Question:

Tax cuts spur the economy but fuel inflation. Is inflation good for the economy?

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Tax cuts are popular--politicians like them because it gets them votes. It allows more spending, which spurs the economy, and people are happier--at least in the short run. But in the long run it feeds into inflation.

Is inflation a bad thing or a good thing for the economy?

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  1. There is nothing good about inflation.  So, in short, inflation is a bad thing for the economy.  But, the costs of moderate inflation are moderate.  And, in order to eliminate inflation, we would have to go through a recession.  The thing about inflation that causes problems is when it gets up to about 8% a year.  In that situation, you have to deal with lots of price changes as well as trying to keep as little as currency as possible in your hands because the inflation erodes its value.  Inflation is never a good thing though.


  2. Inflation is Bad, no matter how you slice it...

  3. Its a bandaid on a broken leg....just a symbolic, short term fix

  4. = When you ask "what is good for the economy" you should never forget that nothing ever effects everyone equally. Large scale immigration is probably good for the economy, but may not necessarily be good for the working class.

    = Inflation is always going to hit the working class harder than the wealthy. Salaries don't adjust very fast, and checking accounts and banknotes don't pay interest.

  5. I think my thinking might be off from the rest of the world's, but isn't inflation what Russia has, where they spend like $1,000 on a loaf of bread, but their $1,000 would equal $3 here?  In my mind, that is not a good thing.  The dollar looses value more and more.  Look at the economies of other countries who have gone through crazy inflation.  That will show us where we are headed, whether for bad or good.  In my mind inflation is only good for people who are getting the extra profit from the higher prices, which is usually the minority of the country.

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