If central banks since 2008 have massively expanded their remit, it was out of necessity, to contain the instability of the financial system. But that was politically possible—indeed, it could be done with no fanfare whatsoever—because the battles of the 1970s and 1980s had been won. The threat that haunted Dornbusch’s generation had evaporated. Democracy was no longer the menace that it had been in neoliberalism’s years of struggle. Within the sphere of economic policy, that expressed itself in the startling realization that there was no risk of inflation.
