Why is the Bank of England so far out of line on bond losses?

Four of the big five Central Banks have undertaken money creation and bond buying ā€“ theĀ  US Fed, theĀ  European Central Bank,Ā  the Bank of Japan andĀ  the Bank of England. The Peoples Bank of China thought it a bad idea. Three of them are sitting on huge losses on the value of their bond portfolios – US, ECB, UK. The same three are also Ā losing money daily on the gap between the income the bonds earn and the cost of commercial bank reserves placed with them now they have raised interest rates. The capital losses on the bonds are much bigger than the running losses on the interest charges.

Ā  Ā  Ā  Ā  Ā  Ā There is no need to accelerate and worsen the large losses by taking them early through market sales of the bonds. Ā Ā The Bank of Japan with the largest bond portfolio relative to the size of the economy has kept rates at zero so does not have the same problems. It intends to keep rates at zero to avoid these issues. It can still afford to do so as it did not balloon the money supply in the way the other three did causing excessive inflation, though Japanese inflation has reached an unusually high but probably temporary level of 3.7% recently. China has inflation at 2.1% showing that a large energy importer did not need to have inflation , because they had a money target for their Bank and kept it under good control.

Ā 

Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā  All threeĀ  Central banks with losses are sitting on negative capital were they to take the losses. This has led to a divergence in approach. The US Fed has ploughed on with aggressive rate rises and with sales of the bonds into a falling market, taking large loses as a result. The US Treasury refuses to reimburse the Fed for the losses and says it does not matter if the realised bond losses exceed the capital of the Bank, as they will quite soon. They rightly argue a central Bank cannot go bust, as it can always create money to pay its bills. The US Fed will account for the losses in a special way to allow the Central Bank to carry on as if nothing has happened. In contrast the ECB , alarmed by potential losses and the adverse impact of selling bonds into a falling market refuses to sell bonds at a loss. Meanwhile the ECB itself is telling the member states Central Banks that “ownā€ the ECB they will be responsible for 80% of Ā the losses made on repayment of bonds by governments as they fall due. The member states central banks will come to their own view of whether to ask for capitalĀ  grants from their governments or whether to adopt the US approach of just leaving the losses within the accounts of the Central Bank.

Ā 

Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā  Only the UK is burdening the Treasury and taxpayers with totally unacceptable losses for no good reason. Money policy does not need sales of bonds. They will run off at a slower pace and with lower overall losses if just held to repayment. There is no need to recapitalise the Bank from tax revenues as this happens. You can follow the Fed. This has always been a policy controlled by the Treasury, with the Bank stating clearly on its website that it carries out the bond buying ā€“ and therefore selling ā€“ for the Treasury as agent. It has always needed Chancellor sign off.

102 Comments

  1. Peter Wood
    November 26, 2022

    Good Morning,

    Sir John, you complain about the wrong thing; the QE carried out was ALWAYS going to result in inflation and then losses on the purchase price of the bonds as interest rates increase. The Treasury and BoE knew this, so the question is WHY did they do QE then, and now WHY are they so keen to be a further burden in the tax payer?

    This is an example of why your contributors are coming to the conclusion that your Party is either grossly incompetent or wilfully damaging the country for other purposes such as a reason to return to the EU, as floated by the Chancellor.

    1. Nottingham Lad Himself
      November 26, 2022

      Just one stat: crime was down by a third under the last Labour government.

      Since it now costs upwards of seven percent of GDP according to modest estimates, and has soared under the Tories, we can only guess at the cost of the undoing of so much of Labour’s good work on that single figure.

      You voted for it, and no doubt will continue to do so, however.

      1. Shirley M
        November 26, 2022

        NLH: I do wish you would stop trying to blame the voters, just because you hate Brexit, and possibly, the UK. We unknowingly voted for liars and frauds. There should be some democratic protection against this outright fraud and betrayal.

      2. Mickey Taking
        November 26, 2022

        what crimes? and measured against what? One month, 5 years? Larger or smaller police force?
        You really must demonstrate there is a basis for your point!

        1. Hope
          November 26, 2022

          NHL,
          20,000 fewer under May. She got rid of them and blocked them having a pay rise for years! She even refused a pay rise when Javid intervened. Quota system having negative impact on service. You get what you pay for. Under May she decimated the police while having open borders! What could go wrong!

          7,000,000 on NHS waiting list another historic record for Tories! Where are those 40 hospitals promised? No dentists available. Care home staff sacked by Tories, jab or no job was there motto causing 40,000 to leave! Open borders have any impact!

          Welfare through the roof, open borders have any impact!

          Sunak wastes Ā£11.8 billion of our taxes to fraud open borders have any impact!

          Shortage of housing. Open borders have any impact!

          I thought we were repeatedly promised reduce immigration to tens of thousands!

