Inflation targeting has been a failure

Fraser Nelson, on the Coffee House blog, has written an impressive piece explaining why Gordon Brown, as Chancellor of the Exchequer, was wrong to pursue his strategy
of inflation targeting. His central argument, as I understand it, is that "....inflation targeting was right for the 1990s when the Tories introduced it. But it was wrong after 2000. And it was Brown's arrogant belief that he had cracked it, found the philosophers' (or economists') stone, that inflation targeting was the be-all-and-end-all, that led us into the economic calamity now unfolding."

As someone who was very sceptical at the time Brown made the Bank of England "independent" and who was concerned that we were returning to a "one club" economic policy similar to Nigel Lawson's reliance on linking sterling to the value of the deutchmark in the late 1980s, Fraser's conclusion makes me think my gut instinct was right:

"So this wasn't "market failure" as Brown pretends, but government failure - the failure of government to regulate the supply of money. The same basic failure that lay behind the entirely avoidable 1930s depression. Truth is that the BoE had the wrong instructions: inflation targeting was right for the 1990s when the Tories introduced it. But it was wrong after 2000. And it was Brown's arrogant belief that he had cracked it, found the philosophers' (or economists') stone, that inflation targeting was the be-all-and-end-all, that led us into the economic calamity now unfolding."

The tragedy is that the damage that Brown (once hailed as the greatest Chancellor of the Exchequer for 250 years) and his supporters have done to the country will take many years to reverse.