29 MARCH 1986, Page 22

Lawgiver returns

WELCOME back to the City for Charles Goodhart, the Bank of England's guide and philosopher through the rise and hey- day of monetarism. Nowadays a professor in a specially-established chair at the Lon- don School of Economics, he becomes a director of Gerrard & National, biggest of the money-market houses. It was Charles who taught us that a statistic which gives you true readings when used for purposes of observation will, if used for purposes of control, at once give you false readings. Prime example: sterling M3, the preferred measure of the money supply. Now that the Chancellor has given sterling M3 a ludicrous target to which nobody will pay the slightest attention, it will doubtless become (by Goodhart's Law) as good as gold.