Inflation is rising and it seems the world’s central banks have critically misjudged the situation. Until a few months ago, most commentators worried about a repeat of the Great Depression. But the 1930s have virtually no relevance to our situation – except that some paranoid economists remain obsessed with this period. The only historical period that bears any resemblance to what is happening today is the 1970s.

Then, and now, an oil price shock turned into a rise in the general price level. Both then and today, central banks largely accommodated this price rise, which was a mistake then and is a mistake now.