I’ve been wondering this question for a while. Ignoring current events, why is a little bit of inflation desirable?
I do understand that it’s done to “stimulate” the economy so people don’t let their cash rot in a checking account, but isn’t it a zero-sum game? Everybody says that money is not meant to stay where it is, rather, should flow through the economy. But if the economy always needs injections of liquidity because otherwise it fails, isn’t the economy broken?
I feel like there’s something I can’t comprehend about that.
To add onto your example, the Mexican company likely had the business plan to build out the 25 story building and fill it with guests immediately. Instead, they can’t. They also can’t build in as many amenities because they don’t have the number of guests to support it.
An American company can build the larger resort and fill it with guests immediately; making more money on day 1 even taking into account the interest they need to pay back. The Mexican company would find it much harder.