The increased supply of capital and lower interest rates enables capitalists to expand their production projects, allocating more funds to labor and other factors of production. The rising wages and general impression of prosperity are considered politically desirable and enable the policy-makers to retain their power.

Any long-term ill effects that might outweigh the immediate advantages of the inflationary policy are regarded as politically insignificant. First, such effects will probably come to light only much later, under a different administration, perhaps even led by another political party. In addition, an uninformed public will be unlikely to associate these effects with the original act of inflation. Indeed, most people are oblivious to the interventionary process of inflation, just as they might be unaware of a private counterfeiting operation. As John Maynard Keynes observed (): "The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Furthermore, when the ill effects finally appear, as we shall see below, they can easily be blamed on various parties outside the government.

Although inflation may later produce a wage/price spiral (discussed below), even this effect can be turned to advantage by politicians. For if a graduated income tax is in effect, they will be able to raise additional revenue without explicitly voting for an increase in nominal tax rates.

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