rantnrave Posted July 16, 2021 Share Posted July 16, 2021 Bank of England ‘addicted’ to creating money, say peers https://www.theguardian.com/business/2021/jul/16/bank-of-england-creating-money-lords-quantitative-easing The Bank of England risks becoming addicted to creating money and needs to come clean about how it plans to unwind its £895bn bond-buying programme, the House of Lords has warned.A report from a Lords committee – the members of which include the former Threadneedle Street governor Mervyn King – said there was a threat of quantitative easing (QE) leading to higher inflation and causing damage to the government’s finances.The Bank started using QE, a process whereby it creates money by buying government and corporate bonds, in 2009 during the global financial crisis, but has stepped up its use during the coronavirus pandemic. But the Lords economic affairs committee said the Bank had become too dependent on the use of QE, which it said was widening Britain’s wealth gap by boosting asset prices. Michael Forsyth, the committee’s chairman, said: “The Bank of England has become addicted to quantitative easing. It appears to be its answer to all the country’s economic problems and by the end of 2021, the Bank will own an eye-watering £875bn of government bonds and £20bn in corporate bonds.” Lord Forsyth said the scale and persistence of QE – which was now equivalent to 40% of the economy’s output – required the sort of “significant scrutiny” the Bank had not faced up until now. “Going forwards, the Bank must be more transparent, justify the use of QE and show it’s working. The Bank needs to explain how it will curb inflation if it is more than just short term. It also needs to do more to mitigate widening wealth inequalities that have resulted from rising asset prices caused by QE.” The committee said during the course of its inquiry, it had become apparent that the Bank of England was widely perceived to be using QE to finance the government’s record peacetime budget deficit during the pandemic. “The Bank’s bond purchases were aligned closely with the speed of issuance by HM Treasury,” the peers’ report said. “If perceptions continue to grow that the Bank is using QE mainly to finance the government’s spending priorities, it could lose credibility destroying its ability to control inflation and maintain financial stability.” In a statement, the Bank said the pandemic had posed an unprecedented threat. “QE and the package of other measures announced over the past 18 months have lowered borrowing costs right across the economy, providing much needed support to all borrowers at a time of extreme economic stress. It is wrong to suggest that the MPC has pursued another policy, namely to finance the government’s borrowing during the crisis. The evidence does not support this assertion.” Forsyth said his committee had taken evidence from a range of experts from around the world, including former central bankers from the US Federal Reserve, the European Central Bank and the Bank of Japan. “We found that central banks all over the world face comparable risks. “QE is a serious danger to the long-term health of the public finances. A clear plan on how QE will be unwound is necessary, and this plan must be made public.” Quote Link to comment Share on other sites More sharing options...
spyguy Posted July 16, 2021 Share Posted July 16, 2021 (edited) 11 minutes ago, rantnrave said: “QE is a serious danger to the long-term health of the public finances. A clear plan on how QE will be unwound is necessary, and this plan must be made public.” This The problem with QE is not only - Does it work? But - How do we get out of it?? Edited July 16, 2021 by spyguy Quote Link to comment Share on other sites More sharing options...
cnick Posted July 16, 2021 Share Posted July 16, 2021 Should the public be educated that thin air 'money' is not the same as money borrowed from poeple?..... that there are two types of money, as it were. One where there's an injured party in the event of a default and one where there's none. and that's why the young have been priced out of housing. ? Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted July 16, 2021 Share Posted July 16, 2021 (edited) 1 hour ago, rantnrave said: Bank of England ‘addicted’ to creating money, say peers https://www.theguardian.com/business/2021/jul/16/bank-of-england-creating-money-lords-quantitative-easing The Bank of England risks becoming addicted to creating money and needs to come clean about how it plans to unwind its £895bn bond-buying programme, the House of Lords has warned.A report from a Lords committee – the members of which include the former Threadneedle Street governor Mervyn King – said there was a threat of quantitative easing (QE) leading to higher inflation and causing damage to the government’s finances.The Bank started using QE, a process whereby it creates money by buying government and corporate bonds, in 2009 during the global financial crisis, but has stepped up its use during the coronavirus pandemic. But the Lords economic affairs committee said the Bank had become too dependent on the use of QE, which it said was widening Britain’s wealth gap by boosting asset prices. Michael Forsyth, the committee’s chairman, said: “The Bank of England has become addicted to quantitative easing. It appears to be its answer to all the country’s economic problems and by the end of 2021, the Bank will own an