Revolution

This week a debate burst into the open.

Sir Mervyn King, governor of the Bank of England, found himself fighting a rearguard action against a groundswell of support for “dropping money from helicopters” – something proposed by Milton Friedman in 1969 as the ultimate cure for intractable economic depressions, described as “Quantitative Easing for the People.”

He had to speak out because the sort of calculations presented last summer started to catch on. The Bank of England has spent £50 billion over the past six months to support bond prices. That could instead have financed a cash handout of £830 for every man, woman and child in Britain, or £3,300 for a typical family of four.

He felt obliged to counterattack on behalf of traditional central banking. In a speech on Tuesday he set out to “distinguish between ‘good’ and ‘bad’ money creation” and denounced “talk about the possibility that money created by the Bank could be used directly to finance additional government spending, or even that money could be given away.”

People are now accusing him of zig-zagging through the economic world sporadically, however, I believe he is trying to get the rest of us to understand slowly the need for change, which is acute...