"when inflation goes higher, the level of consumption goes lower, and the economy goes in decline, which reduces tax revenue."
But does inflation lower the level of consumption? At a basic level inflation favours the borrower at the expense of savers. The result is more people will borrow and less people will save. This tends to increase consumption.
In addition, inflation encourages hoarding which again increases consumption.
When interest rates are artificially low, like in the US, then an increase in the money supply and the consequent increase in inflation, can lead to quite reckless and speculative borrowing. The reason is the true interest rate of a loan is the interest rate minus the inflation rate. If rates are 4% and inflation is 5% your true rate of borrowing is -1%. Everyone will be borrowing when that occurs.
