What’s a poor banker to do?

Mervyn King is on the horns of the contemporary central bankers’ dilemma - how to deal with preternaturally low real interest rates. There are two quite different explanations for this phenomenon, which lead to directly opposite policies on interest rates. If the governor of the Bank of England gets it wrong, he could be held responsible for either a missed opportunity for growth or a big financial mess. The current situation is clear enough. Real interest rates are very low, 1% on 20-year in...