You say that debt can be cancelled on consolidation. As others have already mentioned, if you consolidate between the bank of england and government accounts, you also have to consolidate the cash which also gets cancelled. Which means to work PQE either needs to be printing money or the bank of england balance sheet ends up with a massive hole where it’s assets are supposed to be.
Government 1bn bonds for 1bn cash. Now has assets of 1bn in cash, liabilities of 1bn bonds.
Bank of england buys those bonds using QE. Now has assets of 1bn bonds and liabilities of 1bn cash.
This is where regular QE stops. The action of buying those bonds by the bank of england lowers interest rates.
PQE you say now consolidates the balance sheet of the bank of england with the government. Lets assume you can do this with no legal problems.
You add the assets and liabilities of both sides up. You can’t pick and choose what to consolidate. It has to be everything or nothing – you can’t trick people by only doing one side.
So lets consolidate. Assets now look like +1 cash at government and +1 bonds at bank of england. Liabilties look like -1 cash at bank, -1 bonds at government.
Consolidate and it adds to zero.
So no new money is available for the government to spend.
Unless of course, you are phyiscally printing money outside this process.
Regular QE doesn’t print money in the way you are suggesting. Bonds are purchased by “new” money, but it really just swaps assets and liabilities around. QE works by lowering interest rates.
Regardless, PQE will not be happening in Europe as it is strictly verboten, by law and through treaty. it is silly to suggest that is what they are talking about as it would require treaty change.