Why currencies can't be lowered?

Question

why don't we just lowered the prices for anything, yet we recieve the same amount of payment, so that most people can enjoy life better, without having serious financial crisis. i mean, lets lower the currencies throughout the world, just to be fair. so there is no inflation that just brings disadvantages to ourselves! sometimes this just doesn't make sense, human sells goods and services to other human, yet both the producers and customers having difficulties due to the high prices and inflation! for example, from $100 to just $50. won't life be so much simpler and better??

Answer 1

You misunderstand inflation, typically higher prices mean higher wages.  The difficulty comes in the interim of transition.

The reason we don't revalue our currency is that it would cause distortions in the trade balance that would be bad.  A strong currency means you can import more, but it also means you export less.  That's why China has kept their currency weak for years, so they can export more.  It's just more complicated than you think it is to do.  So generally it's better just to try and guide the markets in times of recession that to reprogram them.

Answer 2

If you live in a dictatorship, or in a communist country your point would be valid; because the government in that situation has the power to regulate such things. In a free market system there is no one person who has the ability to regulate prices to meet their standards, otherwise the market would not be 'free.' As far as currencies go, they are arbitrarily valued, i.e. they are not backed by anything real. The only thing that give money its value is the country that it is based in. Inflation is not just a problem that you can wish away, when people stop investing or spending money the economy slows, thereby hurting the currency; if we were able to call back alot of money, we could curb inflation, but it would also be stealing...

In conclusion, economy in general is arbitrarily controlled, and no one person or agency has the power to regulate prices when they see fit.