Answer to the question in this post: No he doesn’t have a point! The electorate are quite capable, as they did in the 60’s, of understanding that if monetary and fiscal policy errs too much one way we’ll end up with too much inflation. Too much the other and we’ll end up in recession.
That’s the way things were until the late 70’s. The oil shocks did produce too much inflation but it wasn’t demand led. There was a need for corrective action, but that inflation was used by the ruling class to banish Keynes completely. When -all that was needed was some modification.
There’s quite an interesting interview with Lord Adair Turner published here. This bit in particular caught my eye:
“I think the crucial thing, the crucial question you need to answer when you accept that we can do fiat money creation is how to discipline and I’m going to address this subject in a lecture in Germany in February, because some of my very senior German friends have said to me, “Adair, you’re absolutely technically right that this is possible”, but, without quite putting it this way, they say, “we mustn’t tell the people!” Because if the people know, and if the backbenches of Parliament as well as the small elite technocrats know that this is possible, people want to do it – not to the extent of 2% of GDP or not just when we’re in a crisis – they’ll want to do it to the extent of 10%…
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