Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Mervyn King Wanted To Buy Half Of The Uk Government Debt Market

Recommended Posts

http://blogs.telegraph.co.uk/finance/edmun...nt-debt-market/

Just when you thought you knew precisely where the Bank of England stood, it goes and surprises you again. In what counts as a real shock for the City (the third such shock in as many weeks), it transpires that the Governor, Mervyn King, wanted to pump even more cash into the economy than the £50bn the Monetary Policy Committee eventually plumped on earlier this month. He and two other members of the committee (David Miles - the newboy - and Tim Besley, the perennial hawk, in his final MPC meeting) wanted to increase the ceiling on quantitative easing (QE) by £75bn to £200bn.

Let’s try to put that total into perspective. The size of the entire conventional gilts market is currently around £400bn (though of course with the Government raising so much extra cash year by year it is growing at a rapid rate). A £200bn slug is equivalent to around 14pc of Britain’s gross domestic product. This is bigger than Japan ever tried and is far greater than anything either the Federal Reserve or the European Central Bank is doing. And all for a policy whose dividends are extremely dubious and which has arguably never been successfully employed. At least, you can’t fault King for lack of boldness.

The MPC minutes are a further surprise for the City. Two weeks ago, at the time of the decision, few traders anticipated an extension of QE; they were wrong. Last week, few expected the Bank to indicate in its Inflation Report that market expectations for a series of interest rate increases next year and the year after were too much; they were wrong. And now this.

It is not merely that the 6-3 vote represents the first time the MPC has been split on how to carry out QE since it started the unprecedented policy in March – though that landmark in and of itself is a significant one. The fact that King was on the wrong side is highly significant. For in the few times that this has happened before, hindsight has usually proven the Governor to be right with his vote – and the rest of the committee wrong.

In August 2005, King was outvoted as the rest of the MPC decided to cut interest rates to 4.5pc. Although those who were on the winning side (including Stephen Nickell) deny it, this cut helped reinject an extra bit more vigour into the housing market (which had stalled) and was partly responsible for blowing up the property bubble to the terrifying proportions it reached a few years later. In June 2007, King was in the four-man minority in calling for a quarter percentage point increase in borrowing costs to 5.75pc. It is debatable as to whether this was the right vote, given the teetering state of the economy at the time. What is not is that a month later other members of the committee relented and went ahead with the increase.

Blatant propaganda from the media trying to get the people to accept that free money from thin air is the right thing to do?

Share this post


Link to post
Share on other sites

The damage was done a lot earlier, the first meeting King Knut set the pace for debt-dosing the economy and the rest is history, it was explicitly targeted at igniting the housing bubble (already obvious) even further.

Moreover, if the Bankrupt of England's pension pot is still 70 odd percent invested in inflation hedged gilts then they are effectively using Quantitative ******** (and interest rate policy and their ******** missives) to front-run their pensions.

http://www.independent.co.uk/news/business...ent-586417.html

King springs surprise rate cut to 3.5 per cent

Borrowing costs at 48-year low, 'Hesitant' global recovery sparked Bank's move, Mortgage rates may fall

By Philip Thornton, Economics Correspondent

Friday, 11 July 2003

The Bank of England yesterday cut interest rates to their lowest level for almost half a century in a bid to prevent Britain's stagnating economy slipping into recession.

The Bank of England yesterday cut interest rates to their lowest level for almost half a century in a bid to prevent Britain's stagnating economy slipping into recession.

The Bank's Monetary Policy Committee, chaired for the first time by the new Governor, Mervyn King, cut the base rate by a quarter point from 3.75 to 3.5 per cent.

Share this post


Link to post
Share on other sites
Guest KingCharles1st

They knew exactly what they were up to (if not what they were actually doing) and I'm starting to feel that based on their much earlier alarming future projections for the economy, all this actually kicked off 2, maybe 3 years before the Summer '05 cop out.

And QE is the very last throw of the dice.