eye-watering £875bn of government bonds and £20bn in corporate bonds.” Lord Forsyth said the scale and persistence of QE – which was now equivalent to 40% of the economy’s output – required the sort of “significant scrutiny” the Bank had not faced up until now. “Going forwards, the Bank must be more transparent, justify the use of QE and show it’s working. The Bank needs to explain how it will curb inflation if it is more than just short term. It also needs to do more to mitigate widening wealth inequalities that have resulted from rising asset prices caused by QE.” The committee said during the course of its inquiry, it had become apparent that the Bank of England was widely perceived to be using QE to finance the government’s record peacetime budget deficit during the pandemic. “The Bank’s bond purchases were aligned closely with the speed of issuance by HM Treasury,” the peers’ report said. “If perceptions continue to grow that the Bank is using QE mainly to finance the government’s spending priorities, it could lose credibility destroying its ability to control inflation and maintain financial stability.” In a statement, the Bank said the pandemic had posed an unprecedented threat. “QE and the package of other measures announced over the past 18 months have lowered borrowing costs right across the economy, providing much needed support to all borrowers at a time of extreme economic stress. It is wrong to suggest that the MPC has pursued another policy, namely to finance the government’s borrowing during the crisis. The evidence does not support this assertion.” Forsyth said his committee had taken evidence from a range of experts from around the world, including former central bankers from the US Federal Reserve, the European Central Bank and the Bank of Japan. “We found that central banks all over the world face comparable risks. “QE is a serious danger to the long-term health of the public finances. A clear plan on how QE will be unwound is necessary, and this plan must be made public.” Anyone remember the call for evidence for this inquiry.... Well done Billy Smith is all I can say https://committees.parliament.uk/writtenevidence/22536/pdf/ https://publications.parliament.uk/pa/ld5802/ldselect/ldeconaf/42/4211.htm#_idTextAnchor079 Maybe when something is explained to people in power in real terms they listen....nahh, dont be daft. Edited July 16, 2021 by TheCountOfNowhere Quote Link to comment Share on other sites More sharing options...
Trump Invective Posted July 16, 2021 Share Posted July 16, 2021 Do these people feel any remorse for the fact that this is eventually public money? Or does the bank of England intend to pay it back from reduced wages and other austerity? Quote Link to comment Share on other sites More sharing options...
Speed1987 Posted July 16, 2021 Share Posted July 16, 2021 (edited) We need more money creation, not that it really makes much difference... Cut 1kg of gold in half, you've got 2 pieces at 500g. The illusion, is that people are richer, when really their money is devalued. They are taking money from some and giving it to others. Debt needs to get cheaper, otherwise there is no point in being financially responsible. Edited July 16, 2021 by Speed1987 Quote Link to comment Share on other sites More sharing options...
Locke Posted July 16, 2021 Share Posted July 16, 2021 5 minutes ago, Speed1987 said: We need more money creation, not that it really makes much difference... Cut 1kg of gold in half, you've got 2 pieces at 500g. The illusion, is that people are richer, when really their money is devalued. They are taking money from some and giving it to others. Debt needs to get cheaper, otherwise there is no point in being financially responsible. Now I know where you got you username from... 2 hours ago, rantnrave said: the Lords economic affairs committee said the Bank had become too dependent on the use of QE, which it said was widening Britain’s wealth gap by boosting asset prices. I genuinely cannot believe I am hearing this from a government lackey. Now the agitprop around getting rid of the House of Lords makes complete sense. Quote Link to comment Share on other sites More sharing options...
Si1 Posted July 16, 2021 Share Posted July 16, 2021 3 minutes ago, Locke said: I genuinely cannot believe I am hearing this from a government lackey. Now the agitprop around getting rid of the House of Lords makes complete sense. Mark Carney's primary function, and talent, was not as a central banker but as a politician, to push back the day that they would face scrutiny. Quote Link to comment Share on other sites More sharing options...
Dweller Posted July 16, 2021 Share Posted July 16, 2021 2 hours ago, spyguy said: This The problem with QE is not only - Does it work? But - How do we get out of it?? I don't know anything about anything but from what I have read over the years BOE desperately needed to put up interest rates years ago didn't they in order to have something to fall back on during the next crisis. Then Brexit happened! Last year BOE said they wanted to 'remove the punch bowl" of QE: https://www.bnnbloomberg.ca/bank-of-england-wants-to-remove-the-qe-punch-bowl-marcus-ashworth-1.1454652?fbclid=IwAR0zYABenIyOII8icv3Annp6jeyL2ulMfMG6Q1niydT754VgZT13qOeHFJo So how much more than what was to be the "last 100 billion" has the BOE now printed in the face of Brexit and Covid? Quote Link to comment Share on other sites More sharing options...
