The Bank of England on QE

And would Ritchie, now one fifth of a professor, please shut the fuck up?

The Bank of England electronically creates new money and uses it to purchase gilts from private investors such as pension funds and insurance companies. These investors typically do not want to hold on to this money, because it yields a low return. So they tend to use it to purchase other assets, such as corporate bonds and shares. That lowers longer-term borrowing costs and encourages the issuance of new equities and bonds and that should stimulate spending. When demand is too weak, QE can help to keep inflation on track to meet the 2% target.

QE does not, as is sometimes suggested, involve printing more banknotes. And QE is not about giving money to banks. Rather, the policy was designed to help businesses raise finance without needing to borrow from banks. And also to lower interest rates for all households and businesses.

It just ain’t about banks.

Meaning that our 1/5th of a Professor is either ignorant or lying.

giltholdings

If banks increase their holdings of gilts as the BoE increases its holding of gilts then the BoE ain’t buying gilts from the banks, is it?

32 thoughts on “The Bank of England on QE”

  1. To assume that Mr Tattieheid is lying is to assume that he’s got enough grey matter to distinguish a lie from the truth.

  2. Where does the QE end up within the banking system as counter parties aren’t settling in cash for the sale of gilts? Does the Gov bank with the BoE so that any new funds deposited don’t impact on eligible banking reserves for fractional lending?
    If the Gov banked with Barclays then ceterus paribus bank lending could rise due to the QE, but I assume they don’t and so it doesn’t?

    In my idle moments I’ve wondered what would happen if you won £100 million on the Euro Millions and you asked for cash so you could put it in your vault. With the fractional reserve multiplier doesn’t that require a reduction in lending of 3.3 billion?

  3. I see the Joy of Tax will be available on 1 Oct.

    Is there anyone here masochistic enough to endure reading it and reviewing? I ain’t volunteering, that’s for damn sure.

  4. @BraveFart,

    Note its accelerated launch date, and move from electronic and paperback to hardback. Ritchie and his publishers are moving fast to grab those Corbyn coat-tails as they whizz past. Isn’t the market just great?

    Meanwhile, if tax is so fucking joyful Ritchie, why don’t you pay a bit more of it?

    Remember, the last time Ritchie shouted about the joy of tax, he was going to tweet and blog about the things that gave him joy. He came up with 4, then gave up within a week.

  5. Meanwhile, more than 9 months after the competition closed, there’s no word on the 25 small businesses that were going to win a More Tax Mark.

    More than 3 months after launching the tick box More Tax Pledge, no announcements how many millions have signed up. If Tax is so joyful, where’s the announcement that the whole of the UK has signed up?

    No matter, Ritchie is now a Prof, an advisor to a dead duck and minting another trust to pay him into his dotage. The More Tax Mark can die as far as he is concerned.

  6. I think he had the idea that the FTM would take-off as an idea, much like Fair-Trade branding, and then he could charge a mint for it every year.

    Of course this didn’t happen, so the Murphy started saying that the FTM should be legislated in – the very rent-seeking he is so keen to attack in other sectors.

    When this didn’t happen, and he realised that he is never going to make any cash from it he turned to more profitable pursuits. The man really is very keen on money – whatever pays best for the least effort gets his attention.

  7. BraveFart

    It’s likely I will be given it as a present by a particular mischievous person (that was how I got a copy of his first book!) – I tried going through the original magnum opus ‘The Curajus State’ and there were two key problems:

    1/ The book’s basic premise requires a fundamental repudiation of 250 plus years of conventional economics – which is wholly unrealistic so it doesn’t correspond to reality – making discussion of its defects really of tangential interest

    2/ There are so many basic howlers that to respond to each point would require something approaching the size of ‘Decline and Fall of The Roman Empire’ – Additionally the infamous ‘Venn Diagrams’ in Part 2 of the book simply do not make any kind of sense even upon repeated reading.