          No Brexit benefits enacted. Shackled to EU 6 years after voting to leave!

      3. Narrow Shoulders
        November 26, 2022

        Which demographic(s), on the increase, are responsible for most crime Marty?

        There are two simple ways to reduce crime. One is to reduce the quantity of the above mentioned demographics by controlling immigration and using deportation. The other is stiffer sentencing and fewer early releases for those career criminals we can not deport. If they are inside they can’t commit crime on the general public.

        We can be touchy freely with first timers but after that…..

      4. Fedupsoutherner
        November 26, 2022

        Hi Martin. Perhaps that might be to do with the fact our population is larger and we have more people in the country we that we know nothing about. We know known criminals are allowed till stay thanks to lefty lawyers.

        1. Hope
          November 26, 2022

          No oneā€™s knows how immigrants are here the Tory govt. uses estimates not head count! 2022 and they are guessing with our security and safety!

          The Manchester bombing victims must wonder why May is still in the party let alone allowed to become PM.

          1. glen cullen
            November 26, 2022

            And we donā€™t know what threat they are !

    2. Peter
      November 26, 2022

      Look at who has been put in charge of the Bank of England.

      The same person was also head of the notorious Financial Conduct Authority. Regulators in this country are just there for show. They fail to address problems. This same person also had a reputation for falling asleep on the job.

      ā€˜Only the UK is burdening the Treasury and taxpayers with totally unacceptable losses for no good reason.ā€™

      Maybe there is a deliberate bad reason – to soften the country up for further impositions and an eventual shift of power away from voters.

    3. Jamie
      November 26, 2022

      Peter Wood- rest assured we are not going to get back into the EU again – not a snowballs chance in Hell would they have us back – but we do need some kind of easier relationship with them and it could turn out to be a bit like Swiss style where we pay in but have no part in decision making.

      For growth we need trade deals – that is accepted – but If anyone thinks we can conjure up equivalent alternative trade deals from a logistical point at these vast distances to the Pacific, India etc with just with the flick of a computer taking into account time, distance, transportation costs, the environment and possible outbreak of hostilities worldwide at some stage? when we don’t even possess suitable British merchant ships anymore – well again it’s all just more pie in the sky.

      1. Hope
        November 26, 2022

        That does not hold any water. Many goods come from China!!

      2. John Hatfield
        November 26, 2022

        In any case we do not need to pay a committee to make rules for us.

  2. Mark B
    November 26, 2022

    Good morning.

    Just like when Gordon Brown sold all our gold at the bottom of the market, the price of having your man at the top does not come cheap.

    šŸ˜‰

    1. Ian Wragg
      November 26, 2022

      It’s the deep state undermining the government.
      It’s just another step in the march to rejoin the EU and part of the great reset.
      We are being bankrupted by the BoE and the green blob and no one especially fishy and his sidekick will do anything about it.
      The party of sound money. Don’t make me laugh.

      1. Lifelogic
        November 26, 2022

        Is this true I wonder?

        JR says “Only the UK is burdening the Treasury and taxpayers with totally unacceptable losses for no good reason.” so why is this? Then again only UK banks have one size for all rip off personal overdraft rates of 39% (with no real or fair competition) introduced in effect by the FCA while the dire Andrew Bailey was in charge.

        So if you need a car to get to work and live in London you now have to pay an additional tax of nearly Ā£3,000 PA.
        Someone even on an average wage of Ā£30,000 will struggle to have anything left at all to live on after Tax, NI, pension conteibutions. car commuting costs and petrol, student loan interest, lunch at work, office clothing, car tax, council tax and rent of circa Ā£1000PCM do the sums.

        1. Hope
          November 26, 2022

          Using the Economy is always a good way to get votes. If it hits people in their pocketsā€¦
          Lord Frost has it right it is to soften is up.

          First time the remainers made scare stories about economy doom if we voted Brexit. This time no one would believe them so they are deliberately effecting the economy to hit your pockets to prove UK must be aligned with EU to help economy.

          Traitors. Simple. Why did Sunak cave/agree last week about no govt control over BOE which JRM expressed surprise! I think it was pay back for helping to oust Truss and putting Sunak and Hunt in place. Like Sunakā€™s campaign their economic plan was too ready to be a coincidence.

          When will Bailey and senior Treasury officials be sacked? It was reported Truss told Kwertang ā€œTheyā€ were coming for them. Who? Who visited Truss with Simon Casey to see her to scare her?

          Irrespective of party JR and chums need to oust Sunak and Hunt as a matter of urgency. Our country is under threat by both of them and the cohort of remainers.

        2. Peter
          November 26, 2022

          Even if you are a resident in Greater London and use a car Mayor Khan will clobber you with a Ā£12.50 a day charge from August 2023.

