We are due a reconsideration of the Bank’s policy of running down its bond holdings by ÂŁ100bn a year. It looks as if they will reconfirm they will carry on with it, and update or change the reasons.
The US Federal reserve Board faced with the same problem of a large portfolio of bonds bought at very high prices when interest rates were low has refused to sell bonds in the market at a loss as the Bank of England does. It has allowed its portfolio to reduce as bonds come due for repayment. It has recently reduced the pace of doing this, reinvesting some of the maturing bonds to avoid a bigger lurch in the size of the portfolio. It does not receive a cent of taxpayer money to cover its losses. It just places the losses onto its balance sheet with a matching asset for “future profits” as it can do as a Central bank which can create  money it wants as it needs it. The Fed cut the rate of decline in its bond assets as it was worried it was squeezing commercial banks too much who have deposits at the Central Bank to finance the bonds. If their deposits fall too low they will lend less and there will be less money and credit around.
The Bank of England aware that it may well be over squeezing with its aggressive reduction in bonds and commercial bank reserves has launched a new facility for commercial banks. Those that have been squeezed too much by the bond policy can borrow money from the Bank to lend on to customers. The Bank of England is at least honest enough to admit it has no idea what is the correct level of commercial bank reserves and of bond holdings to have, so it lets banks get out of a hole of its making by lending them more if necessary. Why get into the hole in the first place?
The Bank loses money for UK taxpayers in two ways. It needlessly takes big losses on selling long bonds instead of holding them to repayment at a higher price. It has a running loss on the difference between the money it pays commercial banks on their reserves and the low rate of interest it gets on bonds which it bought at very high prices. The ECB has cut its losses on holding bonds by requiring EU banks to deposit a minimum level of money as reserves with no interest payable.It pays a lower rate of interest on the additional deposits  than its fixed base rate. The Bank of England used to pay no interest on commercial bank reserves at all until 2006.
The Bank always needed government permission for the bonds and insisted on a full guarantee to pay the obvious losses they would make. As a result the Bank has made a big hole in fiscal policy, not its territory. Why do we allow this to carry on?
August 26, 2024
Why indeed?
Why was such a dope as Bailey (History Camb.) ever given such a job. This the man who while at the FSC gave everyone anti-competitive 40% one size for all over draft rates due to rule changes. The same banks charge far less over seas. Mine went from base +2% to 40% effectively withdrawing it. We see similar mad market rigging in energy standing charges you could a while back have no standing charge. Now a totsl rip off. A poll tax for zero energy hitting especially the poor appallingly.
August 26, 2024
Personal overdraft rates that is not business ones.
August 26, 2024
Why didnt you apply obviously far better qualified especially in hindsight.
August 26, 2024
Well they obviously were not looking for someone like me. It seems they wanted a History Graduate with and a PhD with a thesis on The impact of the Napoleonic Wars on the development of the cotton industry in Lancashire: a study of the structure and behaviour of firms during the Industrial Revolution and who has fallen for the net zero lunacy.
This rather than someone with maths, physics, risk and electronics skills.
One did not need hindsight to see that locking down the country would do more harm than good, that giving new tech. Covid “vaccines” to young people and people who had had Covid already was not a good plan, that net zero in economic and environmental lunacy that one size for all 40% overdraft rates were idiotic and anti-competitive too.
August 26, 2024
In fact they clearly wanted someone who believed in the âClimate Alarmismâ and âRenewablesâ religions (as Carney is too). One you set that bonkers criteria down you are not going to get anyone rational (unless they just lie I suppose to get the job).
August 26, 2024
Frankly LL, anyone who âbelieves in PRâ (I.e rule by minorities) is as lost as those who âbelieveâ in the Green-scam.
