So QE is to increase by £100 billion, and the total corporate debt owned is to be left at £10 billion, meaning that the Bank of England will now own £735 billion of UK government debt.
To put that in context, even assuming £300 billion more debt will be issued this year (by no coincidence, the exact sum that the Bank has agreed to buy) this means that the Bank will now own more than a third of UK national debt.
And, as importantly, this also means that all the government deficit for this year will be funded by the Bank of England and none by private savers, which appears to be a quite extraordinary move when it would seem as if financial markets are anxious for that debt.
If the government owns a third of it then how can we use the current price to show that the private sector wants more of it?
And, if the private sector wants more of it then why is the Bank of England buying it?
Snippa’s trying to gauge demand from a manipulated price which isn’t, when you come to think about it, going to work out well, is it?