Sometimes a very simple statement can tell you abruptly how a society lies to itself in order to avoid unpleasant contexts. So it is with inflation – and so it is with unemployment. One year of high price increases, usually called “inflation”, has made society and politics quake; forty years of unemployment, on the other hand, are simply pushed aside because they do not fit into one’s own world view.
In a remarkable interview, ECB Executive Board member Isabel Schnabel offered a deep insight into her economic worldview. The result is shocking. Ms Schnabel not only defends the completely failed doctrine of the so-called monetarism, but her historical view of unemployment is characterized by great ignorance. Both are fatal, because the false lessons one draws from history often directly explain the mistakes one makes in the present.