          1. Hope
            November 26, 2022

            We read owners of Bulb made millions while racking up colossal debts and lost Ā£6.5 billion but are paid by govt to stay on and run it!

            Our standing charges are paying for the owners losses! The govt new that small companies were a risk of there was a price cap. Yet still allowed it. Why?

            JR, how can this be right after the banking scandal?

          2. Lifelogic
            November 26, 2022

            + Ā£12.50 for anyone to visit you and Ā£25 if they stay the night. It will not just be London either.

        3. Mike Wilson
          November 26, 2022

          Lunch at work?! I dunno, these young people. Take sandwiches!

        4. Mickey Taking
          November 26, 2022

          and the voters know about your last paragraph all too well.

        5. glen cullen
          November 26, 2022

          You can understand all the public sector strikes when this government is throwing money all over the place like its out of fashion ā€“ they see all this money being spent and they want some

  3. Shirley M
    November 26, 2022

    Incompetent, or deliberate? My money is on deliberate. I don’t know why the UK is being deliberately sacrificed in this way, but the reckoning will come at the next GE, if we can last that long. Will be still be allowed a FAIR election? I even have doubts about that. Deceit and fraud seems to be top of the agenda these days.

    Small business are going out of business, bigger business is going abroad, the brain drain has started, there will be many deaths this winter, due to lack of heating and other essentials now priced out of reach, and the free essentials such as doctors, dentists and NHS are scarce resources for the masses, but the illegals will get priority medical care and be kept warm and well fed for at our expense. Not that they appreciate it.

    This government needs to go, NOW, not in 2 years. We don’t want the Labour either, which will be much the same, LibDems are anything but democratic and the Greens really are loony and would have us all living in caves with grass and insects to eat, if we were lucky. Your party has drifted so far to the left that people are now calling Labour and the CONS, the Uniparty. We need Reform, in a BIG way!

    1. Donna
      November 26, 2022

      Yes, it has to be deliberate. There is no other rational explanation.

      1. Hope
        November 26, 2022

        Donna,
        Look at the large amount of remaining/Labour spads employed at No.10 highlighted by Guido Fawkes! No coincidence. Hunt has moved them in pronto. Why do Tory MPs allow it?

      2. Peter Wood
        November 26, 2022

        According to the stats, easy to find online, since 2008 the Treasury/BoE money printing game has amounted to Ā£850 Billion. That looks like clear intent to debase the currency. For what purpose?

      3. Hope
        November 26, 2022

        In tandem and along the same lines: I guess the other question is: why is Sunak allowed to waste over Ā£11.6 billion of our taxes to fraud and not investigate it? Lord Agnew resigned because of Sunakā€™s school boy errors. Why has Sunak not been forced to resign?

        Labour ought to pursue this line against him when he is imposing the highest taxation and falsely blaming Truss for all His failures! If Sunakcan waste such a vast sum without investigating then workers are not going to accept govt cannot afford a pay rise! Same for the PPE scandal of awarding contracts to Tory mates. We read today it costing nearly a million a week to store PPE. Last time millions of pounds had to be scrapped under Huntā€™s watch because it was not,
        stored properly or checked.

    2. Fedupsoutherner
      November 26, 2022

      Thumbs up to that Shirley.

  4. Richard1
    November 26, 2022

    Have you had any response from treasury ministers or the BoE on this issue?

    1. Hope
      November 26, 2022

      I think it part of the Sunak/Hunt deal to get them in place and used to oust Truss. Do not forget Bailey publicly blamed Truss as well!!

  5. Berkshire Alan
    November 26, 2022

    Perhaps the BOE is doing it simply because it is allowed to, it shifts the blame and shifts the losses to Government, if as you say the BOE reports to the Chancellor, then I am afraid the Chancellor is to blame, and for the last 12 years they have masqueraded as a Conservative.
    That or been totally ignorant to the cause and effect.

  6. James Freeman
    November 26, 2022

    The UK approach is more prudent. The government owns the Bank of England, so the losses are on its books. As much as I dislike the tax increases and the negative economic implications, it is a sound approach. We are paying for the poor decisions made by previous Chancellors.

    The US government does not own the Fed, so they have a simple money printing operation. It introduces higher inflationary risks and the chances of the whole thing blowing up. It believes it is bulletproof as the dollar is the world’s primary reserve currency.

    The member state’s central banks own the ECB and are still printing money. The member states are ignorant of what they now owe. The situation has the political advantage of creating an economic stack of cards. If a country left the Euro, the whole system would collapse, so no one would dare to go.

    The consequences of the Fed and ECB going bust would make the banking crash look like an economic blip. Thanks to our prudent approach and Brexit, we are in a more robust place but would still suffer. What is the government’s plan to protect us in the event of such a calamity?

    Reply It us not more prudent to lock in losses you do not need to take. The taxpayer bill for the losses will all be borrowed!

