It is certainly no surprise that Gordon Brown’s sticky fingers are all over this fiscal deficit disaster- the man was and still is a walking idiot with zero understanding of the financial markets. Think Gold and the lost money he achieved by being “canny and clever” and selling at the bottom of the curve when everyone else was holding back on sales but happily taking U.K. gold reserves at rock bottom prices- genius move, but no different to punishing private pension funds by removing the tax break that ultimately put the pension industry into a £40billion shortfall whilst simultaneously the removed tax break was £40billion, it took years for the pension providers to balance their books.
Labour have never understood business because so many of them have never actually run a business either at manager or above level but claim to be able to tell businesses just how they should be run- this is also true of the other political parties, the worse group being Greens, LibDems, SNP, Plaid Cymru followed closely by Reform, Restore and the CONsocialists.
The financial hole these “Nations” that make up the UK cannot be paid back, the debt interest is growing and no politician dare face the facts- we are effectively a drunken bankrupt trying to get another drink and every pub is saying “OK but the price is going up, up, up”, if any political leader of the many shades of socialism our political parties represent would dare stand up and explain how £3,000,000,000,000+ is to be paid back, especially as it equates to £80,000+ per person, then the truth about just how stupid past Chancellors, Treasury experts, Bank of England bosses have been.
The problem really boils down to one thing- the drug that gives everyone in power his/her adrenaline kick- OPM…….Other People’s Money, spend like a idiot, live like a fool, make merry because someone, at some time but not us will be facing the bill.
A very useful and incisive article which should make peopel stop and ask, how did Brown manage to convince so many people that he was giving the BoE independence when he was actually neutering it? For almost 30 years the financial press has been an accomplice in Brown's deceit.
The ridiculous notion that Brown saved the financial system in 2008 is still believed by many ignorant people. I despair.
Brown, short in stature, dour, balanced by having four chips on each shoulder……..and a dedicated, fully qualified idiot, but in his favour he never claimed to be a chess champion, nor for that matter a dealer in gold bullion.
Whilst I agree that all the BofE has done is said “here’s £75,000,000,000”, with evidence that it has substance, the Government grabbed it and spent it- to not pay it back would be catastrophic in that trust and faith in the money supply would vanish- each note states that “I promise to pay the bearer on demand the sum of etc”, but since the money never really existed, what are they paying with. The BofE has effectively run a Ponzi scheme for years and now they cannot get out of it.
The distinction between a realised loss and an economic cost matters here. Holding a gilt to maturity may avoid selling it at a discount, but it does not erase the cost of financing the Bank’s position while interest rates are higher. The stronger case against active sales may be their effect on market prices and the timing of taxpayer cash flows, rather than the idea that holding the bonds makes the loss disappear.
WIDENING INVESTMENT IN ANTI-INFLATIONARY WAYS — ‘QI’, NOT QE?
Dear Sir John Redwood and readers - It is surely right to question the huge "losses" arising from the Bank of England’s present arrangements. Here is a basic offer,
'But why should interest rates, QE and QT be virtually the whole monetary toolkit?'
Could Treasury and the Bank instead permit a tightly capped stream of 20-year money, issued through commercial banks at perhaps 1.5% fixed interest, solely for productive, anti-inflationary investment?
For example, it could finance thorough retrofit of existing homes: insulation, solar-thermal/PVT, heat storage and other measures that permanently reduce imported energy demand and household bills if done thoroughly on each project (and a Return mechanism introduced from the commercial money).
The important distinction is that this would be directed money, not general stimulus: ring-fenced, independently verified and released only against thorough physical improvements.
At scale, retrofit could support hundreds of thousands of intermediate-skill jobs while creating real national assets and reducing future energy demand.
The question is therefore monetary as much as environmental: if commercial banks can create credit for property purchase, why could a small regulated part of money creation not be directed instead towards productive national investment?
That might be worth Treasury and Bank of England examination as a third instrument alongside QE and QT. Would suitable folks therefore be put in touch with engineers re insulation and scaling warmth-induced Example (costing government nothing): Ian G at Greenwood Structures
Even from the sidelines, I was horrified by the mess that had been created. It makes me feel that the Bank of England is more an obstruction than a help. I would prefer that no government body set interest rates, and that they were set by open markets. The Treasury would issue bonds at whatever rate was demanded by the market. BOE could concentrate on regulating all lenders. Better still, just turn it into a hotel.
I have never understood the point being made in this article. So far as the taxpayer is concerned, transactions between the Treasury and the Bank of England must surely be a zero sum game.
You can argue that there should have been more funding done at ultra low rates, but that is water under the bridge and in any case it is not clear that there were genuine external buyers.
