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by Nursie 3811 days ago
Ideally the value of currency should map to a fairly consistent value. If 1 unit buys a loaf of bread today, it's probably for the best it maps to one loaf of bread tomorrow.

If the amount of currency is fixed, but the economy grows, then the bread becomes cheaper. This has multiple effects, but one is to value work yesterday more than work today (work today will be compensated more poorly). Another is that it favours people who hold currency already over those that are actually producing useful economic output right now.

So in a growing economy, the currency supply probably should increase. It's arguable that tilting things the other way - favouring work today over work yesterday (or ten years ago) and favouring economic activity over holding cash - is desirable, so most developed economies aim for low but positive inflation.

This is my very simplistic understanding of why completely limited currencies are not a great plan.