In the mid-1990s, the consensus view was that central banks should target inflation at 2%. Then in the late 1990s, a light rain of “magic dust” descended on the islands of Japan. The dust made people passive and fatalistic, and the economists there suddenly forgot how to create inflation, a previously inconceivable development.
At the time, Western economists were stunned. “What’s wrong with the Japanese? Why don’t they just do X, Y and Z?”
A decade later, the same magic dust fell on North America and Europe (fortunately the southern hemisphere was spared.) Now Western economists forgot how to create inflation. They began to claim that it was impossible when interest rates were zero.
A few lonely economists had a genetic mutation that made them immune to the effects of the magic dust. They wondered why economists had changed their minds about the efficacy of monetary policy. After all, the Fed and ECB had also failed to do X, Y and Z.
Another decade went by, and the effects of the magic dust began to wear off. The next time deflation threatened in an environment of zero rates, central banks began doing some of the X, Y, and Z that they had recommended to the Japanese a few decades earlier, And it quickly created lots of inflation.