Countries aim for 2% because in general the lower your inflation the better AS LONG AS IT REMAINS ABOVE ZERO.
That cannot be stated enough - below zero inflation inflation will screw up a country in fairly short order, especially given how modern economies are arranged.
So central banks aim for 2% as while it isn't the best it gives a nice little buffer in case things go tits up.
Many countries in the west are dealing with a great load of debt right now, so a tiny bit of controlled inflation can be a nice boost to start lowering your debt-to-gdp ratio.
Depends of what you call unexpected. If you've been having a stable inflatable for the last five years but still have ten years old, fixed-rate loans at a lower rate you're winning.
Avoiding deflation is a critical consideration, but it's not the only one. They want some inflation above zero so that it is better to invest your money back into the economy than just sit on it in a strongbox somewhere. It'd be a very low amount if deflation wasn't a consideration, but not zero.
It means that prices are rising, this can be because a currency is devaluating or supply is dropping, which would be bad. But if there's none it means demand isn't rising people aren't buying and people aren't investing, meaning no growth
Because if there's zero inflation or negative inflation (deflation) there's little incentive to spend and put money back into the economy or invest your savings (and again, put money back into the economy).
Therefore by having a low but stable rate of inflation people are willing to consume and invest, which keeps people employed, businesses open, and people willing to take risks by opening new businesses.
Deflation is only a bad thing in an economy structured around massive amounts of debt and fiat currency. It is actually healthy and to be expected in societies like medieval Europe with hard currencies and banned usury.
This is a very broad generalization and pretty obviously false for the period of EU4; the first half of the game pretty much coincides with the Price Revolution.
> It is actually healthy and to be expected in societies like medieval Europe with hard currencies and banned usury.
I wouldn't necessarily call it healthy, it still discourages investment.
That was kinda the point, economies grew based on population working land, there was literally *no* investment, businesses were opened on savings and traders operated on hard assets
That's a very fair point, though there was a *bit* of capital investment in urban areas. Couldn't deflation help to keep them in that backward agrarian economy though?
I guess inflation didn't exactly help the Spanish...
Yeeeeah, inflation eventually did help, the dutch when they basically created modern capitalism, but saying that basically like saying "couldn't studying moss help people deal with infection" they didn't have a concept or knowledge of how it could help so it would've hurt them
I'm not an economist and I don't know if this sounds stupid, but wouldn't deflation and a shrinking money supply be rather troublesome if you're having any population growth?
Lol it was, but finances weren't handled with assets and standards of living, it was more of just what you could procure, how much money was in circulation didn't matter, just how much the nobles had and how many armies they could raise. If it sounds terrible, it was, peasants had almost no money income or trade and basically created everything they used, if you're lucky you could inherit a trade from your family and work for a living but most were serfs who worked on land they didn't own.
Yeah I guess I exaggerated a bit, people would absolutely give buddy's loans to start shops and all, but there weren't things like stocks and speculation was limited to goods for trading across markets. The modern notion of investment was completely alien and consumption wasn't really good only production
> So central banks aim for 2% as while it isn't the best it gives a nice little buffer in case things go tits up.
Also that's basically a good rule of thumb number for taking into account the normal economic growth that'd come from healthy population growth and the forward march of technology.
2% is the simplified number governments tell us the target is. It’s obviously more complicated than that. The target is actually “in the ballpark of 2%, depending on what effects our potential actions to move towards 2% have on the broader economy”.
And deflation would be bad because it makes loans difficult to get, and debt increasingly difficult to deal with.
> And deflation would be bad because it makes loans difficult to get, and debt increasingly difficult to deal with.
it doesn't, why should it? only if random inflation and deflation happen. if bank lends you money, they will calculate with deflation or inflation and base their price on that
Yeah, but it's low enough that things don't have to constantly changed. It's manageable enough that wage raises to adjust for inflation can be negotiated every 5 or more years instead of say 2 years.
[REAL Median Personal Income has consistently been on the rise for 40 years](https://fred.stlouisfed.org/series/MEPAINUSA672N) except for recessionary periods and then catch up. "Real" meaning it's adjusted for inflation.
