Why is inflation so bad? Somehow I feel inflation is actually the only solution to pull us out of the mess. From 1930 to now, what is the inflation? I am going to make it up here, so 10X (or 1000%). Just imagine if you lived in 1930, and fast forward to 2008. When you wake up in the morning, you were stunned that inflation went to to roof, 1000%. However, you also realize that have much better living standard, 2 or 3 cars in each family, and every car is much better than those made in 1930s, you heard about PC, internet, cell phone, many many more. Do you still care that you just had a 1000% inflation. Why does it r eally matter to you? I mean, why everybody is so afraid of inflation? Sure everything will be more expensive, but do not forget you will get much fatter pay check as well. You will not lose your buying power. We are having a huge housing bubble, and that housing bubble should create a big inflation, but we haven't seen it yet because people artificially keep it down. This is not healthy. A big housing bubble need a big infaltion. Now, we have a big housing bubble. How are we going to solve the problem? One way is to let the housing price go down, but you know what that means, foreclosure goes to teh roof, and banks go bankuptcy, teh financial system collapsed. Anther way is to create a big inflation. Everything goes up, including your pay check, but the housing prices remains the same. Then bank can still keep the money moving. Nobody is going to lose anything.