The scaremongering about inflation and higher interest rates continues to flood out of the mainstream economics community. The conversation has become a little more sophisticated since the claims in the early stages of the crisis that the fiscal and monetary policy innovations introduced by governments would be inflationary. Now we are hearing stories about longer lags – channelling Milton Friedman who also fell foul of the evidence more often than not. So inflation is just around the corner rather than coming tomorrow. As in the past, the mainstream macroeconomics has a serious credibility problem. It is no wonder it keeps making erroneous predictions. It begins with an erroneous construction of reality. It is all downhill for them after that.