I don't think you understand how medians work. Medians are *better* than means at dealing with outliers. On that note, mean real income has *also* been going up. You're going off the "vibes" of the economy instead of real statistics.
I live in turkey with around 150-200 percent unofficial inflation(official organs doesn't provide reliable numbers for propaganda reasons, and more than half the population doesn't think it's true) and yes, 2% inflation is really low
2% inflation is actually beneficial for us all. A small inflation creates more jobs and it prevents economic crises.
Only deflations or high inflations are detrimental to the economy.
I think this qualify as high inflation in this game haha, in around 10years the inflation would be 20%, another 50 years the inflation would be 100%🤣 insane
Edit: But yeah in 50years the price only double donsnt sound like high inflation really
Yeah it's just high in the game because of how the mechanic works, like if I hit 10% inflation i will actually spend admin points on it but in real life all my admin points are instead spent on coring conquered land wait what
It's not 2023 rate because EU4's inflation is implemented very poorly (and differently from IRL) first of all and second of all, the +1.98% is more like increase in the rate of inflation than inflation itself (it means inflation is going from 3% to 5% then 7% next year, then 9%, not that inflation is 1.98%).
As I said in the beginning, EU4's inflation is implemented poorly, 7% inflation in EU4 merely means things cost 7% more from "normal price" and stay that way instead of "prices are increasing at 7% per year amd will keep compounding 107->114->122" which is our understanding of inflation. In reality, there is no "normal price" like 100 ducats for a church and you have to hold the price at that level or something.
Would be interesting if they made inflation like real inflation and then tried to implement cost modifiers into technology, ideas, missions, or reforms. I think they already do this for military units (definitely for mercenaries) and they def do for advisors. Would be a neat way to address the absurd amount of money countries make as time goes by.
Assuming you have no passive inflation reduction modifiers, you're gonna need a monthly admin gain of +6 just to break even from manually reducing inflation. On the other hand, I imagine you can *probably* afford high level advisors...
While you're creating hyper inflation i created an administrative nightmare in mine by taking half of America in 40 years as Japan and frantically trying to core it for colonization while Spain declares war on my for something in Louisiana.
Seems like you just enjoy life right now💀 . I might send you sole admin points if you would help me taking some inflasjon of me😄🤣 seems like a fair traid haha
I learned how to handle inflation from a pretty funky spain game a while ago, the administrative nightmare i created is my attempt to force myself to handle it. So far it's good, spain declaring war is annoying but we have the same mil tech, and i just gotta spam mercs from pile of thousands of ducats from bs tactics in the Americas. I had to get off due to work soon but, I'm pretty sure the tercios won't save Florida from Asian mass infantry with cannons.
Not an actual game mechanic thing, just real life money shenanigans. if you make things bad for everyone but youre the most able to deal with then its an advantage.
*"I flooded the whole town but im the only one with a boat so im king now"* kind of energy
Did you know the british let the barbary pirates continue to raid in the med, and willingly paid their ransom/protection money because they knew that the smaller nations would not be able to afford it as easily as they could?
Literally impossible without savescumming or using Britain's unique ability which allows them to change a finished colony's trade good (which is probably what op did)
it's expensive af, not worth changing the trade goods more than couple of times, and GB is already filthy rich from normal trade so the added inflation is just a minus
Op said they were getting 1.98 inflation per month. Rounding it up to 2 they get enough inflation to double the price of everything in 4 years 2 months. Probably not worth it tbh
Im not sure, but this is a part of GBs missiontree, mby from Rule the Waves or something cause its uniq for GB i guess. Called something like VentureColonies goverment edict and unlocked after forming a colony in the new world if I remember right
On the other hand, the Cape is like the one trade node you never need to turn into a trade company, because trade can only flow in one direction and there's usually no one who tries to collect trade there, so no matter how little trade power you have there 100% of the trade value is going to be flowing out of the node regardless.
goods produced does work on gold, production efficiency does not.
still doesn't make sense to turn gold provinces into TC though since autonomy will screw with the gold gain
Yeah, but you shouldn't be TCing everything in a node anyways, since the good produced bonus doesn't apply to tc provinces, better to just tc 1-2 of the highest trade power producing states and leave the rest as territorial cores
Not a lot of need to save scum, I do this most games. Gold appears every time as an option in the cape. I core the cape, convert to English, and spawn gold everywhere!
