Hello Paul. Thank you for taking the time to read (I thought only my mom read these) and post a thoughtful challenge. I won’t disagree with the points you made with one exception: “a good policy”. They certainly sound like a good policy for reasons you describe but if they actually were then why had they never been thought of before? Jim Grant (of the Interest Rate Observer) has popularized a claim that has been repeated many times now over the years: these are the first negative nominal interest rates (short-term policy rates) in human history. He’s relying on Sidney Homer and Richard Sylla’s book, A History of Interest Rates.

Economics is neither organic chemistry nor materials science, it is not a field where the advancement of human knowledge leads to breakthroughs. Economics is the study of human behavior through a particular lens (money), like politics through the lens of power or religion through the lens of faith. I bring all this up in a long-winded attempt to say that in economics – like in other fields relating to the human character – we can rely on the great texts, philosophers, playwrights of the ages for guidance. Nobody had come up with this idea before.

Now, that’s either because our monetary technocrats are wiser than all the generations before or, more likely, they are more unwise. To paraphrase John Kenneth Galbraith, ‘There can be few fields of human endeavor in which history counts for so little as in the world of modern central banking. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of Haruhiko Kuroda and Mario Draghi.’