Early reaction to today’s column has been curious, though not unexpected: I’m getting a lot of rage from people who want their deficit-and-inflation crisis, and won’t take no for an answer.

Let’s back up here. By spring 2009 a sharp division had emerged among economic commentators. On one side, many people looked at big budget deficits and the rapid expansion of the monetary base, and saw terrible things happening to interest rates — who will finance all that government borrowing? — and inflation — look at all that money the Fed is printing! On the other, some of us — especially those of us who had studied Japan in the 1990s — argued that this wasn’t that kind of situation. With the economy depressed and short-term interest rates up against the zero lower bound, government deficits would not crowd out private spending, but rather promote it. And when you’re in that situation, expanding the monetary base isn’t inflationary. On the contrary, the danger was deflation from excess capacity.

In effect, we’ve had a test of those two views. And guess what? Interest rates have fluctuated, but as of 20 minutes ago the 10-year bond rate was 3.17, yes, 3.17 percent. Bond vigilantes, where have you gone. Meanwhile, core inflation — and yes, that is the right measure — just keeps falling. (As Mark Thoma points out, this is a total refutation of those who kept claiming that there is no Phillips curve.)

But as I said, the people who want their deficit-and-inflation crisis just won’t take no for an answer.

I was trying to come up with an explanation of the curious insistence that we’re facing an imminent interest rate and/or inflation crunch; then I realized that John Maynard Keynes had already done that, in explaining the hold classical economics retained on thought despite its obvious inability to account for the Great Depression:

The completeness of the Ricardian victory is something of a curiosity and a mystery. It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.

And all of this has a real, damaging effect on policy. The econ team at Goldman Sachs (not online) makes the interesting point that FOMC inflation forecasts are pulled up by a small group that keeps forecasting much higher inflation than anyone else; this in turn helps limit the Fed’s willingness to support the economy. And the deficit hawks have, of course, killed any hope of more stimulus.

Anyway, I’m sure that the usual suspects won’t change their tune. Even if we do have a Japan-style lost decade, they’ll keep predicting hyperinflation just around the corner.