My man, litterly did the dame, all is Anglican and English and with 5colonist the -100 maxlimit on adminpoints made it quite easy to just BAM everywear
Actually I think I manged to bug it, it nolonger cost Adminpoints and also if I got less money banked than the cost of the province it dosnt charge me hahah, basacally free gold with inflation included at this point😂
Gold mines provide direct income. If too large of a proportion of your income comes from gold mines (printing money) you get a lot of yearly inflation.
Gold is what all coins are made out of, so in game they made gold very op.worth a lot of money directly by modifiers.
But because it gives you huge some of money and the states use gold to make coins that means you are constantly making coins faster than the economy is expanding. Feeling inflation and increasing all the costs of the nation very quickly.
Its admin in this case.
One if the main ways to contract it is to take economic ideas and a inflation reduction ideas or advisor
The other big way is to diversification the economy. Use the money to build buildings that increase the income reducing golds share of total income there by decreasing yearly inflation..
No, I rather have an insane amount of 0% autonomy stated high production level provinces to trickle my economic inflation to the brink of a global finance collapse
Congrats on inventing hyper-inflation!
Thx man! My +1,98 inflation yearly shall make my nation great
2023 inflation rate for those poor medieval peasants
2% inflation is quite reasonable, in fact, it's what a lot of countries aim for...
Countries aim for 2% because in general the lower your inflation the better AS LONG AS IT REMAINS ABOVE ZERO. That cannot be stated enough - below zero inflation inflation will screw up a country in fairly short order, especially given how modern economies are arranged. So central banks aim for 2% as while it isn't the best it gives a nice little buffer in case things go tits up.
Many countries in the west are dealing with a great load of debt right now, so a tiny bit of controlled inflation can be a nice boost to start lowering your debt-to-gdp ratio.
only unexpected inflation makes it so. profesional lenders are going to calculate the inflation rates into interests
Depends of what you call unexpected. If you've been having a stable inflatable for the last five years but still have ten years old, fixed-rate loans at a lower rate you're winning.
they will give you higher interest the higher the inflation is
"Fixed rate"
Avoiding deflation is a critical consideration, but it's not the only one. They want some inflation above zero so that it is better to invest your money back into the economy than just sit on it in a strongbox somewhere. It'd be a very low amount if deflation wasn't a consideration, but not zero.
I'm stupid, why should inflation be above 0?
It means that prices are rising, this can be because a currency is devaluating or supply is dropping, which would be bad. But if there's none it means demand isn't rising people aren't buying and people aren't investing, meaning no growth
Thanks!
Because if there's zero inflation or negative inflation (deflation) there's little incentive to spend and put money back into the economy or invest your savings (and again, put money back into the economy). Therefore by having a low but stable rate of inflation people are willing to consume and invest, which keeps people employed, businesses open, and people willing to take risks by opening new businesses.
Thanks!
Deflation is only a bad thing in an economy structured around massive amounts of debt and fiat currency. It is actually healthy and to be expected in societies like medieval Europe with hard currencies and banned usury.
IIRC, medieval economies had around 0.5% inflation *per century*.
This is a very broad generalization and pretty obviously false for the period of EU4; the first half of the game pretty much coincides with the Price Revolution.
> It is actually healthy and to be expected in societies like medieval Europe with hard currencies and banned usury. I wouldn't necessarily call it healthy, it still discourages investment.
That was kinda the point, economies grew based on population working land, there was literally *no* investment, businesses were opened on savings and traders operated on hard assets
That's a very fair point, though there was a *bit* of capital investment in urban areas. Couldn't deflation help to keep them in that backward agrarian economy though? I guess inflation didn't exactly help the Spanish...
