Inflation is a currency problem, not a growth problem. Very high rates of growth have occurred with low or no inflation or even deflation. Production increases supply, which lowers prices. From John Tamny at realclearmarkets.com:
In their new book America In Perspective, David Sokol and Adam Brandon report that in 1700, what eventually became the United States had a population of 250,000. By 1770 it was 2.1 million. One hundred years later there were 40 million Americans. By 1914, the number had ballooned to 99 million.
What explains the surge of humans from all over the world? It’s a waste of words to answer the question, but for those still a little bit sleepy, the answer to the question is economic growth. Word travels fast on the matter of prosperity. Abnormally fast growth logically proved a magnet for the world’s strivers in search of something better.
Was all the growth a driver of inflation? It’s a waste of words to answer this question too, but the words will be wasted owing to a growing desire among members of the Left and Right to re-define inflation as a consequence of too much “demand” born of, yes, growth. What a laugh.
Indeed, the surest sign the U.S. didn’t have an inflation problem was the growth itself. Figure that the latter is an obvious consequence of investment (not the “demand” bruited by conservatives and liberals who’ve replaced common sense with textbooks), and investment is all about the production of more and more for less and less. Yes, investment is generally about productivity enhancements meant to produce abundantly and cheaply what used to be expensive and scarce. If you’re wondering if an economy is growing, just look at prices. If once pricey items are becoming more and more accessible, you know there’s growth.