The major reason for a base inflation this: If there was zero inflation, then keeping cash in the bank is the safest thing to do. If everyone does this, money moves less, less investment, slower economy. Sure some will still invest, but the vast majority of people will just put money in the bank, or under their mattress.
With >0% inflation, you now need to do something with your money or else you lose money. If my great great grandparents buried their life savings and gave I received it now, I'd get a new laptop and that's about it.
So now everyone has to invest it. 401k's, other investments, etc. This makes the economy start moving, more activity, this is the 'velocity' of money they mentioned as being a key factor in the health of an economy.
With >0% inflation, you now need to do something with your money or else you lose money. If my great great grandparents buried their life savings and gave I received it now, I'd get a new laptop and that's about it.
So now everyone has to invest it. 401k's, other investments, etc. This makes the economy start moving, more activity, this is the 'velocity' of money they mentioned as being a key factor in the health of an economy.