An overheated stockmarket could spill over into an overheated economy and so push up inflation.
Moreover, these increases have been due to weather, not an excess of demand caused by an overheated economy.
The Shanghai Composite Index has fallen 21% as domestic investors fret over Beijing's efforts to cool an overheated economy.
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Perhaps, as Mr Greenspan seems to fear, the signs of an overheated economy can be seen most clearly in the stockmarket.
As Mr Greenspan himself pointed out last month, an acceleration in demand need not imply an overheated economy if it is caused by an acceleration in productivity.
Until late in 2011, the focus of policymakers in China was on tamping down inflation, stocked by a surge of stimulus spending in 2008-2009 that led to a real estate bubble and an overheated economy.
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And, according to the perceived wisdom, cooling an"overheated"economy means raising taxes and interest rates.
If the economy "overheated, " i.e. inflation reared up, these once-worthies cried for higher taxes to soak up excess demand.
If the economy "overheated, " that is inflation reared up, these once-worthies cried for higher taxes to soak up excess demand.
That was because the economy was overheated, gas prices were skyrocketing, and everybody made a lot of speeches but not much happened.
That in turn usually results in the economy being overheated, and the stock market being over-valued again, and the cycle repeats, with the next administration then allowing those excesses to be corrected in the first two years of its term.
But the government is concerned that some parts of the economy are becoming overheated.
The only problem is that the overheated rhetoric might itself be bad for the economy.
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The economy is operating at around capacity, whereas it had become dangerously overheated in the late 1980s.
MPC's worries, the revisions also revealed that the economy has remained unhealthily reliant upon a consumer boom, fuelled by an overheated housing market.
An implosion of the U.S. housing market, ironically overheated by a previous round of central-bank rate cuts, has slowed the world economy, sparking recessions in the United States and Europe.
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