August 26, 2024
Good Morning,
Look at the data:
BoE Balance sheet: https://en.macromicro.me/charts/54371/boe-total-assets
Money Supply: https://tradingeconomics.com/united-kingdom/money-supply-m2
Banks Balance Sheets: https://tradingeconomics.com/united-kingdom/banks-balance-sheet
Can you still see a problem?
August 26, 2024
Labour has exposed its real anti-car agenda
Low-traffic zones are hare-brained virtue-signalling
MIRIAM CATES today.
Indeed also an absurdly inefficient way to tax people, prevent them getting to work or working efficiently and to lower productivity too.
She states:- These misguided attempts to reduce traffic stem from the âluxury beliefâ that people can do without cars. If youâre fortunate enough to afford taxis, live near a thriving high street, can work from home, and are able to walk the streets safely at night, then you may well be able to manage without a car. But for many, the ability to attend a night shift, get kids to school, shop at affordable prices and visit elderly relatives depends on having ready access to a vehicle.
Indeed or a work van with your tools and materials. But a taxi is of course just s car. In fact s far less efficient car than a private one as they spend about half their times travelling without passengers, are larger and heaviers and they need a professional driver with all their weight, costs and energy needs. So why are thr given rights to use bus lanes when 2x+ more efficient private cars and vans are not? Is it because MPs use them perhaps?
August 26, 2024
The end of personal transport.
Fifteen minute ghettos.
Work from home! Oh yesâŠin houses that were only really ever meant for âdormitoryâ living.
Barking dogs. Thumping music. The noisy aggression born of virtual incarceration.
All nudged and tested out previously. As we do not forget.
On a brighter noteâŠmaybe they want us to fly everywhere?
Very keen on airport expansion.
Planes run on violet water and cobwebs?
August 26, 2024
Your right LL, we in NDevon have the added problem of the Exeter being the site of our main Hospital , that is over thirty miles away with no direct transport. For the sick patients the car is the only viable transport!.
But then politicians don’t care their master say its that or no backhanders. WEF and Liblabcon are all corrupt!
August 26, 2024
Somerset/Dorset are just as bad:
“The NHS Somerset integrated care board voted in late-January to approve plans to remove Yeovil Hospital’s hyper-acute stroke unit (HASU), meaning the most urgent stroke patients will be transported to either Dorchester or Taunton for treatment.
If you’re lucky, it takes 35 minutes to get from Yeovil to Dorchester by car. If you’re unlucky (ie tractors) it can take 50 minutes. It always takes an hour to get from Yeovil to Taunton. There is no viable public transport. And that’s if you start from Yeovil town centre. If you start from one of the villages in the very large surrounding area which are “served” by Yeovil Hospital you might just as well give up and let the patient die in their own home.
Perhaps that’s what they want?!
August 26, 2024
The reality is often the car or a taxi (which is a car) are the only way to make certain journeys at all in a timely manner. Especially at off peak times or if your destination or start point is remote. If only one person want to go at that time or if you have much luggage it is Car, Van, Motor Bike, bike (if you are fit, little luggage and it is not too far) or nothing.
August 26, 2024
If you don’t want people to smoke you tax cigarettes. If you don’t want them to drink you tax alcohol. If you don’t want them to get fat you tax sugar.
So what is taxing people who go to work going to do ?
What is taxing people who save, put in pensions or take on responsibilities or work harder going to do ?
August 26, 2024
Why tax firms for employing people like it’s some kind of social evil that needs to be eradicated?
August 26, 2024
Exactly and the cost of travel to work are not even tax allowable (it usually is for MPs as they claim two workplaces) about ÂŁ3K of my son’s gross salary as a junior doctor goes on commuting. He does not even get a parking space provided not to they even pay for some of his extra exams. About a further ÂŁ18K PA goes on paying back his student debt and interest or would do if he earned enough to do so. Also not tax allowable.
August 26, 2024
I cannot comment on the wisdom of running the country’s finances this way. The twists and turns are those of a snake in a sack, and it is all designed to allow government to spend money way beyond it’s tax income. The nett effect is to reduce the value of everyones currency holdings.