    1. Ian B
      November 26, 2022

      @James Freeman As we have seen in recent days it is round the other way the Bank of England owns the UK Government, it dictates Political Policy to Government. They said jump and Rishi said ‘how high’

  7. Lifelogic
    November 26, 2022

    Yet another huge tax increase? The age at which Britons qualify for their state pension is due to increase to 67 by 2028 and then 68 by 2039, but ministers want to bring the latter rise forward to the mid-2030s. This on top of Kahnā€™s Ā£3000 ULEZ tax. You can only squeeze so much tax out of people before they leave, work cash in hand, barter or just live on benefits. A doom loop indeed.

    This at a time when life expectancy had declined significantly too and this likely to continue given the dire state of the rationed and delayed NHS.

    1. Mike Wilson
      November 26, 2022

      Well, both my lads earn about the Ā£150k mark. They are both talking about emigrating to Australia. Much as it will sadden me, I donā€™t blame them. That will be two less hard working, high tax paying people that the government will not be able to milk. And their partners too. They donā€™t earn that sort of money but they are both higher rate taxpayers.

      1. Donna
        November 26, 2022

        My city-boy son (on over Ā£100,000) is looking at Asia.

        1. Hope
          November 26, 2022

          My son paid far less tax working in US than here and was better off even paying for his health, housing etc. I spoke to a small business man yesterday he is at a loss why govt is trying to force him out of business! They cannot all be wrong. And for what? So Sunak can give away Ā£11.6 billion on climate scam reparations! Or Ā£11.8 billion fraud or Ā£12 billion overseas aid or Ā£11 billion to EU! Madness.

        2. Mickey Taking
          November 26, 2022

          using a powerful telescope?

    2. Berkshire Alan
      November 26, 2022

      Yep. ULEZ taxes, have little effect on actual pollution, as proven by testings taken over the last few years.
      Just another way to extract more money from the motorist, as if VED, Fuel Duty, Vat, car parking fees, road & bridge tolls, congestion charges, fines for small trivial moving offences etc, are not enough.
      All on top of the initial purchase price, annual servicing, and Insurance, which all include taxes !
      Who would now want a business or live and be located just inside the London Boundary ?

      Do you think the London mayor will get re-elected having gone out to consultation on this project, had such a scheme rejected, but still being put in place.
      True democracy in action eh ?

  8. Donna
    November 26, 2022

    Richard Tice, Leader of Reform, has proposed that the massive (and completely unnecessary) Covid Debt is converted into a War-Bond with a long repayment date. Instead, the Government proposes selling off the Bonds now at a huge loss. Gordon Brown sold off our gold at a massive loss – this is a similar exercise in national economic destruction.

    I’m afraid the only conclusion is that the Remainer CONs are deliberately piling damage upon damage onto our economy in order to force “a closer relationship with the EU” which I think will be entry into a two-tier construct with the UK on the outer tier along with the likes of Turkey, Ukraine and the remaining EFTA nations – with the ultimate aims of the WEF as the goal.

    1. Hope
      November 26, 2022

      +1
      There is no other logical conclusion.

    2. Ian B
      November 26, 2022

      @Donna +1

  9. DOM
    November 26, 2022

    John doesn’t like Bailey as John knows what Bailey’s game are. An unelected panjandrum that’s brought down a Tory leader and opened the door to the EU, the WEF and the UN. Downhill from here for those who cherish privacy, freedom from the increasingly aggressive State and distance to do we please without being told me WHO WE ARE, WHAT WE ARE AND WHAT WE CAN SAY AND DO

    Maybe John and his buddies NEED TO BECOME personal. All other avenues have been exhausted

    Does John want to see CBDC’s and the elimination of FREEDOM?

    1. Hope
      November 26, 2022

      +1
      If JR and chums do not move the country will suffer. Country more important than party. I read JRs repeated claim about better to influence Tory than have Labour. Naive. Hunt does not care as he has Labour support already, he is hiring them!! Former Labour minister and spads!

      Collusion/coup won the Biden election. EU keep re running elections until the right result. We are witnessing the same here. Get rid of Johnson get rid of Brexit.

    2. Ian B
      November 26, 2022

      @Dom +1 many many times over

    3. Ian B
      November 26, 2022

      @DOM – Our Freedoms, Our Free speech, the Internet even is not corruped by any one other than the Establishment and the Political Class – they all live in fear of the People that they are paid by

    4. glen cullen
      November 26, 2022

      Spot On +1

  10. Ralph Corderoy
    November 26, 2022

    ‘They rightly argue a central Bank cannot go bust, as it can always create money to pay its bills.’

    Which is why this fiat money is worth a dwindling amount and will ultimately fail, as all fiat currencies have through history. (Though I think the Euro will fail first.)

