CNBC reporter Rick Santelli, who gets credit for spawning the tea party with a 2009 rant, has long warned that the Federal Reserve is courting not just inflation but hyperinflation with its prolonged expansion of the money supply. For five years the inflation has taunted him by failing to materialize.
Finally, the other day, after being challenged on air about his doomsaying, Santelli did his best impression of an exploding ammunition dump. "I was right! I was right!" he bellowed. It was like watching Captain Queeg testifying in "The Caine Mutiny," when the members of his court-martial panel suddenly realize he is stark raving mad.
Santelli is just the most conspicuous and unrepentant of a group of economic experts and pundits who for years argued that the Fed's easy-money policy would send prices soaring. It became an article of faith in some quarters, and faith is often impervious to evidence.
Milton Friedman, who had a greater effect on my thinking about economics and government than anyone else, argued that "inflation is always and everywhere a monetary phenomenon" -- the result of excessive money creation. He documented this claim with a vast array of empirical evidence -- which he thought was valuable -- and persuaded most economists.
One was Ben Bernanke, who cited him as a major influence on his policies at the Fed. But Bernanke knew that too little money can be as bad as too much.
Friedman had taught him well. When Japan suffered a recession in the 1990s, Friedman explained why. "Monetary growth has been too low," he said. "What Japan needs is a more expansive domestic monetary policy."
Faced with the crash of 2008, the Fed decided that was what the United States needed, too. It was striving to prevent a severe recession from turning into a Cormac McCarthy novel, and once that was averted, it was trying to facilitate the return of normal economic growth.
But some people saw only danger. Carnegie Mellon economist Allan Meltzer wrote in 2009 that a repeat of the 1970s and early 1980s was imminent: "If President Obama and the Fed continue down their current path, we could see a repeat of those dreadful inflationary years."
Republican politicians have made similar warnings, over and over. In 2012, Mitt Romney said Bernanke had "overinflated." Wisconsin Rep. Paul Ryan accused the Fed of debasing the currency.