The value of gilts has been distorted by QE; that was its intention. The return has been suppressed but as a result their value has been inflated, these having an inverse relationship with each other.

Corporate bonds

The rate of return on corporate gilts has been distorted by central bank measures to suppress interest rates. This was not the intention, maybe, but by increasing demand for these bonds yields have fallen.

The intention of QE was the effect on corporate bonds. The effect on gilts was the method of creating that desired effect.

Jeepers, this guy teaches, right?

23 thoughts on “Sigh”

  1. The Meissen Bison

    Off topic, for which apologies, but rather than give 25 year-olds a £10k present to help them buy a house, the Resolution Foundation could have come up with the brighter suggestion of abolishing IHT on a family home.

  2. Sort of off topic, but not at the same time.
    He was on LBC this evening on the drive program with Ian Dale discussing the idea of NI for working pensioners . I thought why has Dale got this idiot on? To find I think he wanted him on to tear him a new one. One of Dales comments was along the lines of “What you teach”? I didn’t manage to hear all of it, but what I did was fantastic. Murphy is totally deluded. See if you can get a podcast of it or something.

  3. TMB

    And perhaps distort house prices even further upwards (as a new “IHT free” investment)? Which might accentuate further the haves and have nots? And might even discourage some elderly downsizing (the bigger the house the more tax efficient when the time comes)? (I can’t work out if there was an implicit smiley there?).

    The issue with housing is straightforward: supply and demand, and few in Westminster have been willing to talk about the key reason influencing demand. Hence, if in denial, they are perhaps unlikely to say or do anything useful with regard to potential solutions?

  4. Talking of tuberous appearances, I was vastly shocked recently to see the twerp interviewed (in London, if I recall correctly) on TV5 Monde, who were doing a section on how the Brits have a crime reporting ‘charity’ that pays for information.

  5. Meanwhile, we can watch what unfolds in Argentina as interest rates rise to 40%. Perhaps Marco Fante could ask a question of the professor

  6. Diogenes

    Do you know if Marco Fante is legit – seems to stupid to be a genuine commentator?

  7. I have been going to TRUK less and less directly as it’s just increasingly the ramblings of a paranoid maniac (”twas ever thus’ the cynical might say) but the larger post is worth reading, if only to see the scale of the man’s hubris- opening on subjects where he has less knowledge than most saloon bar bores he proceeds, through a mixture of blithe assertion and non sequiturs to the conclusion ‘a stock market crash is coming’ (for the 98th time I think) – it’s a masterpiece. I fear the Murphy Richards account will once again need to be retired. He is beyond satire…..

  8. “corporate gilts”

    Presumably young female pigs owned by corporations?

    I am not sure why Bank of England monetary policy distortions should have affected the profitability of pork – maybe one of our farming experts can enlighten me? Does the lowering of interest rates encourage people to buy steaks instead of sausages?

  9. The Meissen Bison


    My point was rather why would you universally bung the young 10k from the taxpayer supposedly to help put a deposit on a house rather than make it easier for them to inherit one from parents who have had the gumption to pay off a mortgage on their home over decades.

  10. Inherit from your parents? I’ll be well retired before my parents die.

    Most kids might get to inherit something from their GRANDparents at a suitable age. But my kids — and my wife and I were not early starters — will probably own houses before they lose grandma (her mother lived to 99).

    I fear you haven’t recall thought this through.

  11. The issue with housing is straightforward: supply and demand

    And politicians terrified of prices falling.

  12. A rare glimpse of self-awareness from Spud

    “I suspect that quite a lot of readers did not get to section 10 of my blog on why shares are overvalued, published yesterday.”

  13. “What if your parents don’t own a house? Bit difficult to inherit one then.”
    My parents have 2 children and 4 grandchildren. There may be great-grandchildren when the time comes. Who gets the house?

  14. @ NDReader
    The owner gets to decide that when he/she makes a Will (unless he is called Grosvenor in which case it goes to the next Duke who may live in it but may not sell it).
    When my mother died, the money from selling the house was split three ways; when my grandmother died a few years earlier I wanted to buy the house but my mother refused because “it had too many memories” – all *my* memories of it were happy ones but she owned it so it was her decision.

  15. @ Rob
    Apparently if you are a pre-Cameron Council tenant you get to inherit the tenancy.
    My wife tried to explain this to me but I still canot get my head round it.

  16. Ritchie’s LBC interview is a car crash.

    He said most self employed people want to be employed!

  17. @john 77, May 9, 2018 at 4:43 pm

    Apparently if you are a pre-Cameron Council tenant you get to inherit the tenancy.
    My wife tried to explain this to me but I still canot get my head round it.

    Don’t when it ended, but it is true.

    Also applied to private tenants up to some date too. My mother’s parents lived in same rented house mid 1930s to 1996. Their second child wanted to take over tenancy when they moved-out/died and negotiate discounted purchase. Unfortunately he died from liver cancer in 1995. Grandparents moved to sheltered housing in 1996.

  18. Bloke in North Dorset

    My nephew inherited the council tenancy when my SiL died a couple of years ago as he and his girlfriend were living there. As it was 3 bedroom they did have to move to something smaller as part of the deal.

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