    As Nobel-winner economist Friedrich Hayek said back in 1984: ā€˜I donā€™t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we canā€™t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they canā€™t stop.ā€™

    1. Mike Wilson
      November 26, 2022

      Like Bitcoin? Iā€™m nursing a massive 70% loss. Mind you, I only bought $200. My Amazon shares are down 40% too. If you want investment advice, ask me – and do the opposite!

      1. Mickey Taking
        November 26, 2022

        Sorry but I’d like them to go bust, with Twitter, Instagram and other useless businesses.

    2. fishknife
      November 26, 2022

      “As Nobel-winner economist Friedrich Hayek said back in 1984: ā€˜I donā€™t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we canā€™t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they canā€™t stop.ā€™ ”

      And his name is Energy.

    3. Bloke
      November 26, 2022

      Cunning collective actions such as boycotts, inertia and various others can neutralise bad Govt power. It would be better instead to elect a high quality Govt that did not need such resistance, although it is that which appears more difficult.

    4. Lifelogic
      November 26, 2022

      Difficult to find some currency that the governments cannot stop and kill if they really want to. They can easily destroy cryptocurrencies if they wish to. They are actively currently strangling cash.

  11. ALISON PEEL
    November 26, 2022

    What are the links between the City of London and The Federal Bank? If anybody knows, I would be grateful for any information as I am trying to work out how much co-operation there is between the central banks and who is in charge.

    1. Mark B
      November 26, 2022

      The Bank of International settlements (BIS) would be a good place to start.

  12. a-tracy
    November 26, 2022

    Well explained thank you. You must be frustrated – your lifeā€™s work starting to unravel because once again ā€˜theyā€™ wonā€™t listen to you, choosing to ignore. ERM time again. Labour on the sidelines waiting to finish us off completely, stitching us back into the EU control.

    Hunt became chancellor from nowhere, bottom choice of members, untrusted in Health, the man who left us without decent PPE suppliers and a proper pandemic plan.

    Who told Liz he was to be Chancellor?
    80

    1. R.Grange
      November 26, 2022

      We had a proper pandemic plan, a-tracy, as did most other countries. Here it is:
      https://www.gov.uk/government/publications/uk-pandemic-preparedness/uk-pandemic-preparedness
      Trouble was, we threw it out the window and adopted the WHO’s panic plan based on what China did. Sweden was one of the few countries that kept to its existing pandemic plan. It came out of the crisis with a better outcome than we did, health-wise, and with less damage to the economy and children’s education. To his credit, Johnson held to the original plan for a little while, but international corporate and political pressure was too strong for him.

      1. a-tracy
        November 26, 2022

        RG: I read during the crisis that warehouses that were supposed to have stores of PPE in them were short of stock they thought they had. I remember Franceā€™s Macron putting pressure and threats on Boris mid-March 2020. The teaching unions started to pile in, they wanted to shut the schools and not go back. People forget it was the nursing staff and care home staff that didnā€™t want visitors as ā€œthe risk to the workforce was too highā€. People should have been allowed to take their elderly family home. I personally worked throughout thank goodness. It was terrifying in the first three – six weeks.

        1. R.Grange
          November 27, 2022

          Yes, it was a cynically orchestrated programme of psychological abuse, to which many fell victim. At least you would hope the public would not fall for it again.

  13. William Long
    November 26, 2022

    What you say seems so obviuous that one can only conclude that, either the Chancellor and his advisers are ignorant of how markets work, or that they have some other agenda. Clearly the cannot care about the effects of their actions on the Taxpayer if they allow things like this to happen and HS2 to continue.

  14. acorn
    November 26, 2022

    “Financial market movements are determined by a wide range of international and domestic factors. Since 31 March 2022, there has been significant repricing across asset classes in global financial markets. Gilts are an example of one such asset that has been affected by this repricing. The fair value of the gilts held by the NLF is impacted by market movements but as gilts are held at amortised cost, repricing does not impact the value of gilts recognised in the Statement of Financial Position.”
    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1112371/E02795570_HC_668_National_Loans_Fund_Annual_Report_21-22_Accessible.pdf Do a search with “amortised” and “fair value”

    The US and the UK Treasury fiat currency procedures are very similar, except the UK’s employs a lot more smoke, mirrors and people. The ECB is a combined Euro issuing Treasury and Euro central bank. Euro member states effectively use a foreign currency. They have to issue Gilts to get cash, the UK doesn’t.

  15. Mike Wilson
    November 26, 2022

    Given that you, Mr. Redwood, understand this stuff, one has to ask – WHY?

    Why on earth are they doing this? Are they stupid or wilful?

    Reply I have never been able to work out why the Treasury/Bank puts us through so many needless boom bust cycles.

    1. Donna
      November 26, 2022

      Reply to reply. Because some/somewhere are making a great deal of money from it. The only imponderable is who.