It is essentially a corrupt system. Were it not, every man and woman in the street would have the freedom to conduct their finances the same way. While government cheats the people, they can have no moral grounds for condeming those who cheat government with a bit of constructive accounting or offshore trusts.
August 26, 2024
Regarding any “…update or change the reasons” for its wanton bond selling, has the Bank ever explained why it is pursuing its perfidious policy? I had understood much of the criticism of its antics rested upon its failure to say why it was content to incur the seemingly unnecessary losses.
August 26, 2024
Good morning.
What we are witnessing, in my opinion, is wealth transfer. From the ordinary tax payer to the banks. They, the banks, lost a lot of money in 2008 and need recoup those losses. They are, again in my opinion, struggling with new rules regarding how much they can hold in reserve (stress tests) and still need to be competitive in order to satisfy shareholders. So a good way is to make money on the back of you and me, not just by charging extortionate interest rates way above the base rate, but using the bond system. It is clear that, if the government is happy with all this otherwise, why allow it. It has the capacity to force the banks to offer customers better deals but, having an overly profitable industry that it can tax and intern tax us, to too good an opportunity to waste.
August 26, 2024
Once the alleged 1% vat on the value of homes comes into being… many won’t be able to afford it. Will that mean repossession by the banks or building society or the state???
That is deeply worrying!
August 26, 2024
We don’t ‘allow this to carry on’, because we haven’t been consulted on whether or not it should carry on, nor will ‘we’ ever be. The nearest the public is allowed to get to high finance is when it’s used as a political tool, e.g. when we were encouraged to believe Liz Truss ‘crashed the economy’, a mantra repeated ad nauseam by Labour before the election.
The question that needed asking is who bought the BoE’s bonds sold off cheaply. Whose bond holdings have been increasing recently? Cui bono?
Reply Investors sold their bonds to the Bank at very high prices in AE and have been buying them back at much lower prices during QT. Many pension funds missed out on this by buying geared gifts at high prices and losing large sums in LDI funds on the sell off.
August 26, 2024
R2R yes, gilts are showing a healthy profit since bought 10-12 months ago. It was an obvious Buy, although gold has done substantially better. So had Sunak been on top of it financially, he’d have called for BoE to be buying gold and some equities with this Gilt cash. I’m not convinced he’s actually that bright, given this is supposed to be his field.
August 26, 2024
Yes Gold has done well these past 12 months SJS (up 26% – a sure sign of people getting worried) but of course 10 years ago the price was declining or flat for a few years. Before SG jumps in and tells everyone what a great (speculative) investment Gold is – I will add that holding gold is not an “investment” as such in my view. It’s more of a hedge (or insurance) against inflation or currency swings. I hold physical Gold ETFs that don’t pay any dividend and cost about 1% in admin a year – so can be costly to own. I will admit to selling part of my holding a year or so ago (profit taking) but I am not tempted to do so at the moment. I think this Government is going to do great damage to our economy, continue to run up National debt and that this will damage Sterling. Anything that helps protect me from their stupidity is worth having.
August 26, 2024
Any obvious buys now? I will freely admit any time I have invested in equities, I have lost money. Particularly when I âinvestedâ in the Neil Woodford Income Focus fund.
August 26, 2024
I’m not an expert on banking, but I can spot a scam at 100 paces.
This looks to me like yet another scam, to go with the Covid and Net Zero ones. Basically, it’s a deliberate transfer of taxpayers money to bail out the banksters ….. again.
August 26, 2024
Lady, you never spoke a truer word!
August 26, 2024
Nonsense look at the strength of their balance sheets, profitability, reduction in bad debts. Indeed on the basis they they all consider themselves âover liquidâ they are indulging in large share buy back programmes allegedly to return value to shareholders.
