Everyone Hates Inflation Because They Don't Understand What It Is

By Matthew Yglesias | Posted Thursday, May 24, 2012, at 11:10 AM ET

I basically agree with Pascal-Emmanuel Gobry about the failure of the "independent" central bank concept, but I think the question of why the politics of the price level have shifted requires a different explanation than this one:

Politicians are crankish about monetary policy for a simple reason: because they know that it's out of their hands anyway. It's like national politicians in Europe who demagogue about policies that are EU competency. They know they're not going to do anything about it, so they don't have to think about it, they don't have to know about it, and they can say whatever they like. It's interesting to note that, historically, the populist political position was generally pro-inflation--remember William Jennings Bryan and the Cross of Gold? Inflation squeezes creditors--bankers and rich people--and helps debtors--less-rich people. Instead and in defiance of political logic, populists in Europe and in the US are anti-inflation. This is because they don't have to think about monetary policy because they know they can't do anything about it. So they bleat about inflation because when regular people hear "inflation" they hear "higher prices = bad".

I think the real issue here is the changing structure of the economy, not the changing structure of central banking.