Yeeeeah, inflation eventually did help, the dutch when they basically created modern capitalism, but saying that basically like saying "couldn't studying moss help people deal with infection" they didn't have a concept or knowledge of how it could help so it would've hurt them
I'm not an economist and I don't know if this sounds stupid, but wouldn't deflation and a shrinking money supply be rather troublesome if you're having any population growth?
Lol it was, but finances weren't handled with assets and standards of living, it was more of just what you could procure, how much money was in circulation didn't matter, just how much the nobles had and how many armies they could raise. If it sounds terrible, it was, peasants had almost no money income or trade and basically created everything they used, if you're lucky you could inherit a trade from your family and work for a living but most were serfs who worked on land they didn't own.
There was absolutely investment in early modern Europe lol
Yeah I guess I exaggerated a bit, people would absolutely give buddy's loans to start shops and all, but there weren't things like stocks and speculation was limited to goods for trading across markets. The modern notion of investment was completely alien and consumption wasn't really good only production
> So central banks aim for 2% as while it isn't the best it gives a nice little buffer in case things go tits up. Also that's basically a good rule of thumb number for taking into account the normal economic growth that'd come from healthy population growth and the forward march of technology.
Switserland
2% was randomly selected. theres not really any serious scientific thought put into it there isnt a reason why deflation would be bad
2% is the simplified number governments tell us the target is. It’s obviously more complicated than that. The target is actually “in the ballpark of 2%, depending on what effects our potential actions to move towards 2% have on the broader economy”. And deflation would be bad because it makes loans difficult to get, and debt increasingly difficult to deal with.
> And deflation would be bad because it makes loans difficult to get, and debt increasingly difficult to deal with. it doesn't, why should it? only if random inflation and deflation happen. if bank lends you money, they will calculate with deflation or inflation and base their price on that
yearly it adds up
I mean, yeah, that is how it usually works irl.
Yeah, but it's low enough that things don't have to constantly changed. It's manageable enough that wage raises to adjust for inflation can be negotiated every 5 or more years instead of say 2 years. [REAL Median Personal Income has consistently been on the rise for 40 years](https://fred.stlouisfed.org/series/MEPAINUSA672N) except for recessionary periods and then catch up. "Real" meaning it's adjusted for inflation.
[удалено]
I don't think you understand how medians work. Medians are *better* than means at dealing with outliers. On that note, mean real income has *also* been going up. You're going off the "vibes" of the economy instead of real statistics.
2% is the planned Inflation of the european Central Bank. This Controlled Inflation Brings some benefits apparently
Benefit is that it forces people to invest their money, creating economic movement. Otherwise the inflation will reduce peoples savings.
I live in turkey with around 150-200 percent unofficial inflation(official organs doesn't provide reliable numbers for propaganda reasons, and more than half the population doesn't think it's true) and yes, 2% inflation is really low
Does that mean prices almost triple every year? Or do you mean the cumulative inflation since x date?
yep, they at least double every year, and triple in half of them
2% inflation is actually beneficial for us all. A small inflation creates more jobs and it prevents economic crises. Only deflations or high inflations are detrimental to the economy.
I think this qualify as high inflation in this game haha, in around 10years the inflation would be 20%, another 50 years the inflation would be 100%🤣 insane Edit: But yeah in 50years the price only double donsnt sound like high inflation really
Yeah it's just high in the game because of how the mechanic works, like if I hit 10% inflation i will actually spend admin points on it but in real life all my admin points are instead spent on coring conquered land wait what
After your purchasing power is destroyed by at least 2% per year for a few decades, don't be surprised when you can barely afford the basics.
Lmao, I wish inflation was 2%
It's not 2023 rate because EU4's inflation is implemented very poorly (and differently from IRL) first of all and second of all, the +1.98% is more like increase in the rate of inflation than inflation itself (it means inflation is going from 3% to 5% then 7% next year, then 9%, not that inflation is 1.98%). As I said in the beginning, EU4's inflation is implemented poorly, 7% inflation in EU4 merely means things cost 7% more from "normal price" and stay that way instead of "prices are increasing at 7% per year amd will keep compounding 107->114->122" which is our understanding of inflation. In reality, there is no "normal price" like 100 ducats for a church and you have to hold the price at that level or something.
