Mervyn King’s Belfast speech

Mervyn King must think we have no knowledge of history:

Sir Mervyn argued, in the long run, the Bank must maintain its 2% target, as price stability must remain the primary responsibility of all central banks.

As I posted in the early days of this blog:

Therefore by King’s own logic, the Bank of England has failed. He did have some common sense in his speech, however:

He also said low interest rates simply encouraged spending today at the expense of spending tomorrow, and so were not a sustainable way to achieve long-term growth.

This of course has been the view of the Austrian school for over 100 years, and of the British Currency School even earlier. Maybe one day he’ll learn that those low rates helped caused the crisis, and therefore are no fix for it.  After all, if the growth low rates bring is not sustainable, such growth must surely come to an end?

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