Inflation becomes the most important thing nowadays

The size of a government will determine the inflationary pressure it creates in the economy: a larger government creates higher inflationary pressure in the economy while a smaller government creates lower inflationary pressure. What is the role of the government? It is an organisation to enforce contracts between people (many become laws and regulations), to defend the community (nation), to redistribute resources among the population and to increase the community's total benefits (this could include invasion, negotiating trade deals and etc.). However, when we are talking about the social benefits and social costs, we often exclude the costs and benefits of the government.

The government is an important part of our community, many people are employed by the government and many companies are doing business with the government. The reason of why we often omit the costs of the government is that we think that the government is able to borrow money, especially when we are living in a socially and politically stable country. In many countries, the public debts are accumulating over time. If these governments did not have their central banks (though many central banks operate independently), some of them would not just perform better than Greece, Italy and some other Eurozone countries.

When the public debts are accumulating, the most common way for many governments is to add more inflationary pressure to devalue the real value of their debts. And the governments are happy about such strategy as well, because to create more inflationary pressure is to expand government spending, increasing government spending in most cases can win more popularity and support, as many parties in our community can be benefited from government spending expansionary. Therefore, as long as the public debts exist, the governments will always expand their spending. When the economy is growing, the government will expand their spending by proposing more welfare programs, and when the economy is declining, the government will further expand their spending. In this process, the public debt level is going to increase, the inflation pressure always exists (when it fails to deliver an inflation, the government and the central bank will try their best to lift the inflation rate above zero), the government spending is always increasing.

This process can go forever; however, one part of this process is not entirely in the control of the government, which is the inflation rate. When the inflation rate is negative for a significant time period, and the fiscal policy and the monetary policy fail to push the inflation rate back, the whole process will collapse, then the government will bankrupt and the economy will collapse as well. Therefore, inflation I believe is the most important economic factor nowadays. Some people may argue that inflation signals economic growth; I later will discuss if it is possible for an economy to grow when there is a deflation in this economy.