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Mainstream medieval inflation medicine

Summary:
Mainstream medieval inflation medicine Inflation peaked back in June 2022, only three months after the Fed started hiking interest rates. At that time, the Fed’s policy rate had risen just 75 basis points, and no one knew how much higher it might go. In fact, we have no evidence that monetary policy had any significant effect on the course taken by prices – certainly not before the June 2022 turning point, and not thereafter, either. In modern medicine, a specific diagnosis normally leads to a specific treatment. But that is not the case in modern economics. Instead, the absence of an orderly sequence in the recent episode recalls the medieval approach to medicine, according to which all disease stemmed from an imbalance of the four bodily “humors.”

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Mainstream medieval inflation medicine

Inflation peaked back in June 2022, only three months after the Fed started hiking interest rates. At that time, the Fed’s policy rate had risen just 75 basis points, and no one knew how much higher it might go. In fact, we have no evidence that monetary policy had any significant effect on the course taken by prices – certainly not before the June 2022 turning point, and not thereafter, either.

Mainstream medieval inflation medicineIn modern medicine, a specific diagnosis normally leads to a specific treatment. But that is not the case in modern economics. Instead, the absence of an orderly sequence in the recent episode recalls the medieval approach to medicine, according to which all disease stemmed from an imbalance of the four bodily “humors.” And, as in pre-modern medicine, the treatment is always the same, regardless of the nature of the humoral imbalance. Medieval doctors drew blood; modern central bankers raise interest rates. The parallel is exact, because the thinking hasn’t change.

James K. Galbraith

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

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