You can expect to read a series of pieces here over the next few years about inflation. This may seem bizarre: after all, we have just had the biggest drop in RPI inflation since 1948. However, a more detailed look by some thoughtful economists reveals that UK inflation is really the highest in the developed world. A one-off cut in mortgage costs affects RPI (not CPI).  The VAT cut is another one-off.   Once these have cleared out, there is a real risk we will have a tightening cycle sooner than most expect.

If you are interested in macroeconomics, the question of how to approach inflation is one of the Big Three: the other two being "What on earth to do about the national debt" and "Should we keep an independent currency".   Voices like Tim Leunig can be heard calling for a controlled burst in order to lighten the imbalances.  I personally can't see this happening without politically-disabling outrage: if this were announced when £1trn of gilts were outstanding, the next day would see a fall in prices that might well be labelled the biggest calculated expropriation of wealth since the Tsar was hustled out of the Winter Palace.  But it will be a huge temptation.  As our recent graph shows, such debt as we will be trying to clear in 2014 has normally required a burst of high nominal GDP growth to deal with.

So plenty will be written about inflation targetting in the next few years, and rightly so.  But I doubt very much that any of it will be as poorly written and simplistically argued as what I have read from Maurice Saatchi, Chairman of the CPS.  "The Myth of Inflation Targeting" reads more like a bad-tempered speech than a piece of research, with lots of verb-less sentences and dramatic pauses.   It is, moreover, quite unoriginal; the question of whether the Bank's remit is correct has been debated for many years - it is older than the crisis, and has attracted far more even-handed analysis than this, including a piece of ours published last autumn. 

Starting with this cliche: "Shakespeare taught us that human beings can have a fatal flaw. So too can legislation", it also has some terribly out of date facts, like "These days, Bank of England officials are routinely condemned for allowing British citizens to suffer the longest and sharpest recession of all major economies." Please visit the IMF or OECD to get updated on this one. 

But what is most extraordinary is the sheer simple-mindedness of the analysis.  The author effectively exonerates every financial actor, regulator, trader and banker from any culpability because they all fell for a single myth - that stable inflation made every market safe. If markets subsequently crashed, it was the fault of the myth. 

Never mind that plenty of learned academics wrote well in advance about their concern about the imbalances building up, regardless of the stable price environment.  Never mind that something called 'free will' still enabled people to look beyond the specific target that the Bank of England was aiming at.  Never mind that targetting asset prices with monetary policy is incredibly difficult and would have had the Bank second-guessing the financial markets and engineering an industrial recession in order to bring house prices down.    No, there is a straightforward causality between pursuing price stability and the major financial crisis. That's it.

It now seems extraordinary that the publisher of this piece, the Centre for Policy Studies, was once a thinktank at the heart of a political revolution. If you want to learn about this difficult issue, go elsewhere. Our piece is a good starter.  Speeches by John Gieve are also pretty thoughtful. But if you end up thinking it is as simple as this work implies, then you are wrong. 

PS - praise for Brown and Darling - now you don't read that very often. The IMF has praised the UK's reaction to the recession.

UPDATE:  Amazingly, Lord Saatchi has introduced this flimsy idea - that we can blame everything on inflation targeting - as a Bill to Parliament. I hope the Lords dealt with it satisfactorily.