So whereâs the need for the programme? I guess they will all dip in if they can arbitrage the rate the BOE sets. It maybe to pushback on excuses of not lending because of balance sheet pressure when the reality is their sector risk appetite? As we know politicians have zero knowledge of this and just want money flung out anywhere.
My question of Sir JR is, on the basis he would have pushed the Chancellor/Treasury ministers on this, why couldnât he gain traction?
Reply Because treasury officials agreed with the Bank and the Chancellor was unwilling to override the official idiocy.
August 26, 2024
Not override, the chancellor is the boss and could and should have stopped the idiocy. Hunt was not fit for purpose in charge of NHS and not fit for chancellor!! Sunak unfit for chancellor and unfit for PM. Your former party thought otherwise. Sorry, JR the buck stops with your former govt.âs over 14 years!!
August 26, 2024
People don’t always learn from their mistakes. Selling gold too cheaply was another hit on the Ban’s reputation.
August 26, 2024
I think it made more of a dent in Gordon Brown’s – especially since he flagged it in advance!
August 26, 2024
Yes the interesting question is “why” ? – Have the BoE ever advanced a reason for doing this when the EU and USA aren’t ? I haven’t seen one. There MUST be some reason but what is it ? The suggestion that Andrew Bailey is some sort of financial genius who has developed a better policy than the Fed seems … unlikely. As a follow-up how come both Conservative and Labour chancellors agree with him when it is they who have to deal with the financial problems it creates ? I did see a report that Reeves wants to simply omit these losses when balancing her budget so she is at least aware of the issues. Only Reform is committed to stopping this.
August 26, 2024
The magic money tree is thriving, but sadly at the taxpayers expense.
Pays large salaries, good pensions, sick pay, and no doubt good holidays as well, guess the redundantly package and bonuses are also good, so why should those employed vote for change.
August 26, 2024
However little the Conservatives understood money in their dying days, these Labour people understand it less. We seem to be addicted to propping up commercial banks in this country. This is a running theme, from Brown to Tory Chancellors too many to name to the present Labour lot. Those banks feel no compunction not to lend money on at enormous profit, so for the sake of 2-3% why not make them suck it up and pay them zero on a compulsory level of reserves? After all, they pay zero on current account balances for the most part. A kind of subscription for being a bank which is also permitted to rack up rates of 10-30% on lending elsewhere.
We’re being ripped off again, just as with the bailouts in 2008. Stacks of government debt whilst pensioners on ÂŁ12K a year have the fuel allowance whipped away, private school parents pay VAT on education…
August 26, 2024
Those who endorsed lockdown have no platform for complaints about this issue regarding QE and the conspiring between slime like Johnson, the Treasury and Bailey. I believe John endorsed lockdown so I’m not sure what his complaint is.
Do the Tories ever take responsibility for their destructive actions since 1997 (yes, they endorsed the poison of Blair) or do they simply disappear into obscurity with a simply shrug of shoulders and a ‘nowt to do wiv me officer’
reply I was part of the MP group making the case against their lockdown!
August 26, 2024
Well said Dom.
I travelled from Dorset to central London to protest at the suspension of our Civil and Human Rights; the deliberate destruction of our economy and the coercive control propaganda.
Those who didn’t stand up for our rights during the Covid Tyranny have no moral right to complain now.
August 26, 2024
JR, I thought you agreed with the initial lockdown but not the last one?
Many thought the Barrington declaration was the way forward. Tory govt. smeared experts who advocated this, censored them and wrongly classed it as misinformation!! Whitty, Valance and Van Tam need to be investigated not given titles and more govt jobs!! The sham of the covid inquiry ought to be closed down as a waste of public money ie our taxes!!
Reply. no.
August 26, 2024
In fairness to the government, Covid was an emergency. No-one had any idea about it. Germany spent a tonne more money than the UK.
I think you need to focus more on policy expect where the government makes a clear mistake in emergencies which lockdown wasn’t (it was a mistake but not a clear one).