    I will of course read the text if it is given to me (just as I have read Mein Kampf or the essay ‘ The Doctrine of Fascism’) – it is vital to know how the mind of the enemy ‘works’ (if indeed it does work)……

  8. VP

    I did not know that the Venn Diagrams were in the Courageous State. It may therefore be worth buying a second hand copy just for its comedic value.

    Surely as a long sparring partner of Murphy, it would be worth your while sending the books to him to ask for signatures (and perhaps a respectful phrase of greeting or two) to make them even more treasured keepsakes?

  9. BraveFart

    The person buying me the book is an acquaintance of Murphy and was going to get him to sign it for me but didn’t get the chance which I must say in retrospect is disappointing!

    I would have scanned the image and if per chance I can get a signed copy of the ‘JOT’ then I will upload the image for all here to see!

  10. The BBC has had wonderful coverage of the ascension of Jezza including 24 things you didn’t know about our glorious new leader and a short history of the Corbyn phenomenon.

    Meanwhile, in other news, Merkel’s closed the borders, Abbot’s been stabbed in the back and the England cricket team got stuffed.

    And now back to our main story…

    The Great Leader has purged the front benches of splitters and class traitors and cleaned out party headquarters by installing loyal class warriors in place of the traitorous scum who had infested Millbank.

    All praise to the Great Helmsman.

  11. I still can’t believe he made McDonnell Shadow Chancellor. He’s gone nuclear straight away.

    One plus is that all those people who moan that politicians are all the same now have to think of something else to say.

  12. The Venn diagrams are a mistake, mildly. They should have stayed on the blog as a curio.

    Corbyn is outdoing Farage and some. At least there is detail, whatever you think about it, Ukip has failed on that. You couldn’t make it up.

    Of course I’m delighted Corbyn absolutely trounced the others, 60% in a four horse, first vote?

    Daily Mash

  13. Arnald – Murphy has hitched his horse to a stupid terrorist loving traitorous fool who does not have the most basic understanding of economics. He is in good company. I hope they fall together.

  14. Fred

    What, like John Major courting the IRA? Or Blair with everyone? Mo Mowlam an evil conniving fascist?

    Or the US presidents with a whole raft with dictators. Maybe Thatcher with Pinochet? Iran-Contra? BAE in totalitarian, terrorist regimes? The Bin Laden family?

    Christ where does one begin? Bombing ones former allies “back to the stone age” is decent foreign diplomacy? The Monarchy supporting Fascism in the Thirties?

    Comparing Corbyn with all that (off the top of my “mass murderous” head is really, really shockingly unintelligent.

    You must have missed something in your life to have to share this opinion.

  15. I see Arnie can wank himself into a frenzy all day, and still summon up impotent, bitter rage in the evening.

    Must be taking his supplements.

  16. See, john square, I’m not raging.

    Have I described anyone to invoke Godwin’s Law?

    Also not sure what you mean by “supplements”. I often take one of those fizzy multi-vitamins.

    Woop woop, that’s da sound of da police.

  17. Gillies, what?

    “terrorist loving traitorous fool”

    “Mein Kampf… ‘ The Doctrine of Fascism’

    “Great Helmsman”

    I up your straw man with the fucking Wicker man.

  18. John Major courting (if you like) the IRA…plus the oppo…while Prime Minister and actually able to achieve something…

    Jeremy Corbyn courting (certainly) the IRA…don’t seem to find a record of meeting the other side strangely enough…while an obscure backbencher likely to achieve nothing but a boost to his pathetic ego…

  19. Arnald: “What, like John Major courting the IRA? Or Blair with everyone? Mo Mowlam an evil conniving fascist?

    Or the US presidents with a whole raft with dictators. Maybe Thatcher with Pinochet? Iran-Contra? BAE in totalitarian, terrorist regimes? The Bin Laden family?

    Christ where does one begin? Bombing ones former allies “back to the stone age” is decent foreign diplomacy? The Monarchy supporting Fascism in the Thirties?

    Comparing Corbyn with all that (off the top of my “mass murderous” head is really, really shockingly unintelligent.

