This theory is far from original to me, but I will state it anyway. I think that a government increase of demand (i.e. spending) can and does increase real economic growth up to a certain point. It causes inflation, but because of human psychology, it revives a stagnant economy and so increases growth more than it increases inflation... up to a certain point. If it becomes excessive, the effect becomes more negative than positive. The increased spending is not sufficiently wanted to offset the weakening of the dollar. I think that when inflation passes a certain point it almost inevitably exceeds growth. First, am I correct? Second, if so, how can this crisis point be found in the economy at any given time?

(My economic threads are monotonous, but they beat those anti-Semitic ones by certain other posters, don't they?)

__________________
"I am a Tory Anarchist. I should like every one to go about doing just as he pleased- short of altering any of the things to which I have grown accustomed." (Max Beerbohm)

Non of us are economists, so I don't see the use in arguing this.

Indeed. Economists have a monopoly on making predictions that don't come true. It's because they can make charts.

__________________
That information is classified and to be given only on a need-to-know basis...

And I do not need to know.

I would say that there are two sides with this issue. The first is the fact, that inflation is typically exist, because the central bank (goverment) prints more money. Otherwise the currency rate would follow the economic development. When economic grows, the currency's value would raise, and when economic shrinks, the opposite.

The value the goverment gains in the process of printing money, is taken from anyone's pocket, who hold currency. And the more currency you own, more money is transferred to the goverment. In this way the question of the inflation rate becames a question of the tax rate. So ~ how high tax rate is acceptable.

A bigger problem with the inflation raises if people get sick of inflaction (~goverment stealing their money), and change the currency they use. Like I mentioned, the currency's value is related to the size of economy using the currency. When the economical area starts to shirnk, other people might panic and move away from the currency, thus increasing inflation and creating even greater motivation to abandon the currency. This might end in a collapse of the currency's value as well as a collapse in the economics.

- BtD

__________________
"Freedom is the freedom to say that two plus two make four. If that is granted, all else follows."
[George Orwell, 1984]

Hey, that's not very nice.

__________________
I wasn't born with enough middle fingers.

But does that make it any less true?

__________________
That information is classified and to be given only on a need-to-know basis...

And I do not need to know.

Especially when you have to get an exact number.

__________________
I wasn't born with enough middle fingers.

No doubt. I was just arguing that it's not pointless for us to be able to argue this stuff simply because we are not professional economists. That would entail that those of us that are not sociologists or political scientists are really wasting our time discussing anything on this forum.

__________________
That information is classified and to be given only on a need-to-know basis...

And I do not need to know.

The question in the thread has no answer that anyone would agree on. I would say under 4%.

__________________
I wasn't born with enough middle fingers.

I disagree javablack. When it comes to certain economic and socioeconomic topics we can argue because usually the issues entail ideological beliefs. But, the concept of wether 3% or 2.4% inflation is is better or worse, is not suited to the average joe. They have thousands of economists working around the clock calculating and crunching these numbers, using statistics from every corner to determine what the best decision is. We dont have the capacity to argue this. We can only argue as to whether more or less inflation is good or bad, and even that is ifee in my book unless the indvidual has a solid understanding of macroeconomic theory.

It would be like arguing whether we should send 100, or 150, or 170 thousand troops into Iraq when invading. Only the generals and such people can determine such numbers, while we can only argue such abstract ideas like more or less troops.