[quickthrowman]

> What does this actually mean? Every time I try to wrap my head around why it's bad e.g. for a business to make a constant profit, rather than an increasing profit;

It’s very simple.

If you make $1M in profit in a year and the following year you also make $1M but inflation was 3%, you earned 3% less money than you did the year before. The nominal profit was the same but the real profit was lower.

To earn the same real return with 3% inflation you would need to earn $1.03M the year after you earn $1M. If your profits grew less than inflation, you made less money and your company is worth less as a result.

Monetary policy people figures out that a small amount of controlled inflation that incentivizes investing is better than deflation which encourages people to hoard cash. Some people disagree with that.

https://en.wikipedia.org/wiki/Real_and_nominal_value

[trumpdong]

That's not actual growth though, that's just measuring the same business in a different unit worth 0.97 of the old unit. The business can be the same size.

[quickthrowman]

The question asked was “Why is it bad to earn a constant (in nominal terms) profit rather than an increasing profit.” The size of the business is irrelevant to this question. I answered the question, the short answer is ‘inflation’.

When responding to a question, I choose to answer the question the person asked instead of another question they didn’t ask.

[trumpdong]

They didn't say "(in nominal terms)" and businesses are expected to grow in real terms.