The long run just got longer
Mervyn King's speech in Liverpool on Tuesday night was noteworthy for its gloomy tone - and, perhaps most of all, for what he didn't say.
He did not say everything was going to be alright. And he didn't say that the UK was heading in the right direction.
In fact, he explicitly said we were not. But acting alone, he doesn't think there's much that he or the British government can do about it.
Well, I said it was gloomy. Here's the key part of the speech:
"Without monetary stimulus - low interest rates and large asset purchases [QE] - there is a risk that growth will stall and inflation will fall below our symmetric 2% target. But easy monetary policy, by bringing forward spending from the future to the present, means that the ultimate adjustment of borrowing and spending will be even greater."
Let me explain, briefly, why this is so significant. The point he has made many times before - and most would agree with - is that the global economy needs to re-balance. That means higher savings and lower borrowing for deficit countries like the UK.
With the government's deficit plan and the fall in sterling, the governor said we were previously moving towards that. But now we're not.
Because the global demand we need to grow through exports has not materialised, the government's borrowing targets will be missed, and the Bank of England will need to keep interest rates lower for longer.
So, to return to that key sentence from the speech - the governor of the Bank of England has admitted that Britain is now moving further away from re-balancing, and further away from a time when savers will get a decent return for their money.
He's not happy about this but he seems resigned; he has to deal with the world economy as it is, not the world economy he would like the G20 to build.
You could see Mervyn King's speech as a gloomy rejoinder to the prime minister's comments on debt, which caused so much debate a few weeks ago.
The governor agrees with David Cameron - ultimately you don't solve a debt crisis with more debt. That's the long run re-balancing part of the story.
But being an economist, Mervyn King had also to agree with Mr Cameron's critics when they say that it would be catastrophic for everyone to stop borrowing and spending at the same time, in the absence of any external demand to fill the gap. In the case of the government, this would also be self-defeating. Public borrowing would have to go up.
So, in the short run we - UK households and the government - are going to have to borrow more to keep the economy growing. Thanks to the eurozone crisis and the failures of the G20 process, that long-term solution to our debt problems had to be put on hold.
And our recovery is likely to be "not just reluctant but recalcitrant".
The governor will see this as a blunt statement of the global reality. Others may consider it an extraordinary counsel of despair.