Thirdly, the observation that money can be "too much" or "too little" implies that there is an ideal middle figure, and that in its monetary management the Bank of England—or indeed any central bank—should conduct its operations in order to deliver that figure. Given that a nation's ability to produce goods and services ought to be rising over time (although it may not be doing so very much in the UK at present), the ideal figure for the quantity of money ought also to be rising over time. There is a hint, in other words, about the benefits of a policy rule in which the quantity of money is targeted by the state to grow in line with productive capacity. All being well, that should keep the price level stable or, at any rate, maintain inflation at a low rate. 

Am I suggesting that King's 20 years at the Bank of England have persuaded him of the essential truths of "monetarism", as that very ambiguous term is commonly used in Britain? Yes, that is exactly what I am suggesting. Nevertheless, King did not draw the logical conclusion from his comments on "too much" and "too little" money, and openly bless a monetary target. That of course would have been much too radical. 

King's thinking has developed a great deal in his 20 years at the Bank of England. His latest speech is utterly different from the speeches he gave in the 1990s, when he was—in effect—learning on the job. (His academic specialisations were in tax and company finances, not in money and banking.) He has been educated by events as well as by books he has read, and the seminars and meetings he has attended. He has in fact arrived at a position similar to that of a large number of other people exposed to much the same set of influences over a long period of time. 

But King's attitude towards the financial sector remains as hostile and bigoted as that of most university dons. He was a leading advocate of the large-scale recapitalisation of Britain's banks in late 2008, which was followed by a plunge in money growth and the worst six-month slump since the 1930s. (See my article "Gordon Brown's Recessional" in the March 2011 issue of Standpoint.) He is now advocating a repeat of the exercise, apparently unaware that the inevitable consequence would be another sharp downturn in the economy. He has learned a lot in the last 20 years, but his understanding remains incomplete and unsatisfactory, and he has been the most disastrous Governor in the Bank's history.