Corbynomics: A Dystopia

steampowered

Rusty_Shackleton wrote: »

The BoE state themselves that QE is printing money and that they use it to buy government bonds. Bonds are an instrument for governments to borrow money. Therefore, QE funnels newly printed cash to the government in the form of a loan.

You've got it the wrong way round.

When the government buys bonds, it isn't borrowing. It is paying back. The debt represented by the bond is effectively cancelled.

Thrugelmir wrote: »

At the moment............

As with the US. What happens once the proceeds of redemptions plus the income generated isn't reinvested into further gilt purchases. Thereby reducing demand.

Perhaps. But remember that yield includes a risk factor. The fact that the yield is barely over 1% suggests that the international financial community has concluded that the risk of there being an issue here is infinitesimally low.

mrginge

It's the same old same old with these loons.
They think short term corrective measures can translate seamlessly into long term economic strategy.
Of course, the fact that we can get away with these measures is entirely because we've built up a sound, secure and honest financial system for *centuries*. A fact completely missed by the debt and devaluation nut jobs, who would throw away all that credibility in a shot.

I don't want the UK to turn into Greece or Iceland thanks.

Rusty_Shackleton

Steanpowered, the govt buying bonds would be paying off their debt, but the BoE used QE to buy bonds FROM the government to push the yield down and encourage investors to put their funds elsewhere. That is effectively borrowing

System

Thrugelmir wrote: »

As with the US. What happens once the proceeds of redemptions plus the income generated isn't reinvested into further gilt purchases. Thereby reducing demand.

I'm always interested in the views of people who have a knack of being able to predict the future. So spell it out - what does happen?

antrobus

Rusty_Shackleton wrote: »

If an individual wants to borrow, they need to find a lender. If the state wants to borrow and controls the currency, they are the lender....

cogito wrote: »

You really don't have a clue, do you? Your second sentence is one of the most idiotic things I have ever read.

I can only agree with cogito.

antrobus

Rusty_Shackleton wrote: »

Steanpowered, the govt buying bonds would be paying off their debt, but the BoE used QE to buy bonds FROM the government to push the yield down and encourage investors to put their funds elsewhere. That is effectively borrowing

You really don't have any clue at all do you?

Rusty_Shackleton

Antrobus et al. Explain how when the BoE are buying govt bonds that that doesnt make the BoE a creditor.

And that is what theyve done. Consider the objective, as stated by the BoE, of QE: to lower the yield of bonds to encourage investors to put their money in other areas of the economy such as shares - because during a recession govt bonds are seen as a safe investment, they wanted to make other investments more attractive, and get money to businesses. Now consider if thats the objective, the impact of demand and supply. The return (value) goes down in respond to an increase in demand for govt bonds. If the BoE was buying bonds back FOR the government, how would that achieve the stated objective?

Im walking you through the steps and backing up my thinking, yet all anyone can muster is 'you don't get it', rather than saying where you think im wrong. With the exception of steampowered, who thinks ive got the transaction backwards, which Ive explained why I dont think i have.

Im just joining up what the BoE themselves say on their own website, and yet im the one being called an idiot?

mrginge

Rusty_Shackleton wrote: »

Steanpowered, the govt buying bonds would be paying off their debt, but the BoE used QE to buy bonds FROM the government to push the yield down and encourage investors to put their funds elsewhere. That is effectively borrowing

What makes you think the BoE bought bonds from the govt?

Rusty_Shackleton

Mrginge, I stand corrected, in looking at something to answer you... the BoE buy bonds on the secondary market, its actually illegal under the Maastrict treaty for the BoE to buy them directly from the government. My points about the purpose were correct though, and the government have still borrowed from themselves, albeit indirectly - the BoE is a creditor to the govt.

mrginge

Rusty_Shackleton wrote: »

My points about the purpose were correct though, and the government have still borrowed from themselves, albeit indirectly - the BoE is a creditor to the govt.

It's quite embarrassing really. You come on here posting about how incredibly clever you are because you've read all sorts and all other posters are just thick.

Almost hilarious in fact.

The government has not borrowed anything. They have not leant anything either.