LAST week, obscure Tory MP Douglas Carswell tweeted, "1976 again. The orthodox approach to the economy is bust." One obvious question: is if this is the 70s, where is the inflation? Inflation, in terms of the retail price index, peaked at 26.9% in 1975. Today RPI is 2.8%. The consumer price index, the more common measure of inflation, is 2.4%.

Yesterday the Governor of the Bank of England, Mervyn King, said that CPI inflation would probably waver around the 2% mark for the next two years. Given the Bank's poor record of forecasting—it has consistently underestimated inflation in the past four years—this will doubtless be wrong (in which direction is unclear). But, given no big shocks, the prognosis looks right: inflation will stay low. There is no runaway inflation of the sort Britain saw in the 70s. This should continue.

But the comparison with the 1970s is often made in Tory circles. It is easy to see why. The hung parliaments, Liberal pacts, terrorist threat, Jubilee, Scottish nationalism, EU referendums, the glum talk of decline: it all has the feel of the 70s. Rightwingers still like to paint Cameron as a sort of Heath, surrendering to Europe and giving up on his avowed free-market radicalism.

Market conditions are similar. Now as then, Britain is suffering from stagnant growth. Now as then, the government is borrowing imprudent amounts. (Public sector net borrowing peaked at 7% of GDP in 1975/6, close to today's levels of 8.3%.) Workers have found their living standards squeezed as flat pay has failed to keep up with even moderate inflation. Which leads nostalgic folk like Mr Carswell to hanker after a Thatcher-like figure to canter in to the rescue: "What will the 1979 moment look like?" he asks. Some Tories really believe it's the 1970s.

How about it, though? Shouldn't there be more inflation? At first glance it is a puzzling question. Britain has faced similar shocks: soaring oil prices and a surging monetary base. From this, you would expect huge inflation. Yet it hasn't happened: a 2% rise in prices isn't half as bad as a 25% rise. And it hasn't happened because 2012 is a different world from the 1970s. Three fundamental things have changed: one, there is a banking crisis; two, the unions are under control; and three, policymakers now understand the economics of Milton Friedman.

The first is important. The bank credit crunch is far from over. The Bank of England has minted £375 billion in new money and handed it to the banks. But the banks have—to use a technical term—sat on it. The money has not seeped through to businesses or households. M4, a measure of broad money, has shrunk 5.2% since last June; it shrank 0.7% the year before that. Hence the low inflation.

Second, workers have not raised their voices for larger salaries. In the 70s, the power of the unions meant employees were demanding huge pay rises. In November 1978—the start of the worst strikes of the 70s, but by no means the worst year for inflation (RPI was 8%)—car workers asked for 30% pay rises, miners and some council workers wanted 40%.

Contrast that with today, when public sector pay has been frozen, and you can see the difference. There is no demand for a 10% pay rise, let alone 40%. Union leaders are calling for "fair" rises. And strikes have had little effect on policy or the population. Workers have effectively taken a large drop in real wages. In the 70s, higher pay rises led to higher costs for the firm, and so fuelled further inflation. We do not see the same thing today.

Third, low inflation has been achieved by the acknowledgement that "inflation is always and everywhere a monetary phenomenon". Central banks and governments now understand Friedman's dictum that more money chasing around fewer goods means prices must rise. That is why inflation has come down in the past 30 years. When there is inflationary pressure in the economy and we are out of this rut, central banks can and will intervene to push inflation down.

We are no longer in the 70s. We shouldn't fear 2% inflation. We should be worried at that other prediction Mervyn King made the other day: that British growth in 2012 will be "near zero". We should be near peevish.