Mervyn King: I heard recession

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I did not hear all of Mervyn King’s speech last night at the Mansion House. But I heard “asset sales” i.e. an end to quantitative easing and I heard “rate rises”.

And between those two lines I heard something else: “business as normal will be resumed as soon as possible”.

But that would be the City’s view of business as normal.

It’s not the view that says low long term interest rates are vital.

And that unemployment is central to economic policy as we go forward.

No, the rue of "sound money” over all else was coming out loud and clear.

Have we learned nothing?

Have we not appreciated that right now money is the least of our problems? And that deflation remains much more likely than inflation anyway.

Apparently not. And that’s why giving the Bank of England more powers worries me, a lot.