As we have recently noted in these pages, it was our expectation that the advice of the currency debasers that rule today's economic orthodoxy would once again prevail, despite the reams of both theoretical and empirical evidence arrayed against it. This ongoing war on savers will end up doing incalculable economic damage in addition to the damage it has already wrought. The whole thing is as though physicists were suddenly abandoning Einstein's theories on a whim, arguing that they are no longer fitting for our modern age since they are a century old.
It is of course possible for Einstein's theories to be wholly or partly superseded one day, if contradictory evidence emerges that requires an alternative explanation for the phenomena observed. In the natural sciences it is (relatively) easy to test theories, as they can be subjected to controlled and repeatable experiments (of course in physics there is also theoretical work that can not, or not yet, be tested in this manner. At the time Einstein's theories were published, they were also not immediately testable, but this has changed over time).
In the social science of economics, no controlled or repeatable experiments are possible. Whenever someone says that e.g. Ben Bernanke's monetary experimentation has 'saved us from a repeat of the Great Depression', then they have actually no way of showing that their contention is true, since we have not experienced the alternative course of events where Bernanke did not engage in monetary pumping. We can not say 'let's go back in time and play the whole thing through again without meddling by the Fed'.
So when someone like Martin Wolf, Adam Posen or Charles Evans says 'we need more inflation to fix the economy', they should be required to show by means of logical ratiocination in what way their idea is superior to the devastating debunking of inflationist theories better economists have provided us with a long time ago already. When Ludwig von Mises published 'The Theory of Money and Credit' in 1912, it was the culmination of a century of debates on the topic and should have forever laid pro-inflation arguments to rest.
Nonetheless, interventionism and inflationism continue to be as popular as ever with the statism supporting economic mainstream and central banks continue to implement it.
As Bob Hoye recently remarked, their theories and actions always appear to be 'working' when asset prices go up, as people will then tend to believe the most outrageous nonsense. It is in a sense a variant of the vapid rationalizations that attend stock market bubbles.
