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To: Oeconomicus who wrote (2713)	11/11/2008 12:30:21 AM
From: c.hinton	Respond to of 3816

oec...do you even know what aggragate demand is in relation to inflation? en.wikipedia.org "Demand-pull inflation arises when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation. This would not be expected to persist over time due to increases in supply, unless the economy is already at a full employment level. The term demand-pull inflation is mostly associated with Keynesian economics." now try this on counter cyclicare fiscal policy bized.co.uk "if aggregate demand in low (AD1) then the government should pursue reflationary policies such as cutting taxes or boosting government spending to push aggregate demand higher and boost employment and output. However, if aggregate demand is too high (AD4) and causing demand-pull inflation then the government should pursue deflationary policies. These may include increasing taxes or cutting government spending to reduce demand." it would seem obvious that if one reduces taxes to stimulate demand one can raise them to do the opposite.... PS... re "Keynes never said any such thing"......of corse he did not say "you raise taxes to choke off inflation ....when inflation is out of controll." those are my words.......

To: Oeconomicus who wrote (2713)	11/11/2008 4:24:47 AM
From: c.hinton	Respond to of 3816

OEC...did you not see that the article you cite is solely concerned with describing the perils of the hidden "inflation tax"... as opposed to taxes in general? try this one...."Expansionary and contractionary fiscal policy. " cliffsnotes.com "Expansionary fiscal policy is defined as an increase in government expenditures and/or a decrease in taxes that causes the government's budget deficit to increase or its budget surplus to decrease. Contractionary fiscal policy is defined as a decrease in government expenditures and/or an increase in taxes that causes the government's budget deficit to decrease or its budget surplus to increase. Classical and Keynesian views of fiscal policy. The belief that expansionary and contractionary fiscal policies can be used to influence macroeconomic performance is most closely associated with Keynes and his followers. The classical view of expansionary or contractionary fiscal policies is that such policies are unnecessary because there are market mechanisms—for example, the flexible adjustment of prices and wages—which serve to keep the economy at or near the natural level of real GDP at all times. Accordingly, classical economists believe that the government should run a balanced budget each and every year."