Ritchie will be disappointed

THE Bank of England’s Governor has insisted the UK will not fall into an inflationary spiral of the type seen in Zimbabwe, as Threadneedle Street prints money on a massive scale.

Andrew Bailey said the Bank would “not hesitate to take all necessary actions” to support British businesses through the disruption while also ensuring inflation remained consistent with its 2pc medium-term target.

He said the Bank was not engaging in “monetary financing” – in which a central bank permanently expands its balance sheet in order to fund the government.

“This type of reserve creation has been linked in other countries to runaway inflation,” Mr Bailey wrote in the Financial Times. “That is because it could undermine a central bank’s ability to control monetary conditions over the medium term.”…

Quite so, the entire point of going through the issuance of bonds that are then bought by BoE is so that, at some point in the future, BoE can sell the bonds into the market, collect the cash created and cancel it.

6 thoughts on “Ritchie will be disappointed”

  1. I know they talk about these bonds, how in clever manner they have come up with a plan how not to cause inflation. Traditionally, in extremis, when the rubber meets the road, central banks do the only thing they know which is print. Hopefully it won’t come to that and this bond plan works as intended.

    What could possibly go wrong?

  2. The Meissen Bison

    Disappointment is not in the repertoire.

    Captain Potato can do you puffed up and self-important (PUSI) or incadescent with raging emportment (IRE) but nothing in between.

    In this instance there is satisfaction to be gleaned from being wiser than the governor of the Bank of England and all his many hapless myrmidons.

    Today’s setting is PUSI.

  3. So they create funny money and then think that people impoverished by a huge financial hit are going to shell out for said bonds?

    What is the BoE buying these “bonds” with Tim?

    Unless their is an actual mug with real earned money to buy then it is an elaborate plan to print while claiming not to.

    And lying about it.

  4. Whilst I can see that QE has demonstrably not been very inflationary, I’ve always been a bit puzzled by the ‘this is not monetisation’ argument.

    How is it different, in effect, to slashing interest rates to ease government borrowing, but promising to raise them again later if inflation looks like it might appear?

    Asking for a friend 🙂

  5. Bloke in North Dorset

    Talking of Mystic Spud being disappointed, his prediction of 10,000 deaths a day is looking well short, the doubling rate has gone to 4 days.

  6. One of the problems with exponentials is that they are finite, in all the mass hysteria this seems to have been forgotten, in this case they run out of old sick people to kill. Not to say we want to get to the peak of the exponential curve, but do have to bear in mind there is a peak.

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