It is certainly no surprise that Gordon Brown’s sticky fingers are all over this fiscal deficit disaster- the man was and still is a walking idiot with zero understanding of the financial markets. Think Gold and the lost money he achieved by being “canny and clever” and selling at the bottom of the curve when everyone else was holding back on sales but happily taking U.K. gold reserves at rock bottom prices- genius move, but no different to punishing private pension funds by removing the tax break that ultimately put the pension industry into a £40billion shortfall whilst simultaneously the removed tax break was £40billion, it took years for the pension providers to balance their books.
Labour have never understood business because so many of them have never actually run a business either at manager or above level but claim to be able to tell businesses just how they should be run- this is also true of the other political parties, the worse group being Greens, LibDems, SNP, Plaid Cymru followed closely by Reform, Restore and the CONsocialists.
The financial hole these “Nations” that make up the UK cannot be paid back, the debt interest is growing and no politician dare face the facts- we are effectively a drunken bankrupt trying to get another drink and every pub is saying “OK but the price is going up, up, up”, if any political leader of the many shades of socialism our political parties represent would dare stand up and explain how £3,000,000,000,000+ is to be paid back, especially as it equates to £80,000+ per person, then the truth about just how stupid past Chancellors, Treasury experts, Bank of England bosses have been.
The problem really boils down to one thing- the drug that gives everyone in power his/her adrenaline kick- OPM…….Other People’s Money, spend like a idiot, live like a fool, make merry because someone, at some time but not us will be facing the bill.
All roads lead to Labour - from 1945 to the present.
But, hopefully not the future.
A very useful and incisive article which should make peopel stop and ask, how did Brown manage to convince so many people that he was giving the BoE independence when he was actually neutering it? For almost 30 years the financial press has been an accomplice in Brown's deceit.
The ridiculous notion that Brown saved the financial system in 2008 is still believed by many ignorant people. I despair.
Brown, short in stature, dour, balanced by having four chips on each shoulder……..and a dedicated, fully qualified idiot, but in his favour he never claimed to be a chess champion, nor for that matter a dealer in gold bullion.
Bank of England prints money from thin air........so why does Government have to pay interest on it?
Whilst I agree that all the BofE has done is said “here’s £75,000,000,000”, with evidence that it has substance, the Government grabbed it and spent it- to not pay it back would be catastrophic in that trust and faith in the money supply would vanish- each note states that “I promise to pay the bearer on demand the sum of etc”, but since the money never really existed, what are they paying with. The BofE has effectively run a Ponzi scheme for years and now they cannot get out of it.
The distinction between a realised loss and an economic cost matters here. Holding a gilt to maturity may avoid selling it at a discount, but it does not erase the cost of financing the Bank’s position while interest rates are higher. The stronger case against active sales may be their effect on market prices and the timing of taxpayer cash flows, rather than the idea that holding the bonds makes the loss disappear.
WIDENING INVESTMENT IN ANTI-INFLATIONARY WAYS — ‘QI’, NOT QE?
Dear Sir John Redwood and readers - It is surely right to question the huge "losses" arising from the Bank of England’s present arrangements. Here is a basic offer,
'But why should interest rates, QE and QT be virtually the whole monetary toolkit?'
Could Treasury and the Bank instead permit a tightly capped stream of 20-year money, issued through commercial banks at perhaps 1.5% fixed interest, solely for productive, anti-inflationary investment?
For example, it could finance thorough retrofit of existing homes: insulation, solar-thermal/PVT, heat storage and other measures that permanently reduce imported energy demand and household bills if done thoroughly on each project (and a Return mechanism introduced from the commercial money).
The important distinction is that this would be directed money, not general stimulus: ring-fenced, independently verified and released only against thorough physical improvements.
At scale, retrofit could support hundreds of thousands of intermediate-skill jobs while creating real national assets and reducing future energy demand.
The question is therefore monetary as much as environmental: if commercial banks can create credit for property purchase, why could a small regulated part of money creation not be directed instead towards productive national investment?
That might be worth Treasury and Bank of England examination as a third instrument alongside QE and QT. Would suitable folks therefore be put in touch with engineers re insulation and scaling warmth-induced Example (costing government nothing): Ian G at Greenwood Structures
Even from the sidelines, I was horrified by the mess that had been created. It makes me feel that the Bank of England is more an obstruction than a help. I would prefer that no government body set interest rates, and that they were set by open markets. The Treasury would issue bonds at whatever rate was demanded by the market. BOE could concentrate on regulating all lenders. Better still, just turn it into a hotel.
I have never understood the point being made in this article. So far as the taxpayer is concerned, transactions between the Treasury and the Bank of England must surely be a zero sum game.
You can argue that there should have been more funding done at ultra low rates, but that is water under the bridge and in any case it is not clear that there were genuine external buyers.