I’ve been thinking about how to justify / steel-man fiat money. After all, the hard money mindset seems more akin to a thought experiment rather than something humanity will witness anytime soon.

So, here goes:

The government tells you via its central bank that the inflation target is 2%. This is good: transparency.

This means to be a winner you need to increase your income by more than 2% to increase your standard of living over time. This is good: people need targets.

If you can’t be bothered to beat inflation then you can rely on the state and claim welfare. This is good: you get to share some of the spoils of the winners who pay more tax because they beat the inflation target. (Self-respect doesn’t pay the bills. Also, welfare payments is a cheaper form of control than imprisonment.) This is also good for democracy: you will vote for the party which will do the least harm to your welfare payments. So, in effect, not only are you voting and approving for welfare but also the overall 2% inflation target.