Inflation is a Product of Ineptitude, Not Misfortune

Economists do little harm outside of government. True, the Sydney-based Australian Bankers’ Association Research Directorate was closed down shortly after I left my position of economic adviser in the mid-1980s, and the State Bank Victoria collapsed while I was chief economist at the beginning of the 1990s. However, I protest my innocence and impotence. I was too uninfluential to be instrumental in defining events. And, let me say, most economists in the private sector are in the same boat. That’s not the case when it comes to government. When in government, and most definitely I include central banks as part of government, there is no limit to the damage economists can do. We are about to live through a time which underscores that baleful reality.

Inflation has been let loose. This has not been the product of happenchance, unforeseeable by those trained in economics or, in fact, by anyone with the slightest interest in economic history. Inflation (a persistent and…