1. Yes, broad redistribution of money (demand) and poor productivity growth (supply) creates price inflation. ‘Fiscal Policy’ seems like a meaningless term, so

1. Yes, broad redistribution of money (demand) and poor productivity growth (supply) creates price inflation. ‘Fiscal Policy’ seems like a meaningless term, so I can’t comment. But you know what is both designed to redistribute money and massively hampers productivity? Taxes. 2. You’re assuming that the budget is constant. It is not. Governments employ debt because they can. Governments tax because they can. If anything, the relationship is the opposite of the way you state it. Taxation allows them to take on more debt. Debt forces them to increase taxation. 3. Good theory. It is what I would have believed before spending over a decade in the bureaucracy. It’s neither right nor wrong, but irrelevant to the actual functioning of the system.