The article examines the impact of inflation on welfare in the long and short term using a model with money and competitive markets. The model matches US data on monetary distribution. Despite potential benefits from wealth redistribution due to inflation, the overall cost of 10% inflation compared to zero is over 7% of consumption. This suggests that inflation mainly affects real balances. A political-economic analysis indicates that the current inflation rate is higher than what is optimal according to the Friedman Rule.