about 0.15 percent of the GDP a year. A comparable tax hike reduces spending growth by the same amount" ( http://www.theatlantic.com/magazine/arch\\... ) s/b William A. Niskanen, the chairman of the libertarian Cato Institute says: "judging by the last twenty-five years (plenty of time for a fair test), a tax cut of 1 percent of the GDP increases the rate of [government] spending growth by about 0.15 percent of the GDP a year. A comparable tax hike reduces [government] spending growth by the same amount" ( http://www.theatlantic.com/magazine/arch\\... ) "In conformity with economic theory, the spending effect was larger when the tax change was legislated to have a permanent effect on tax liabilities." The effect of tax changes on consumer spending, Steindel, Charles, Current Issues in Economics and Finance, December 1 2001 http://www.allbusiness.com/marketing/mar\\... Inflation is only possible if an increase in the monetary base is permitted to accommodate excess aggregate demand by means of an increase in prices. Why should we assume that the central bank would accommodate an excess of aggregate demand through an expansion of the monetary base? A constant level of optimal public spending and a concomitant expansion of the monetary base for this purpose would limit the growth of the monetary base to the rate of public spending. Why should this be inflationary? issuing debt is just a 'reserve drain' to support interest rates. you have a lot of catching up to do- please start with 'soft currency economics' under 'mandatory readings' on this website Alexander Doty Reply: