Yes. The price would be higher than it would have been. It doesn't mean it's a bad thing to do, the benefits in increased demand, higher employment etc might outweigh the negative of higher inflation.

In a recession (or recession-like conditions) it would make sense for the government to fill some of the demand gap by a combination of higher borrowing and temporarily printing money. (So long as the printing of money is controlled by a body other than the government. Ie the Bank of England)

But why would prices increase just because demand increased when there was spare capacity and maybe unsold stocks? It is possible to print money without inflation but the danger comes if the printing goes on too long. and that's something that can only be judged in hindsight.

Because if there's spare capacity and unsold stock then companies have to lower their prices to sell that stock, if they don't sell anything they'll go out of business pretty bloody quickly. Prices won't necessarily go up, but will either stay stable or not decrease by as much. So prices and inflation are higher than they would have been, which is an increase.

It is almost impossible to print (and effectively use) money without inflation, but there might be additional deflationary factors that are either stronger or even it out.

Precisely.

That still doesn't mean that the policy itself isn't inflationary.

No one would be doing it if it weren't for fear of deflation.

LeighGionaire: the only person I know who is less economically literate than George Osbourne.

I do actually know (not by choice) someone who shares similar ideas with LeighGionaire.



They also believe that 9/11 was caused by the US government.

Well you could argue that, indirectly, it was...



*hides under tinfoil hat*

Yeeees. Indirectly, is the word.



That's not what they're meaning.



I have heard, more than once, the: 'steel doesn't melt at ...' argument. They get laughed at. To their face. And not just by me.

If I ever need a good laugh, I google "9/11 conspiracies"

[url=http://www.unison.org.uk/news/news_view.asp?did=8526Check this out[/url.



A school is found to have asbestos. Then the HSE changes its mind and says it's safe, even though other independent inspections say there is a problem. And the HSE won't release the report.



That would be one way to save money.