Scenario A will happen with almost a certainty in some cases, but certainly not all. A and B will both occur. The problem is calculating the level of both A and B is very very difficult.

I look at making these kinds of interventions as the equivalent of playing Minefield. Sometimes you click on a square, and everything is hunky dory. Sometimes you get blown up. Since we are talking about the lives and livelihoods of millions of people, I think thats a piss poor paradigm to follow.

You are correct, increasing wages does not *always equal large inflation. There are many many factors involved. See minefield example.

For who could be free when every other man's humour might domineer over him? - John Locke (2nd Treatise, sect 57)