Mochi had been very responsible.

For six months, every Saturday, she had dropped her allowance into a jar on her shelf. She was saving for the Cosmic Rocket PlaySet, which cost exactly $10. She had done the math. She was almost there.

Then she went to the shop.

The Cosmic Rocket PlaySet now cost $12.

Mochi came home and sat in the hallway with the expression of someone who had been personally wronged by the universe. Hodl found her there, stared at the jar, stared at her, and sat down.

“I saved the right amount,” she said. “And now it’s not enough.”

“Yes,” said Hodl. “That’s inflation. It has a name.”

“I want to have a word with whoever is in charge of that,” said Mochi.

Hodl took a deep breath. He had been waiting for this conversation for a while, actually. He had prepared.

"Okay," he said. "Imagine you had ten cookies."

Mochi looked slightly more interested.

"And someone asked you what the cookies were worth. You'd say they're worth whatever someone will trade for them, right? Now imagine someone made more cookies — a hundred new cookies — and handed them out for free. Suddenly everyone has cookies. Cookies aren't as special. So the things you'd trade cookies for — toys, lemonade, scratching posts — cost more cookies now, because cookies are everywhere."

"That's money," said Mochi slowly.

"That's money," said Hodl. "Someone makes more of it, the existing money buys less. That's inflation."

"Who makes more money?"

Hodl paused. "That's the really interesting part," he said.

Where does inflation come from?

Prices don’t rise randomly. Inflation — the gradual decrease in how much your money can buy — usually happens because the supply of money grows faster than the supply of things to buy. More money chasing the same goods means each unit of money is worth a little less.

In modern economies, money supply grows primarily through two channels: central banks like the Federal Reserve expanding credit, and commercial banks creating money when they issue loans. Governments can also spend more than they collect in taxes and effectively create new money to cover the difference.

The result, over time, is that a dollar saved today is worth less next year. Not a lot less, in a healthy economy. But consistently less, year after year, for your entire life.

The 2% target — and what it means for savers

Most central banks deliberately target around 2% annual inflation. This is intentional. Mild inflation encourages spending (why hold cash that loses value?) and makes debt easier to service over time. It also means that money kept in a savings account earning 0.5% interest loses purchasing power every year, quietly and without announcement.

Bitcoin’s supply is fixed

Bitcoin has a maximum supply of 21 million coins, set in the original protocol and enforceable by math and network consensus. No central bank can create more. No government can expand it in a crisis. The supply schedule is public and immutable. This is why many people hold Bitcoin as protection against inflation — it’s designed to be resistant to the force that eroded Mochi’s savings.

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Hodl’s note: This is not investment advice. Hodl is a cat. But the math on holding cash vs. holding something with a fixed supply over long periods is worth understanding, even if you’re nine and your savings jar has $8 in it.

What Mochi decided to do

Hodl explained that Mochi had two options. She could keep saving dollars, knowing they might buy slightly less over time. Or she could put some of her allowance into something that couldn’t be inflated.

Mochi thought about this for a while.

Then she asked if Hodl would help her set up a wallet.

Hodl helped her set up a wallet. It took about ten minutes. She put in $2 worth of Bitcoin and left $6 in the jar for near-term purchases.

She still needed to save for the Cosmic Rocket PlaySet. But she felt, for the first time, like she understood why the numbers kept moving.

That felt like something.

The short version

Inflation happens when the money supply grows faster than the things money buys. Each unit of money gradually purchases less. This is not an accident — most central banks target mild, steady inflation on purpose. Bitcoin’s fixed 21 million supply is designed as a direct response to this: a money that can’t be inflated away by whoever controls the printing press.

Accept money that stays fixed.

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