Share this post


Link to post
Share on other sites
They knew exactly what they were up to (if not what they were actually doing) and I'm starting to feel that based on their much earlier alarming future projections for the economy, all this actually kicked off 2, maybe 3 years before the Summer '05 cop out.

And QE is the very last throw of the dice.

Almost exactly 4 years earlier I'd say.

Share this post


Link to post
Share on other sites
Guest KingCharles1st
Almost exactly 4 years earlier I'd say.

What happened in '01? I wasn't paying attention then..

Share this post


Link to post
Share on other sites

I don't get the fuss. The pound is hardly reacting at all to this stuff except to hop around indecisively. I reckon the boys in braces are finally figuring out that QE doesn't do anything in this kind of situation and Mervyn is just messing with their heads to try and bring Sterling lower.

Edited by tpbeta

Share this post


Link to post
Share on other sites
What happened in '01? I wasn't paying attention then..

Dot Com bubble burst* and 911

* actually 2000, but the effects were being felt in 01 and we (US) were sliding towards recession... massive monetary slackening with big rate drops started this sorry mess. Some say that the rate drops were to avoid recession as it would send out the wrong signals after "the worst terrorist attack in history"...

of course this whole period and exactly what happened and who did it is very controversial and is now likely to send this thread off on a tangent :lol:

If someone had the time I think a graphical time-line would make a very interesting addition to the HPC Wiki... sometimes it is only when you place all of the major occurrences in chronological order a true picture of what has happened can be made.

Edited by Bubble&Squeak

Share this post


Link to post
Share on other sites
Dot Com bubble burst* and 911

* actually 2000, but the effects were being felt in 01 and we (US) were sliding towards recession... massive monetary slackening with big rate drops started this sorry mess. Some say that the rate drops were to avoid recession as it would send out the wrong signals after "the worst terrorist attack in history"...

of course this whole period and exactly what happened and who did it is very controversial and is now likely to send this thread off on a tangent :lol:

If someone had the time I think a graphical time-line would make a very interesting addition to the HPC Wiki... sometimes it is only when you place all of the major occurrences in chronological order a true picture of what has happened can be made.

I would take it back a little further and add in LTCM collapse.

Share this post


Link to post
Share on other sites
Dot Com bubble burst* and 911

* actually 2000, but the effects were being felt in 01 and we (US) were sliding towards recession... massive monetary slackening with big rate drops started this sorry mess. Some say that the rate drops were to avoid recession as it would send out the wrong signals after "the worst terrorist attack in history"...

of course this whole period and exactly what happened and who did it is very controversial and is now likely to send this thread off on a tangent :lol:

If someone had the time I think a graphical time-line would make a very interesting addition to the HPC Wiki... sometimes it is only when you place all of the major occurrences in chronological order a true picture of what has happened can be made.

I never gave the 9/11 conspiracies any attention or plausibility until I actually bothered to sit down and watch a couple (on YouTube and Google Videos) a few weeks ago.

I always thought that the financial boom started in 2001 following 9/11 - largely as an after effect of the aggressive slashing of interest rates to stave off a recession. However, it wasn't until I watched a few of these videos that I even considered the possibility that the financial boom (and perhaps even resulting bust) was intentionally orchestrated.

There are some bonkers (and quite frankly, if true, terrifying) theories out there but, irrespective of the angle, they all provide the same compelling evidence of a dark and unsettling objective that is being / could be achieved through the sequence of events we've lived through during the past decade (and I dare say before).

Anyone who found the "Money as Debt" videos enlightening should definitely watch them. It's amazing how easily the dots can be joined.

Share this post


Link to post
Share on other sites
In August 2005, King was outvoted as the rest of the MPC decided to cut interest rates to 4.5pc. Although those who were on the winning side (including Stephen Nickell) deny it, this cut helped reinject an extra bit more vigour into the housing market (which had stalled) and was partly responsible for blowing up the property bubble to the terrifying proportions it reached a few years later

That's what they are trying to do again now with QE. We have a small blip down then inflate back them up past the terrifying level?

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   288 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.