low positive interest rate best secures this, like the UK target of 2%. It’s an interesting point that the UK housing market rise has seen many pensioners invest in property, and it shifts wealth through rising rents to the wealthy from those who can’t afford to buy a house - that kind of dynamic increasing without redress, increases inequity and risks of housing market failure, in terms of lack of availability or a crash. Action must be taken based on emergent consequences of economic choices.

A caveat is that countries undergoing a demographic transition from high to low birth rates, dramatically decrease infant mortality and poverty. So there is a moral duty to have higher inflation there, to incentivise greater investment. This tends to be the period of greatest economic growth for any country, and it's crucial to make big investments in infrastructure like transport networks and sewerage in this era, to secure long term wellbeing.


Today's fiat money is no longer linked to gold or any other "commodity" asset. It is better thought of as kind of communications medium "owned" by the nation state, based upon national debt to bondholders and backed by that state's power to collect taxes and other revenues.

When you "own" a dollar you own a certain amount of credit, say 40 cents, and a certain amount of future debt to bondholders, say 60 cents, which is built into the nominal value of that dollar. My main point is that one should see money as a social relation in motion, not something objectively stored like gold, oil, or food.

Having said that, the effects of inflation are complex and variably distributed among social classes. Classically, a state might prevent a "runaway" inflationary spiral by ensuring, above all, that it did not cause wages or wage expectations to rise. Lower inflation tends historically to suppress employment and rising wages.

The Fed's dual mandate to prevent high unemployment and high inflation is thus somewhat contradictory and was meant to act as kind of political balance between labor and capital.

However, this is all enormously complicated now by the rise of a global financial industry. What used to be a more general inflation that also lifted union wages may now take to form of asset bubbles or a localized inflation in luxury goods for the wealthy, such as the price of art, luxury urban real estate, and political donations.

Right now, governments must pump an enormous amount of monetized debt into the economy to close the gap between total wages and total consumption of good produced. Household debt and even government debt increase to sustain consumption, which becomes profit for capital "shareholders." But all of us have some share in these various roles as, say, both wage earner and shareholder.

Is inflation ethical? It kind of depends on who in the end has to pay off the debt. Hint: That why the number-one goal for the wealthy and corporations is no longer production, but fleeing tax jurisdictions.


The question from the philosophy side is whether philosophy has a right to consider the problem at all?

I think it does. Hilary Putnam won the Ulysses Medal from University College Dublin. He gave a lecture on receipt of the prize based upon his book: The Collapse of the Fact-Value Dichotomy.

It may be a book you want to read. Though logical positivism (Ayers and others) may be officially dead, it carries on as a de facto ideology. We are sort of born into logical positivism.

There is also a short video that Putnam posted on youtube on this subject. I will try to find it and add it to my answer. Here: https://m.youtube.com/watch?v=oLJfEVu3kbY

So if philosophy has a right to answer, the next problem becomes how is the philosopher to set up the question? You would have to set up and disclose a lot of assumptions for such questions since Economics is a moving target with many powerful players.

  • but is it an ethical question? I am unfamiliar with libertarian arguments. Isn't that even what Marx meant about capitalism, how there is no ethical social relation (only ruthless critique and individualism perhaps)
    – user64727
    Feb 24 at 21:18
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    @identicon you may want to study the subject of logical positivism and the enormous impact it had. In popular talk in the US it often boiled down to Fact-Value Dichotomy.
    – Gordon
    Feb 24 at 21:26
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    interesting counter point, thanks. i like cezanne
    – user64727
    Feb 24 at 21:29

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