What I think is going on is an attempt to blur the line between two kinds of prediction — unconditional and conditional. An unconditional prediction is something like this:
SCHIFF: You know, look, I know inflation is going to get worse in 2010. Whether it’s going to run out of control or it’s going to take until 2011 or 2012, but I know we’re going to have a major currency crisis coming soon. It’s going to dwarf the financial crisis and it’s going to send consumer prices absolutely ballistic, as well as interest rates and unemployment.
For the most part, however, the economists who got it wrong didn’t make that kind of prediction; what they said was more along the lines of “if we have a massive increase in the monetary base and continue running trillion-dollar deficits, we’re going to see soaring inflation and interest rates”…. [H]ere’s the thing: the conditions for their prediction have been met. The monetary base has more than tripled; trillion-dollar deficits have gone on for years. I suppose you could offer some explanation in terms of other factors for the failure of these events to produce the predicted results — but I don’t see the Cochranes etc. doing that.
The point is that it’s not a very good excuse to say that you didn’t specifically predict runaway inflation if you gave an “if-then” story and your if came to pass without your then.
Weekend Musings Triggered by Observing That Noah Smith Is Working Hard to Make John Cochrane Appear Less Clueless About the World than He Is...