    2. acorn
      November 26, 2022

      You well know JR, the Treasury and its BoE are operating exactly to the rules that Westminster legislated. Nothing more, nothing less.

      Meanwhile, contemplate this. Five million of the UK’s energy customers, eight of its nukes and thirty one of its wind farm generators; in all, supplying a fifth of the UK’s gas and electric, will shortly be owned by the French government, now that it has been cleared to renationalise EDF.

      Octopus Energy will manage EDF’s retail customers on its Kraken platform. Octopus and National Grid recently tested a vehicle to grid balancing market mechanism for peak grid demand periods. This will become a nice little earner for EV owners who sell a few kWh back to the grid during the “darkness peak” (circa 5 to 7pm).

      PS. Did you see Harmony Energy using Tesla kit, has powered up its 100 MW / 200 MWh battery storage facility at Cottingham? It has been built next to the National Grid’s Creyke Beck substation, which will be connected to Dogger Bank, the world’s largest offshore wind farm, when it launches in the North Sea later this decade.

      1. Mark B
        November 26, 2022

        I agree with your first paragraph, acorn and have said as much in the past.

      2. Original Richard
        November 26, 2022

        acorn : “This will become a nice little earner for EV owners who sell a few kWh back to the grid during the ā€œdarkness peakā€ (circa 5 to 7pm).”

        Firstly, each discharge/recharge cycle degrades the battery. So owners will lose money over the long-term.

        And if Octopus/National Grid discharge your battery during the “darkness peak” because they lack sufficient energy, what makes you think they will have sufficient power to recharge your battery overnight or even possibly for the next week or more?

        1. acorn
          November 27, 2022

          My three decades in the power generation and transmission industry and keeping up with the capabilities of current technology; particularly on grid scale battery technologies which you don’t appear to be aware of.

          1. Original Richard
            November 27, 2022

            acorn :

            What “grid-scale battery technology” please?
            And where in the world does it exist please?
            And how much does it cost?

            Taking the cost of the Australian 150MW `194MWhr Hornsdale Tesla Power Reserve, which was completed in 2017, at AS90m (Ā£50m), the cost in batteries for our 40GW demand will be Ā£250bn for each 24 hours the wind does not blow or fails to provide ā€œexcessā€ power to charge the batteries.

            The battery price today will even higher as the prices of lithium, nickel, cobalt, copper etc have all doubled if not trebled in price since 2017. In fact mining engineers say there isn’t the capacity to produce sufficient of these minerals until the middle of the next century.

      3. a-tracy
        November 26, 2022

        Acorn, who in Westminster set the rules to bring Truss and Kwasi down then?

        1. acorn
          November 27, 2022

          Basically Truss and Kwasi ignorance of; or, deliberate attempt to circumvent, the requirements of the “Budget Responsibility and National Audit Act 2011”

          1. a-tracy
            November 27, 2022

            Who told Kwasi to bring it forward (I remember a great deal of pressure being put on him and Liz from the media straight after dealing with the Queenā€™s death) did the mandarins tell him the responsibilities of that Act, now that is the interview that Piers Morgan or Nigel Farage or Andrew Neil needs to secure, one with Kwasi and Liz to get to the bottom of that rush to give one side of the deal without the other being in place to discuss at the same time.

            Did the Treasury civil servants warn him he required to talk about both giving tax and energy concessions and where the cuts or repayment schedule was going to fall – to be delivered on the same day at the same time? The chair of the OBR confirmed that the body sent ā€œa draft economic and fiscal forecast to the new chancellor on 6 September, his first day in office.

            People knew what they were expecting a week before see: https://uk.news.yahoo.com/kwasi-kwarteng-mini-budget-150704826.html?

            Reply The advice I offered was to present spending and taxing together with figures for resulting borrowing. I do not know why they rushed out just the taxes

      4. Mark
        November 27, 2022

        I presume that the Dogger wind farm will claim curtailment payments while charging up the battery instead is supplying the grid, and then get paid again when the wind farm output is inadequate and the batteries can be discharged. An abuse of the system rules already happening (elsewhere Ed)as identified by GWPF.

    3. Mickey Taking
      November 26, 2022

      Friends who are brokers, investors, fund managers etc That’s why !

  16. Bloke
    November 26, 2022

    HM Treasury should have full control. Gordon Brown caused the Bank of Englandā€™s oblique ā€˜independenceā€™. His successors view independence like human freedom as if reversing it would be like colonising people. They maintain Brownā€™s original error. Devolved Govt was similarly a daft move but remains stuck in chaos for similar reasons.

  17. Ian B
    November 26, 2022

    Good morning Sir John

    Does the UK need an unelected unaccountable Bank of England, that then exceeds its franchise by dictating to the elected the only ā€˜politicalā€™ course they are permitted to take.

