HISTORIC WORLD ECONOMIC DISASTER BECKONS: Out of ammo? Even the Economist, that mouthpiece of big-government, establishment economic thinking, can see that the end is nigh for “responsible” manufacturing-new-money-and-giving-it-to-your-friends. (Have you noticed that there is an awful lot more money around than there was say 20 years ago? We talk of trillions of dollars now. Did you get any of the newly-manufactured money? Me neither, except maybe a house loan.)

One fear above all stalks the markets: that the rich world’s weapon against economic weakness no longer works. Ever since the crisis of 2007-08, the task of stimulating demand has fallen to central bankers. … Despite central banks’ efforts, recoveries are still weak and inflation is low. Faith in monetary policy is wavering. …

The time has come for politicians to join the fight alongside central bankers. The most radical policy ideas fuse fiscal and monetary policy. One such option is to finance public spending (or tax cuts) directly by printing money—known as a “helicopter drop”. Unlike QE, a helicopter drop bypasses banks and financial markets, and puts freshly printed cash straight into people’s pockets. The sheer recklessness of this would, in theory, encourage people to spend the windfall, not save it. (A marked change in central banks’ inflation targets would also help: see Free exchange.)

Another set of ideas seek to influence wage-and price-setting by using a government-mandated incomes policy to pull economies from the quicksand. The idea here is to generate across-the-board wage increases, perhaps by using tax incentives, to induce a wage-price spiral of the sort that, in the 1970s, policymakers struggled to escape.

Oh! Who can see inflation coming?

Keynesianism and three centuries of ever-bigger banking-and-government is reaching its logical endpoint. Bad policy and unreal ideas matter — they just aren’t (to use their favorite word) sustainable.