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Three Federal Reserve governors, Messrs. Lindsey, Laware, and Kelley, have declared that the economy has slowed and inflation is not a problem. Leading Wall Street economist Ed Hyman takes the same view, arguing that inflation is headed for 2 per cent.

But California supply-siders Arthur Laffer and Victor Canto have a different view. They reject the inflation-output trade-off known as the Phillips Curve, arguing instead that higher taxes will slow the real economy while easy money will boost inflation. In other words, growth and inflation are negatively, not positively, correlated.

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Three Federal Reserve governors, Messrs. Lindsey, Laware, and Kelley, have declared that the economy has slowed and inflation is not a problem. Leading Wall Street economist Ed Hyman takes the same view, arguing that inflation is headed for 2 per cent.

But California supply-siders Arthur Laffer and Victor Canto have a different view. They reject the inflation-output trade-off known as the Phillips Curve, arguing instead that higher taxes will slow the real economy while easy money will boost inflation. In other words, growth and inflation are negatively, not positively, correlated.