So, the question is, why not do that repurchase? It can be done by simply issuing some government debt – at a very low cost, with savings accruing as a result.
Every issue of just the one more gilt makes the interest that must be paid on all other gilts that little, infinitessimally small, amount higher.
No, really. And we know this because Spud keeps whining that as the QE gilts are sold back to hte market then interest rates on gilts rise.
No, the cost of funding via government bonds is not the interest that must be paid on the gilts newly issued. It’s the extra interest that has to be paid on £2.5 trillion of ’em.
Which might be a lot, you know?
The yields may change but the interest rates paid?
The poor lad who usually films his videos and does the post-production has gone down with a virus and is off sick. Get well soon that man.
But I thought that him being in a limited liability partnership production company meant that one of the partners might step into and fill for you when you were off sick.
Will the Emeritus Potato insist that he spends 14 days in isolation, on full pay, face masks worn for any future video production and the whole of Ely locked down for 3 months?
Murphy’s not only got Munchausen’s he’s got Munchausen’s by Proxy. (Richard Murphy, I mean).
No statutory sick pay for Thomas sadly, as he’s “not an employee”.
I finally found Tim’s site again, by coming through a “back entrance”.
Aren’t gilts mostly fixed rate? In which case there is a cost to higher rates, but it’s spread over several years as each tranche has to be refinanced.
Yes, it takes time to happen. But then, of course, it’ll also take the average gilts lifespan to unwind….
“it’ll also take the average gilts lifespan to unwind”
Good point. What we might call a black hole for the next government?
I finally found Tim’s site again, by coming through a “back entrance”.
No bleeding…?
It can be done by simply issuing some government debt – at a very low cost, with savings accruing as a result.
Always fascinates me how he seems to regard the government’s finances as being totally separate from the economy. The government sells gilts, it takes money out of the economy when they’re bought. So where do the “savings” come from? If the government is “saving”, someone must be losing.
You can think like he does if you’re an isolated economic entity & others are external. But not if you’re a government because you’re your own externality.