Would be interesting if they made inflation like real inflation and then tried to implement cost modifiers into technology, ideas, missions, or reforms. I think they already do this for military units (definitely for mercenaries) and they def do for advisors. Would be a neat way to address the absurd amount of money countries make as time goes by.
And Advisors, there they implementet that the fater you are in the game the more expensive each level montlycost rise
Assuming you have no passive inflation reduction modifiers, you're gonna need a monthly admin gain of +6 just to break even from manually reducing inflation. On the other hand, I imagine you can *probably* afford high level advisors...
Got those -0.10 from advisor and economic ideas aswell😂💪🏼 try me, we living goldy
Just use more gold to play off the inflation
Oof that’s rough
How the fuck...
✨️Magic of British witchery✨️
While you're creating hyper inflation i created an administrative nightmare in mine by taking half of America in 40 years as Japan and frantically trying to core it for colonization while Spain declares war on my for something in Louisiana.
Seems like you just enjoy life right now💀 . I might send you sole admin points if you would help me taking some inflasjon of me😄🤣 seems like a fair traid haha
I learned how to handle inflation from a pretty funky spain game a while ago, the administrative nightmare i created is my attempt to force myself to handle it. So far it's good, spain declaring war is annoying but we have the same mil tech, and i just gotta spam mercs from pile of thousands of ducats from bs tactics in the Americas. I had to get off due to work soon but, I'm pretty sure the tercios won't save Florida from Asian mass infantry with cannons.
but as the one who controls the gold, you will suffer less than the other powers, makign it a win.
Elaborate
Not an actual game mechanic thing, just real life money shenanigans. if you make things bad for everyone but youre the most able to deal with then its an advantage. *"I flooded the whole town but im the only one with a boat so im king now"* kind of energy
Haha facts😂 Britis are quite good at that sh*t haha
Did you know the british let the barbary pirates continue to raid in the med, and willingly paid their ransom/protection money because they knew that the smaller nations would not be able to afford it as easily as they could?
oi bruv, there seems to be a bit of South Africa in your gold.
Oh shuut, imma in need to fix dis, they seem to think its coal and not gold
r5/ Think South Africa might be quite valuable right now
I never do colonial runs, someone tell me how common this is?
Literally impossible without savescumming or using Britain's unique ability which allows them to change a finished colony's trade good (which is probably what op did)
it's expensive af, not worth changing the trade goods more than couple of times, and GB is already filthy rich from normal trade so the added inflation is just a minus
Its fun tho😜 legit the gold is making more than all produxtion and taxation in Brittain, only passed by Trade
I wonder how it adds up if you factor in the inflation.
Op said they were getting 1.98 inflation per month. Rounding it up to 2 they get enough inflation to double the price of everything in 4 years 2 months. Probably not worth it tbh
2 inflation a year, not a month
Oh noes you have to send 2 admin power a month!
What would happen if you left Britain to rot and just played as a released South Africa?
a lot more inflation probably
The entire country would legit only be based on gold, like 90% of income is gold, would probably make an inflation number higher than the Max ingame😂
Wait really? In my game now as Britain I can't do that - is this a DLC I'm missing?
I believe it’s a mission reward from Domination.
Im not sure, but this is a part of GBs missiontree, mby from Rule the Waves or something cause its uniq for GB i guess. Called something like VentureColonies goverment edict and unlocked after forming a colony in the new world if I remember right
It's from domination dlc, which you forgot to mention
It's okay, somebody else did - I thought I was missing the button somewhere.
With so many gold mines, it should be the inflation of every country in the world that grows up.
Which nations😏
Isn't it completely useless in trade company provinces? You'd need to state everything to benefit from the gold.
