actually a little inflation policy is always an appealing choice
for politicians because it allows them to finance their spending
sprees with a hidden tax and its a tax they need never vote on or
defend to their constituents. To impose it they merely have to
spend money, if they spend more money they can raise in visible
taxes, they run a budget deficit and borrow money(sell bonds) to
pay the government bills.
So when the united states ran up a massive budget deficit like what
happen in the 80's under regan administration, the central bank did
what they knew the politicians wanted to do. They bought some of
the debt on the open market paying for it's purchases with cash
created out of thin air, this created an added demand which pushed
up prices for treasury bonds and bills which is the same as
lowering interest rates because when the price of bonds goes up
their yields drop. Then as new money begins flushing through the
economy driving up prices as more money chases the same quantity of
goods you begin to have inflation.
In the end is all power play and manipuiation by the politicians to
create a false sense of wealth and prosperity culminating in a
raging stock market bull run all this just to increase their
chances of re-election.
At this side of the world it means in the short term our stock
market rally will also turn into a massive bull run.