The economy has changed...

I don't think the world of finance and economics is ready for a complete re-think on monetary policy. But given the changes that have taken place in the economy in recent decades, a complete overhaul would not be a bad idea.

What changes? Ask yourself, what did you spend money on recently? Did you get a new app? Did you buy a new i-book? Or upload a movie onto a tablet to watch on a plane flight? More and more, what we buy is a mixture of pixels, photons and bytes. In short, it exists only in electronic form, not in "reality". Our consumption of these goods has no implication for the scarcity of factors of production, and therefore for inflation. The "platform economy" does not only deal in virtual goods but also delivers real consumables, food, services. It drives prices down by making instant price comparisons possible, and by massively broadening our choice options. It is like the world has moved from being a textbook one dominated by oligopoly, to near perfect competition, and in a very short time. We can spend and spend and spend, but prices will barely budge.

Throw in automation and AI, and there is also the beginnings of an explanation for the flattening relationship between labour market tightness, and wages growth. Running short of workers? Buy a box of electronic wizardry to do their job instead. Seriously, there are boxes out there writing economic data reports already. My working days are numbered (at least in their current form). What about yours?