Lastly, Boris’ government was pretty quick at the vaccine. Without the vaccine, we’d all be living in a post apocalyptic Stone Age chucking stones at each other.
August 27, 2024
You obviously watch and believe the BBC.
The Government KNEW before the first lockdown that Covid was a Low Consequence Infectious Disease with low mortality rates. They also KNEW that it was only the very elderly/frail and those who already had serious life-limiting conditions who were at real risk.
The jabs were, at best, ineffective and at worst have killed and injured ( some Ed)
August 27, 2024
‘You obviously watch and believe the BBC’
– I don’t know what the BBC says. Nor do I care. I don’t watch it.
I’m just thinking what most normal, moderate Tories think.
More like you watch extreme-right-wing conspiracy theorists such as Alex Jones!
So if you’re going to come up with this conspiracy theory, ‘they KNEW before’ then why did they go against this! Doesn’t make any sense why they would do this. You have to explain that otherwise your theory is just extreme conspiracy stuff.
August 27, 2024
(And the Tory Party has no chance of getting back into power with nut-job conspiracy theories like this)
August 26, 2024
> Why do we allow this to carry on?
Debt to GDP ratio dear Sir.
That trumps all considerations – regardless of the cost. Muppets, all of them.
August 26, 2024
Debt is anathema to me. My grandmother, who passed at 87 during the 1970’s, used to keep her savings in a chamber pot under her bed. These consisted of gold sovereigns and the old sterling silver 2 shilling coins. The family understood why – during the Great Depression (aka the Great Deflation) of the 1930’s a lot of money was lost when banks went bust, which began after the famous stockmarket crash of October 1929. Central bank quantitative easing was the response after the bankster’s financial crisis of 2008. All that money printing is now coming home.
Global debt reached unprecedented levels of about $235 TRILLION in 2023, representing about 238% of global GDP – made up of sovereign debt (government bonds/gilts etc) and public debt (mortgages/credit cards/car loans etc). There is no way this amount of sovereign debt can ever be paid down; as Hunt and now Reeves have noted, we must grow the economy to just try and slow it’s growth
Governments cannot print gold – which has recently hit new all-time highs. My grandmother left me some of her sovereigns when she passed and I’ve never sold them. On Friday they were worth ÂŁ430 each. How much is a UK Gilt worth? It’s just a piece of paper backed by nothing other than a government promise.
Reply Gold has done well but it also has periods of bad performance when you can lose money in it. There is no direct linkage to inflation so sometimes you can be living through inflation but the price of gold goes down. Investors also need to add in the income they earn on a bond to compare its performance with gold which pays you no income and can entail holding and insurance costs.
August 26, 2024
The gold sovereigns I bought in 2002 for ÂŁ65 would now be worth only ÂŁ143 each if they had appreciated by RPI inflation, yet they are now worth three times that.
It’s true the value of gold can go down, but so what when the value of sterling is practically guaranteed to devalue every year.
The main problem holding gold is how to sell it without too much churn. I suppose it could be used to part pay for something private if the seller is willing.
August 26, 2024
Holding physical gold in the form of coin is very popular with some (in the US they call themselves ‘Stackers’) and it has the advantage of not admin costs. However, it also comes with a great deal of risk. If you decide physical gold is something you need to have, then ETCs (Exchange Traded commodities – very much like ETFs) are probably the safest way to go. There is third party risk but if the vaults of JP Morgan Chase in London ever disappear, then all bets are off anyway….
August 26, 2024
Well what did Brown sell it for 25 years ago?
August 27, 2024
I believe the average price was about $275/oz LL – and (this morning) it is currently sat at $2,510
August 26, 2024
We need to grow our economy, exactly.
Through the HIGH TECH industry and building the British versions of the German Audis / Golfs / Mercedes of the future. Financial and Consumer Markets aren’t enough.
