The newly installed head of the European Central Bank, Mario Draghi, broke with his predecessor and cut the benchmark interest rate to 1.25% from 1.5%. In one fell swoop Jean-Claude Trichet’s misguided austerity policy has evaporated. And not a moment too soon, given the signs of rising recession risk for the Continent. But there’s more to the story than just another rate cut.

Scott Sumner offers some context as he distills the macro lessons by reviewing the “Trichet debacle”…

Thank God Trichet is finally gone. Now let’s see what we can learn from recent policy moves by the Bank of Japan and the ECB.

Start with the fact that both are ultra-conservative institutions. Then consider the following moves:

1. The BOJ tightens in 2000 by raising rates, despite no inflation. Soon after the economy turns down and the BOJ is forced into an embarrassing about face, rates are cut back to zero.

2. The BOJ tightens in 2006 by raising rates, despite no inflation. Soon after the economy turns down and the BOJ is forced into an embarrassing about face, rates are cut back to zero.

3. The ECB tightens policy by raising rates in mid-2008, just as a severe debt crisis is leading to a rush for liquidity, and threatening to plunge the world into recession. A few months later the economy turns down and the ECB is forced into an embarrassing about face, rates are cut sharply.

4. The ECB tightens policy by raising rates in mid-2011, just as a severe debt crisis is leading to a rush for liquidity, and threatening to plunge Europe into recession. Today the ECB was forced into another embarrassing about face, and cut rates by 1/4 point.

All of which reminds once again that wisdom in economics is cyclical, not cumulative, or so it appears in some corners. Fortunately, that’s a rare condition outside of the dismal science, such as medicine and aerospace engineering. Otherwise, we’d all be visiting witch doctors and limiting our travels to transport via terra firma.