SE10 Posted July 16, 2021 Share Posted July 16, 2021 1 hour ago, TheCountOfNowhere said: Anyone remember the call for evidence for this inquiry.... Well done Billy Smith is all I can say https://committees.parliament.uk/writtenevidence/22536/pdf/ https://publications.parliament.uk/pa/ld5802/ldselect/ldeconaf/42/4211.htm#_idTextAnchor079 Maybe when something is explained to people in power in real terms they listen....nahh, dont be daft. Nicely done Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted July 16, 2021 Share Posted July 16, 2021 4 minutes ago, SE10 said: Nicely done I'll pass on your compliments 😉 Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted July 16, 2021 Share Posted July 16, 2021 50 minutes ago, Si1 said: Mark Carney's primary function, and talent, was not as a central banker but as a politician, to push back the day that they would face scrutiny. common thief Quote Link to comment Share on other sites More sharing options...
Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted July 16, 2021 Share Posted July 16, 2021 “Just ask any youngster trying to buy a flat and they will tell you about the impact of QE,” said Forsyth. https://www.ft.com/content/60d239bf-ea75-4dae-ada4-eed9cfd4fb3a OUCH! Quote Link to comment Share on other sites More sharing options...
Si1 Posted July 16, 2021 Share Posted July 16, 2021 Emotionally illiterate, arrogant response, predictably: "The BoE rejected the committee’s conclusions, saying it was “wrong” to suggest QE was designed to finance the government. It added that in the economic recovery, “the MPC will continue to assess the outlook for inflation and economic activity and to set monetary policy as necessary in order to achieve a sustainable return of inflation to the 2 per cent target”." Quote Link to comment Share on other sites More sharing options...
zugzwang Posted July 16, 2021 Share Posted July 16, 2021 Where's Starmer gone? Quote Link to comment Share on other sites More sharing options...
Si1 Posted July 16, 2021 Share Posted July 16, 2021 9 minutes ago, zugzwang said: Where's Starmer gone? Or the Shadow Chancellor "look how much money I made from my house" Rachel Reeves. Quote Link to comment Share on other sites More sharing options...
Former postman Posted July 16, 2021 Share Posted July 16, 2021 Just now, Si1 said: Or the Shadow Chancellor "look how much money I made from my house" Rachel Reeves. Anneliese Dodds is the shadow chancellor Quote Link to comment Share on other sites More sharing options...
Si1 Posted July 16, 2021 Share Posted July 16, 2021 Just now, Postman said: Anneliese Dodds is the shadow chancellor Quote Link to comment Share on other sites More sharing options...
Former postman Posted July 16, 2021 Share Posted July 16, 2021 Just now, Si1 said: 1 minute ago, Si1 said: Well I guess that just about proves how much of an impact Keir Starmer's shadow cabinet is making on my life doesn't it? Quote Link to comment Share on other sites More sharing options...
Si1 Posted July 16, 2021 Share Posted July 16, 2021 1 minute ago, Postman said: Well I guess that just about proves how much of an impact Keir Starmer's shadow cabinet is making on my life doesn't it? I preferred Dodds tbh. Played a straight bat. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted July 16, 2021 Share Posted July 16, 2021 58 minutes ago, Si1 said: I preferred Dodds tbh. Played a straight bat. Too straight for the Blairites, evidently. Quote Link to comment Share on other sites More sharing options...
Dweller Posted July 16, 2021 Share Posted July 16, 2021 https://www.metro.us/what-might-the-bank/ What might the Bank of England do to wean the UK economy off stimulus? Quote Link to comment Share on other sites More sharing options...
spyguy Posted July 16, 2021 Share Posted July 16, 2021 2 hours ago, zugzwang said: Where's Starmer gone? Blackpool https://www.bbc.co.uk/news/uk-politics-57848266 Its not going well. Quote Link to comment Share on other sites More sharing options...
winkie Posted July 16, 2021 Share Posted July 16, 2021 Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted July 16, 2021 Share Posted July 16, 2021 https://www.facebook.com/RTUKnews/videos/the-two-biggest-causes-of-inequality/778600999714553/ Quote Link to comment Share on other sites More sharing options...
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