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

Assets Purchased By The Boe

Recommended Posts

Ok ... Question time for the learned HPC members ..

The BoE bought assets from the open market worth 200Billion. These would be bonds/gilts bought in the secondary markets that generate an interest for the BoE every year.

Assuming a 5% rate, thats 10 Billion annually that the BoE have as a new income stream from the treasury ..

1. What is happening with this income ?

2. Are the BoE free to up the bonuses and pensions for their bosses now that they have increased the balance sheet and found virtually free cash ?

3. Does the treasury own the interest income that has been earned by the BoE ? / Can the BoE donate funds back to the treasury ?

4. Can the BoE write off the future interest liability from the treasury as they own the assets ?

Your views please ..!!

Share this post


Link to post
Share on other sites

I am more concerned about the rate at which the interest rate on Greek bonds is rising give it a year and they will be paying near 100% interest.

:blink:

But that's ok because they have found another way of borrowing money, tell everyone else that they will default! All of a sudden the rest of the euro zone are willing and able to throw good money after bad. While were voicing concerns I am concerned what the motivation is of these countries to give money to another country that has no chance of paying it back.

Share this post


Link to post
Share on other sites

Ok ... Question time for the learned HPC members ..

The BoE bought assets from the open market worth 200Billion. These would be bonds/gilts bought in the secondary markets that generate an interest for the BoE every year.

Assuming a 5% rate, thats 10 Billion annually that the BoE have as a new income stream from the treasury ..

1. What is happening with this income ?

2. Are the BoE free to up the bonuses and pensions for their bosses now that they have increased the balance sheet and found virtually free cash ?

3. Does the treasury own the interest income that has been earned by the BoE ? / Can the BoE donate funds back to the treasury ?

4. Can the BoE write off the future interest liability from the treasury as they own the assets ?

Your views please ..!!

It goes into their profits (offsetting any loses). IIRC, the BoE has been quite profitable for the last few years despite normally being run to break even. It's all funny money though when you consider that its profits eventually go back into the government's account and that it's, er, the government paying most of the interest.

Share this post


Link to post
Share on other sites

It goes into their profits (offsetting any loses). IIRC, the BoE has been quite profitable for the last few years despite normally being run to break even. It's all funny money though when you consider that its profits eventually go back into the government's account and that it's, er, the government paying most of the interest.

Bump... Original queries still mostly unanswered ... am adding no 5 ..

5. When QE is unwound (hahahahaha), does the interest generated and collected till date also have to be unwound or does this remain as the profits for the bank .... what a lovely enterprise .. ?

Share this post


Link to post
Share on other sites

The question is finally answered today by HMG ....

I think we are now seeing a fact emerge .. There will be no stopping QE till the currency is trashed and the system is reset

Till recently there was a pretence being maintained that QE was not printing money

Its fair to argue that QE of 375 Bn has created an income stream that has generated 35Bn for the treasury (till date, more to come)

It has also possibly saved HMG another 15Bn in interest costs when selling these gilts - net effect of QE is roughly equivalent to monetising at least a 10th of it.

So if the books dont balance, the answer will always be to QE till the interest covers the deficit

I cant see a scenario where the stopping of QE would ever be justified .. the answer will always be that we are doing too little of it ..

Welcome to the economics of the madhouse .. lunatics in charge of the asylum and all that !!

Still the UK debt is AAA rated so it must be alright ..

Share this post


Link to post
Share on other sites

Im on a roll now .. so here is my newly discovered logic for supporting any amount of govt deficit ..

Say Govt Deficit is 'x' , then QE = 10 x should ensure that no politician has ever to worry about balancing books

Im a genius, I am !! I may even rename myself Gordon Brown !!

Share this post


Link to post
Share on other sites

This should be a bigger story. Finally we have some genuine money creation from thin air...... the 35 billion coupon forgiven on the 375 billion principal, though it was always debatable if that would ever be repaid.

So we have a Lord Turner style money creation scheme...stealing money from investors via diluting the pound to fund the public sector promises most of which are index linked and are print proof. So why wouldn't they.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

Just to play devils advocate, if the purchasing power of Gbp relative to other currencies remains stable, isn't this interest saving technically an export ?

Yes .. exporting our inflation and worthless currency created from thin air for material goods, fuel , food .... till the sellers of said products wisen up .. why wouldnt the politicians here (and the general population) exploit this

I have no idea why this news has not provoked a greater reaction .. everyone actually believes in the money for nothing mantra from the feckless to the elites ..

The crack up boom approacheth !!

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

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.