Also, we have to embark on a huge cultural revolution to get people to ENJOY WORK and to be RESPONSIBLE and depend on FAMILY instead of state. Therefore the average Brit becomes more productive, lower taxes and lower immigration. You can’t leave it to capitalism to do that! Capitalism is great but it also had a cannibalistic side to it as well that can destroy the values and structure of culture. Capitalism has to be tempered otherwise we turn from bees creating honey (a Christian symbol of hard work and culture during the Middle Ages / Renaissance) to rats gnawing up and destroying everything.
Reply The era of German car supremacy is over
August 26, 2024
On the topic of monetary policy, I saw a positive review in the FT of a book by a retired civil servant, sir Tim Lankester, who was economic private secretary to Margaret Thatcher when she first came to office. The review applauds the bookâs conclusion that Thatcherâs monetarism was an error which created 3m unemployed. The review does not say whether the book acknowledges that the reason we got high unemployment in the early 80s is huge swathes of nationalised British industry were completely uncompetitive, having been propped up for years by subsidies and protectionism, and plagued by militant unionism and government interventionism. Unemployment rose in the U.K. for the same reason it rose in Eastern Europe after communism fell.
Perhaps Sir John should review this book and explain why Thatcherâs reforms, including conquering inflation, were entirely necessary?
Reply Thatcher followed Treasury and Bank orthodoxy 1979-81 which overtightened and caused a recession. In 1981 Walters came in as monetarist adviser and rightly proposed easier money which duly lifted us out of recession. I followed Walterâs as Economic Adviser and Head of Policy and proposed further expansionary policies which worked.
August 26, 2024
Walters was âopposingâ Lawson, the Chancellor. By the time you took over, had Lawson seen the light?
Reply No, the battle to stop the ERM/ DM shadowing happened with me as adviser but we did it in private, not public.
August 27, 2024
Thanks I wonder whether Lakesterâs book covers this or is just a denouncement of Thatcher, perhaps Iâll read it at some point.
August 26, 2024
If the BoE was operating for the good of the country they would have worked this all out long ago.
The conclusion then is that creation of debt and wasting of resources are deliberate – How could there be any other answer.
It’s not just the BoE that wastes our money – every single quango does its bit by overpaying for inefficiency, hiring expensive consultants, while throwing money down the nearest drain. But it is HMG that leads the way in reckless spending of taxpayers money and over-sized thriving encouragement of the public sector.
August 26, 2024
The government is continuing to outsource responsibility for most things, and therefore ‘is not responsible’ for the quangos.
An example….
I hear today that the responsibility of immigration is to be transferred to local authorities…. so there will definitely not be any overall record of legal or illegal immigration!
August 26, 2024
Talk about sloped shoulders socialism.
That will be an excuse to put our council tax up 10x
August 26, 2024
When the taxpayer picks up the bond losses thereâs not really much to worry about is there?
August 26, 2024
The BoE prime responsibility is to the “precious ones”
August 26, 2024
Sir John is quite right. The Fed has had a far better QT programme than the BoE.
Both central banks needed a volte face given their mistakes prolonging QE after the pandemic. Its economics 101 that the money supply of an economy should equal its GDP. If the money supply is greater than GDP it will be inflationary. If it is less than GDP it will be deflationary. Long story short, both central banks printed far too much money. Therefore money supply exceeded long term GDP, it spurred inflation and consequently they needed to withdraw the excess money supply to assist with countering inflation.
Why the BoE sold the bonds they bought (at enormous loss) though whilst the Fed let theirs mature and thus run off their balance sheet in due course is something I find inexplicable. Maybe the Governor of the Bank of England should be summoned to a parliamentary select committee to specifically address this? Its not like the Fed have done worse than the BoE either. Disinflation rates have been very similar for both economies so the huge loses the Bank of England incurred selling their bonds is unjustifiable.
