Then, excess demand resulted in higher inflation, huge current-account deficits and rampant asset-price inflation.

ECONOMIST: China's economy

One more reason not to lose sleep over the surge in oil prices is that, unlike the rises in the 1970s, it has not occurred against the backdrop of general commodity-price inflation and global excess demand.

ECONOMIST: Oil��s pleasant surprise

The doves counter that it is excess demand, not rapid growth, that causes inflation to accelerate, and argue that America's economy, though certainly booming, is in no danger of outstripping its capacity.

ECONOMIST: The storm before the storm?

Over the past two years, some of the main drivers of Chinese inflation have been excess liquidity combined with strong domestic demand and supply shocks to food prices and commodity prices, according to Chang.

FORBES: China Tightens Liquidity Amid Stubborn Inflation

As stockmarkets rally on a belief that the central bank has acted pre-emptively and quashed any prospect of inflation, looser financial conditions could fuel the very excess demand that the Fed is trying to reign in.

ECONOMIST: Monetary policy isn��t getting any easier

HSBC, most such episodes occur during periods of unusually low inflation, which give monetary policymakers an excuse to disregard potentially worrying indicators of excess demand.

ECONOMIST: Greenspan lets things simmer

If the economy "overheated, " i.e. inflation reared up, these once-worthies cried for higher taxes to soak up excess demand.

FORBES: Fact And Comment

If the economy "overheated, " that is inflation reared up, these once-worthies cried for higher taxes to soak up excess demand.

FORBES: Fact and Comment