For economists:
For a generation or maybe more central bankers of North American and European nations especially but also generally have seen it their prime duty to fight inflation and they are proud to keep it down below 2% and have no problem with keeping it at 1% or even below.
Inflation of course, is based on reduced purchasing power of money (that is increased prices) largely driven by circulation. Pump more liquid money into the economy, and the value of money goes down and prices go up since it now takes higher prices to get the same profit.
We're familiar with the issues of run-away hyper-inflation (Argentina in the past, Zimbabwe now). However, there is a school of economists that believe that central bankers are at this point, doing more harm than good in terms of fighting inflation. They can point to Japan where the desire to control inflation has continued to mire the Japanese economy in minimal growth despite usage of other tools (among other things). Another result of a determination to keep inflation very low in a recession is increased unemployment. Increased inflation can also help the average person since their debts are reduced (in real terms) and they tend to get raises.
A counterpoint is China. In the current recession China ignored worries about inflation and poured stimulus into its economy in a method similar to what is known as "qualitative-easing." Now that inflation is starting to take root in the Chinese economy, government policy makers are taking their "foot off the gas" so to speak and focusing a bit more than inflation. By contrast, the obsession with inflation fighting in the west has led to a much more restrained or retarded growth. It seems from published reports and interviews that central bankers are PROUD of low inflation and don't really care what the adverse effects are.
Basically my question for those with an economic bent: What would the world be like if a more balanced view of inflation v. unemployment had taken hold in the west?