    We must never forget an independent BofE is a Gordon Brown invention, the UK was doing well before without it.

    The management of the BofE is in neglect by it refusal to keep inflation under control, then blaming everyone else. The BofE is in neglect in dumping their failures on the UK taxpayer. So it is a cheek when they then Dictate to Government how it must frame its Political Direction ā€“ no one elected them.

    Failed in control of the FCA, bailed out those failures and then blamed the mini-budget that was about growth.

    1. Mike Wilson
      November 26, 2022

      We must never forget an independent BofE is a Gordon Brown invention, the UK was doing well before without it.

      Really? That feels like a rewriting of history to me. When it wasnā€™t independent, under the control of the Thatcher and Major governments, we had a credit boom and bust, a housing boom and bust, the ERM fiasco, 15% interest rates, and hundreds of thousands house repossessions. It was all going so well New Labour won the 1997 election by a landslide.

  18. Mickey Taking
    November 26, 2022

    off topic.
    The Daily Express says parents are raiding their retirement funds early to help their children through the cost-of-living crisis. It cites research from a financial services company that shows 500,000 people withdrew Ā£3.6bn from pension pots in just three months this year. Analysts say people are dipping into pension funds to make ends meet and, as a result, risk running out of savings in retirement.
    [Thats a lot of votes lost at the next GE!]

    1. a-tracy
      November 26, 2022

      MT, how does the DE know they are going on to help their children?

      Rather than pay off their mortgages esp endowment and interest only, or buy an alternative home for themselves, invest in buy-to-lets instead of pensions (because they keep getting robbed by Chancellors), they were told they would lose their allowance so probably just cashed in their chips before Hunt started on them.

      1. Mickey Taking
        November 26, 2022

        As a matter of interest they hit the nail on the head, we did exactly what is suggested.

  19. Bryan Harris
    November 26, 2022

    Once again our host demonstrates clearly why our major institutions are unfit for purpose.

    This goes well beyond mismanagement and wrong thinking, for no nobody could justify the way money is being wasted, thrown away for no good reason.

    Our economy and resources are being deliberately destroyed for one purpose – to suit the insane globalist agenda.

  20. Ian B
    November 26, 2022

    Sir John
    As each day passes it is clear that those we elect to Govern are not permitted to do so by the very vehicles the UK Government has set up. This continued unaccountability by those that dump on the taxpayer surely cant continue.

    Why is this Prime Minster and his Chancellor so weak when it comes to running Government and the State. As someone said elsewhere, These ministers will protect their bosses in the Establishment at the expense of serving the People of the UK

    1. Mark B
      November 26, 2022

      The answer is – The EU.

      Our membership of the EU and all the various QUANGO’s were designed to distance the political process further and further away from the State. all the while the EU via various laws passed to the UK and issued via Statutory Instruments (bypassing Parliament) allowed them to control the State without any interference from Parliament and the government. In effect, the Civil Service and the EU Civil Service were running things and, no matter who you voted for nothing could ever change.

      Sounds familiar ?

      šŸ˜‰

  21. Keith from Leeds
    November 26, 2022

    Hello Sir John,
    Yesterday you mentioned ways to reduce our carbon footprint, all very sensible, but that is what I mean when I say you support net-zero. Carbon or CO2 is not a problem just because the media & Government say it is. It is the same stupidity as the BOE selling bonds at a loss & as a conservative member, I am appalled at the Government’s inability to do anything except make life harder for the people of the UK. Why are our PM, Chancellor, Home Secretary & Ministers so incompetent? They talk a good fight but then nothing changes!

    Reply I am talking to a government which wishes to reduce CO2 so I need to use arguments they will listen to

    1. Hope
      November 26, 2022

      JR,
      Govt or party? Is your use of the word govt. to deflect to some inanimate body?

      The issue is so large financially it should be put to the people by referenda as we will pay for it. May brought in net stupid during her last few weeks without any cost benefit analysis! All promises about balancing the books and paying down debt were simply lies to get elected.

      Your party has been proven to be totally untrustworthy on many issues; economy, taxation, immigration and Brexit.

    2. glen cullen
      November 26, 2022

      Don’t just talk to the government, talk with your fellow MPs and parlimentary party as reducing co2 and net-zero is a manifesto pledge …you need to recind the manifesto

      Reply The pledge is for 2050

      1. glen cullen
        November 26, 2022

        The pledge actually says ā€˜ā€™reaching net-zero by 2050ā€™ā€™, but youā€™re starting the net-zero process early by banning the ICE vehicles and gas boilers in just 7 years in 2030, by introducing city wide clean air zones today and spending Ā£2bn on cycles lanes today and rising the ‘green’ & ‘environmental’ levy today

    3. Bill B.
      November 26, 2022

      Well, SIr John, your reply sounds a bit like saying “I am talking to a captain who wants to sail straight towards an iceberg, so I have to use arguments he will listen to.”

