Merv "The Swerv" King - former governor of The Bank of England - has joined the ranks of those ex-central-planners-who-feel-the-need-to-protect-their-legacy-by-rewriting-history-and-admitting-the-entire-thing-is-crazy. Speaking in Tokyo overnight, King said he’s concerned that financial markets believe real interest rates will remain very low for a very long time which has created "a significant disequilibrium in the world economy," adding that he does "not believe and expect a market economy to thrive on real interest rates that are close to zero." Warning that many nations realize "they have pushed monetary policy as far as it can go," King added that with the additional risk of currency wars, "markets will discover that they have been pushing asset prices to an excessively high level and there will be a major downward shock to asset prices." As Bloomberg reports, Former Bank of England Governor Mervyn King says central banks and governments are becoming more and more strident in their determination to talk down their exchange rates. “Many countries today can see that they have taken monetary policy as far as they can go.” “Exchange rate policy may now become an instrument of monetary policy.” “Since exchange rate changes are a zero sum game, there is a risk of currency war.” King says disequilibrium in world economy is causing chronic weakness in demand The must be addressed, says King, noting that monetary and fiscal stimulus may not be able to bring a recovery unless the disequilibrium is addressed King also explained that he’s concerned that financial markets believe real interest rates will remain very low for a very long time. “They may be right, they may be wrong,” “If they are right, I think we have a significant disequilibrium in the world economy. I do not believe and expect a market economy to thrive on real interest rates that are close to zero.”: King “If they’re wrong, then at some point markets will discover that they have been pushing asset prices to an excessively high level and there will be a major downward shock to asset prices and with debt levels fixed in nominal terms, that could cause some serious problems at some point in the future.”: King * * *Next thing King will tell investors that Gold is money...