Its now going to get even worse for the BoE however as the Fed is expected to cut its policy rate by about 1% (in 4 x 0.25% increments) between Sep and Dec 2024 (as implied by the current pricing in the OIS market). As a result the remaining bonds on their balance sheet have already priced this in and gone up in price. This will continue to happen as long as US policy rate gets cut.
It would have been the same benefit for the BoE (as they are in a rate-cutting programme now too) but they have sold much of their bonds back to the market already. Another one for the select committee.
August 26, 2024
âWhy do we allow this to carry on?â
Why, indeed.
I am always intrigued, Sir John, that whilst you disagree with the establishment economists, the Uniparty Parliament and the BoE on this issue you appear quite happy to accept the establishment scientistsâ and the BBCâs CAGW lies and their Net Zero Strategy âsolutionâ. Only arguing against the most ridiculous policies, not the reason for them.
The website Zerohedge on Saturday (24/08) carried an article that New York were going to pay Equinor (Norway) and Oersted (Denmark) $155/MWhr and $146/MWhr for fixed offshore wind. Their current price for electricity is $36/MWhr.
In the UK the government has offered the wind industry (Equinor & Orsted et al) at the next renewables auction next month ÂŁ100/MWhr for intermittent fixed offshore wind, ÂŁ242/MWhr for intermittent floating offshore wind (as recommended by the PM at his recent GB Energy speech in Scotland) and ÂŁ88/MWhr for intermittent onshore wind when reliable and dispatchable gas is around ÂŁ60/MWhr and the average price for 2024 Q4 is ÂŁ86.75/MWhr.
Why do we allow this to carry on?
Reply I have never voted for or spoken for the NZ policy. I am well versed in economics and financial markets but not on climate science so I take a different approach.
August 26, 2024
Because no politician of either of the main parties is prepared to face the screams of ‘The Blob’ about Bank of England ‘Independence’, if they told the bank to change its ways, in the public interest, that is, if they have any understanding of the problem in the first place.
August 26, 2024
My (overly) simplistic understanding of buying and selling bonds suggested that losses incurred now on sales are savings on implied interest payments in future years just as gains made now are interst on future years taken early.
Are we not discussing cash flow and the value of money for the most part? Except for the fact it is public sector accounting which only seems to deal in cash flow not accrued assets or prepayments
August 26, 2024
We should rename the bank as: The Bank of NOT for England.
Their actions are deliberate and help cause misery to lots of UK citizens!!
August 26, 2024
But if the Chancellor/Government does not sack Andrew Bailey, we can only conclude they support him.
If you tolerate mediocracy, you encourage it.
It is already clear that Rachel Reeves is out of her depth as Chancellor, and neither she nor the PM understands how to grow the economy.
It is no surprise for those of us who are old enough to have experienced Labour Governments before. The next five years will be a very unpleasant shock for the younger generation!
August 26, 2024
So it’s true, the “independent” BoE are losers!
But will this new Chancellor have the bottle to return the BoE back under the control of elected officials in government? But only if they are highly qualified, of course.
August 26, 2024
The central banks are concerned that a high percentage of their bonds mature in 2 years and new bonds will have to be issued to replace. Due to the huge national debts central canât afford the high interest rates. Therefore they will reduce the rates substantially in next 24 months even if that means creating a recession.
August 26, 2024
John, many people in the City are mystified by this. Do you have any possible explanation? It certainly doesn’t work in the interests of the nation. Who might be benefitting? (A lot of us have grown used to the idea that our political class does not work in our interests.)
Reply In my adult career I have often experienced disastrous follies which the Bank believe in and sell to the government with disastrous consequences. E.g. Competition and credit control early 1979s, European Exchange Rate Mechanism late 1980s early 1990s, Commercial banks can lend much more as they are global late 2000 s and now the boom/ bust QE/QT.
August 26, 2024
If you donât know why Mr R, we certainly donât. Some kind of managed decline perhaps? Decolonisation? I wish I was joking.