    You must have missed something in your life to have to share this opinion”

    All the above shite–even if all of it were true–adds up to about 1 tenth of 1 per cent of the evil done by the scum of socialism in 100 years.

    200 million murdered by socialist shite so far and still there are noisy cunts like you who sing glad hosannas in praise of evil. Only a few hundred thou but that there are any is a shocking indictment of the human species.

    Well from now on scum like you are in the headlights and every time your beard-freak treasonous bum-chum opens his gob to spew some leftist bad breath thousands more will hear your crazy shite first-hand and marvel that they ever considered socialism as anything other the than pure scumery that it is.

  20. I’m guessing the Comment Filters at TRUK must be working Overtime as the Greatest stool pigeon of your time enters the fray with his usual cocktail of wit and repartee. Slow night, Lawrence?

  21. Arnald,

    During the Cold War, the West made a lot of unsavoury alliances with bastards, in pursuit of the greater good. It’s not about actually supporting the bastards’ causes; it’s about judging those bastards to be slightly less barstadic than the bigger bastards. I’m not about to defend every one of those alliances, and hardly think they all worked out for the best. But I am, on balance, glad that the USA and USSR fought a series of proxy wars and interfered in other people’s civil wars rather than engaging directly. Say what you like about Viet Nam, but it was better than global thermonuclear war. And that really was the alternative.

    I will note that the same people who decry the alliances we made with the likes of Pinochet during the Cold War never complain that we allied with Stalin during WW2. Which is telling.

    The much-hated George W Bush unequivocally rejected the principle of supporting tyrannies because they’re allies, on the grounds that tyranny is always wrong. We could accuse him of naivety or insane optimism there, but not hatred.

    Compare to Corbyn and his ilk. As mentioned many times before, I grew up in the Labour Party, surrounded by their ideology, raised not on the stuff that the likes of Blair say in public because they’ve noticed how much the electorate hate it, but on the stuff the unreconstructed ones say to each other in private. Old Labour actively support the IRA — not just Sinn Fein; the IRA — not merely because they think Ireland should be united, but because they’re incapable of saying “Protestant” without preceding it with “fucking”. They firmly believe that killing Northern Irish Protestants is OK, as it’s for the cause. They don’t just “support the Palestinian struggle”; they happily spread old antisemitic libels, such as how the Israelis poison the water supply (everyone knows Jews poison wells, right?) and how the USA’s foreign policy is in thrall to the all-powerful Jewish lobby (because everyone knows this tiny group of people secretly control the world, right?)

    Speaking as someone who lives in NI, the idea that Major and Corbyn are the same because they both met Adams is utterly fucking barking mad. And, much as Corbyn’s supporters are trying to push such damage-limiting propaganda, are even they really convinced?

    I don’t think the electorate will be.

    Any photos of that time Corbyn shook hands with Paisley? Or a transcript of the time he described the Israelis as “our friends”? No? Funny, that.

    I don’t share in these celebrations that Labour have made themselves unelectable. Corbyn’s poisonous ideas are worryingly popular. I hope Labour will be trounced under him, but I wouldn’t take it for granted.

  22. Squander Two

    I’ve just applauded that comment and got some strange looks from around the office – fantastic. No doubt Lawrence if he casts his eye down here will have another stream of consciousness rant to ‘have the last word’ but you really have nailed it…..

  23. “The much-hated George W Bush unequivocally rejected the principle of supporting tyrannies because they’re allies, on the grounds that tyranny is always wrong. We could accuse him of naivety or insane optimism there, but not hatred.”

    S2. You’re wrong. GW Bush was in thrall to the Saud family and the economy he presided over was (is) largely propped up by various sovereign wealth funds from tyrannical regimes.

    Dick Cheney in a cuddle with Saddam? Boris Fucking Yeltsin?

    You’re just making stuff up. You’re usually better than that

  24. And yeah, because the loyalist paramilitaries didn’t ever do the same as the IRA. No segregation?

    And when will people stop equating Israeli action with the Jewish Faith? Why doesn’t Israel admit to having a large nuclear arsenal? Talk about destabilising the region.

    Blind vision.

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