MurphMonster insists that the national debt is piffling, Because all those gilts bought by the Bank of England can just be cancelled and no one would be the wiser. The Bank of England seems to disagree:
The Bank stressed that QE was more likely deliver a £17bn profit by the time it is entirely unwound, and that the “narrow” measure of the programme\’s profitability ignored the wider benefits to the public finances of lower government borrowing costs and larger tax revenues as a result of stronger economic growth.
However, the risk of taxpayer losses will fuel scepticism about QE, which senior Bank policymakers – including the Governor – have warned may no longer be so effective at stimulating growth.
The Bank’s study also showed that the Treasury’s decision last year to seize the excess cash in the scheme would save it “between £65bn and £70bn” by 2016. But the cash transfer would then be reversed between 2017 and 2020, when the Treasury would have to raise extra debt in the market to hand the money back to the Bank.
In an essay in its Quarterly Bulletin, the Bank mapped out a number of scenarios on how the gilts would be sold back to the market.
It\’s very difficult to see who should be believed here, isn\’t it? The retired accountant from Wandsworth who says it\’s all just peachy and the senior and practised officials of the central bank who say that actually, it might be a bit tricky you know.
Just who to believe, eh?
BTW, I was terribly amused to see that MurphMoshie has just realised that he\’s an MMT\’er. Err, yes, this has been obvious for some years now. But the joy of his views is that he comes up with ideas yet his knowledge of economics is so patchy, so sketchy, that he doesn\’t realise that other people have been discussing those very same ideas for decades. And in the process, often enough, finding out what\’s wrong with those ideas. With MMT it being that if you give the politicians the keys to the printing presses then you will get inflation. High inflation too. That\’s just the way the incentives work. In a true MMT system taxation is only there to curb inflation. And we all know that no politician actually likes imposing or collecting taxes. And if the reason you have to do so is only to curb inflation, rather than to have to pay for your spending desires, then it doesn\’t take a genius to see that spending will rise from hte printing press while the curbing of the inflation through taxation will be insufficient.
You know, like cancelling QE gilts rather than selling them back to the market.