Not long ago I wrote a column in defence of central banks. Some readers were quick to disagree. Central banks had failed to maintain “the real value of our fiat currencies”, wrote one, urging me to ponder how inflation had eroded the true value of savings over the decades. A glance at Venezuela, where inflation over the past year has been more than 100,000% and the economy is breaking down, reminds us that this is no idle complaint. Central banks must keep inflation under control. But what does “under control” mean? How much inflation is too much? And — a question only an economist could ask — how much inflation is too little? It goes without saying that hyperinflation is an economic catastrophe, so the first thing to check is whether hyperinflation is likely in an advanced economy, or indeed a competently governed country of any sort. It is not. In 2012, economists Steve Hanke and Nicholas Krus assembled a list of every confirmed episode of hyperinflation in history. There were not...

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