Governments love inflation because few people realize their pockets are being picked. From James Rickards at dailyreckoning.com:
Inflation is not a guessing game anymore; it’s here. Every time you buy gas at the pump or groceries at the supermarket or book a plane ticket, the price increases are staring you in the face.
The problem is that inflation cannot be isolated. It’s not limited to what you pay to fill up your car, for example. Truckers have to pay the same higher prices for diesel fuel, which add to transportation costs and to the final prices of delivered goods.
It’s a clear example of the ripple effect.
That much is clear. What is less clear are the thousands of ways that inflation hurts you that are invisible. The most important of these is that inflation is a tax.
The government borrows dollars, and you earn dollars. Taxation is one way that governments take money from citizens to pay off government debt. But taxes are unpopular and hard to get approved by Congress.
Inflation works much better.
It reduces your real income since the dollars you earn are worth less. And it reduces the government debt because the money the government owes is easier to repay for the same reason – the dollars are worth less.