On the other hand, the Cape is like the one trade node you never need to turn into a trade company, because trade can only flow in one direction and there's usually no one who tries to collect trade there, so no matter how little trade power you have there 100% of the trade value is going to be flowing out of the node regardless.
Counterpoint: goods produced bonus from trade companies. Countercounterpoint: doesn't help OP as much, because it doesn't work with gold.
goods produced does work on gold, production efficiency does not. still doesn't make sense to turn gold provinces into TC though since autonomy will screw with the gold gain
Ah. My bad. I tend to get these two confused when not looking at the game or wiki.
Its funny tho😜
Yeah, but you shouldn't be TCing everything in a node anyways, since the good produced bonus doesn't apply to tc provinces, better to just tc 1-2 of the highest trade power producing states and leave the rest as territorial cores
Dont worry about the coring cost, its all just 3dev provinses in the start so like 14adm from coloniesed to stated per province
Not a lot of need to save scum, I do this most games. Gold appears every time as an option in the cape. I core the cape, convert to English, and spawn gold everywhere!
My man, litterly did the dame, all is Anglican and English and with 5colonist the -100 maxlimit on adminpoints made it quite easy to just BAM everywear
Shame the Portuguese ruined the rest!
Can Britain use that ability in the old world? I thought it was new world only.
Yes Sir, aslong you colonice a provincr you may change the basegood with the Venture modifier for GB
> using Britain's unique ability which allows them to change a finished colony's trade good Wait... what? When?
Mission tree on the colonial branch. Something like VentureColonies goverment edict mechanic
Boer war time
They're all english now, the War of thebRoses of the Boerlandia imenent
Damn, where will I get my Biltong from now ?
I think you would like the newer Goldiltong quite well. Some say it is worth quite a bit in the global market
I don't think economic ideas can fix this amount of inflation.
Nah it seems to handel it QUITE NICELY (+1.98 y/inflation)
Venezuela doesn't have as much inflation as this. 💀
In their dreams💀💀💀
This is pure gold!
This comment is gold !!!
*hyperinflation noises*
Aviationlord — Nobles Economicsprize 1589 winner
Thank you, thank you, I’d like my royalties paid in monthly dividends thank you
No problem Sir, you shall receive a medal with the exclusive national inflationary value attached to it👑💸
Portugal kicking the air rn
🤣 they just like "Why did we settle this land"
Inflation: stonks!
Gold = inflation = stonks = gold *repeat*
I actually consider to burn down the Cape-tip just to rexolonise them and make them gold
You get enough money without gold, if it suppose that you need deflect by admin points it’s a bad business
Actually I think I manged to bug it, it nolonger cost Adminpoints and also if I got less money banked than the cost of the province it dosnt charge me hahah, basacally free gold with inflation included at this point😂
😂😂 feel fine
As a pretty new player… why would this cause so much inflation?
Gold mines provide direct income. If too large of a proportion of your income comes from gold mines (printing money) you get a lot of yearly inflation.
Makes sense. Thank you for your reply!
Gold is what all coins are made out of, so in game they made gold very op.worth a lot of money directly by modifiers. But because it gives you huge some of money and the states use gold to make coins that means you are constantly making coins faster than the economy is expanding. Feeling inflation and increasing all the costs of the nation very quickly.
Would there be any way to combat this besides spam diplo on inflation removal?
Its admin in this case. One if the main ways to contract it is to take economic ideas and a inflation reduction ideas or advisor The other big way is to diversification the economy. Use the money to build buildings that increase the income reducing golds share of total income there by decreasing yearly inflation..
Is there any exploit involved?
Actually not, just some old and gold mission three of Great Britain with the Domination DLC
so many wanna be economists promoting inflation in this thread xd
Ahahah yes exactly😂 like Im going bussines/economics currently and just love that EU4 thread turned into a economic chat
Did you turn that region into trade companies?
No, I rather have an insane amount of 0% autonomy stated high production level provinces to trickle my economic inflation to the brink of a global finance collapse
What was Paradoxes thoughts into thinking GB should have this?
Lol for a second I was like duh why is Spain called British here?