      Why not tell the government that up ahead by 2050 there is a total bill of Ā£573 bn to be paid for net zero (OBR figures)? What will happen when the country collides with that overpowering financial shock?

      There must be a change of course.

      1. glen cullen
        November 26, 2022

        We haven’t got a plan ‘A’ but plan ā€˜Bā€™ China will bail us out & plan ā€˜Cā€™ EU will bail us out

      2. Original Richard
        November 26, 2022

        Bill B :

        In July 2021 the OBR put the cost of Net Zero at Ā£1.4 trillion.

        But it must be many times this figure as this works out at just Ā£20K/person and we all the know the current costs of heat pumps, evs and energy alone!

        1. Mark
          November 27, 2022

          The cost in damage to the economy will be very large, and ongoing. By 2050 it could easily amount to Ā£500bn to Ā£1 trillion a year. You only have to look at the effect of suppression of activity under lockdown to understand this.

    4. Mickey Taking
      November 26, 2022

      So Sir John, how is the talking, to persuade them round to reality going?

    5. Timaction
      November 27, 2022

      Why are they importing over 1 million people a year and claim they want to reduce CO2? A harmless plant food.

  22. am
    November 26, 2022

    The BOE is just boosting the profits of the commercial banks. The government is protecting the mortgage market for the commercial banks.
    It is obvious.

  23. Francesca Skinner
    November 26, 2022

    I suggest it is time we removed Andrew Bailey from his post surely we have more capable economists, Mark Carney was another failure. I would like to know if they are chosen as part of the old boys network.

    1. Lifelogic
      November 26, 2022

      They were/are both dreadful PPE and History of the Lancashire Cotton industry of similar – both full of the net zero, intermittent energy lunacy and other green crap too.

  24. paul
    November 26, 2022

    10% rates on borrowed money in the next two years and could hit a all time high, put that your pipe and smoke it.

  25. Lindsay McDougall
    November 26, 2022

    There was a time when power and responsibility went together; no longer it seems. I’ll ask again: why hasn’t the Governor of the BoE been sacked?

  26. Bill Mayes
    November 26, 2022

    This is scary “stuff”, SJ. You have exposed the fact that the East has a much better hold on and approach to the global financial problem, than our so-called “experts” in the West. Surely these people have a duty to their citizens to explain reasons for their failures? Or are they the same as too many politicos these days? Never accept responsibility for their failures and never apologise for them? To them it appears mandatory to follow the oriental doctrine, “Never, ever, lose face”? But we are in the democratic West not in the communist East! Japan et al excepted, of course!
    What I cannot understand is why our country should suffer the “hit” to the GBP because some “in the West”, who did not like the economic growth plans of our previous and innovative PM, shied away from totally smashing the Russia Rouble into the ground because of the FAILURE of the ‘invasion’, sorry, “special military operation” into the independent Nation of Ukraine. I doubt again that I shall ever receive a viable explanation from any cognisant source. “There is something rotten in the State of” the West!

    1. Hat man
      November 27, 2022

      Trying to ‘smash’ the Rouble has been the problem, Bill. Sanctions won’t work when large parts of the world don’t like what ‘the West’ is doing, and prefer a multi-polar world order to one dominated by the US. Even EU citizens may soon wake up to why they’re having to pay massively higher energy bills, and see their energy-rich industry leave for America or China. Especially when they see the huge profits the US is making, by selling them its LNG in place of the cheap Russian gas their prosperity has been built on for the last four decades.

      The neo-cons’ war to weaken Russia hasn’t worked, and we need a rethink.

  27. paul
    November 26, 2022

    The bank cannot ask for losses to be paid on the bonds, they did not pay for them like a investor and even if they did they take the loss, the bonds belong to the treasury not the bank, no money change hands apart from the bank giving the treasury the interest on the bonds because the treasury is the owner of them and not the bank. The right course of action is for treasury to ask for the bonds back at no cost to anyone, the bonds were only given out the in the first place to bail-out the high street banks, who decide they didn’t need the money. Its your job john to see that peoples money is look after by starting a court case against the BOE for attempt fraud. I don’t want to hear how close the country came to a end in 2008, it take 10 second send bonds to the bank and them 10 second to the high street banks, so there is no reason for bank to be sitting with any bonds, it all BS.

  28. Mark
    November 27, 2022

    I see the Bank is now planning to sell the Ā£19.3bn of gilts it bought defending gilts prices during the crisis it created. Presumably it should be allowed to do this so long as the sales are at a profit: perhaps more than just any profit. The sales should not push prices down more than a small amount without being halted and spread out over time for fear of creating the next crisis.

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