- Nov 17, 2013
But it's exactly what does happen.Money does not reduce in value over time. The amount of currency increases over time. That's why it's called inflation, and why actual money ($/hr worked, an ounce of gold, real estate) go up in dollar terms over time. If programs want to devalue their currencies then they need to pay interest or they're just robbing people, same as any other savings account. Why would anyone keep money in a bank if what could be bought with it was guaranteed to decrease, unless they made a choice to keep it there for convenience?
$1,000 ten years ago was worth more than $1,000 is today. The value of that $1,000 is slowly inflating away.
Interest, which has nothing to do with maintain value, generally doesn't keep up with inflation anyway.