We are now paying the price for decades of reckless fiscal and monetary policy
Annabel Denham writes in CapX
Harrison Griffiths writes in 1828
Neil Record writes in The Telegraph
“since 2009, the Bank has been buying very large quantities of Government debt in an action christened at the time ‘Quantitative Easing’ (QE).
“At the time of writing (December 2022), the Bank owns £847bn of QE gilts valued at cost. It also owes a similar amount to the commercial banks (effectively on overdraft). This borrowing is subject to the Bank paying the bank rate to the commercial banks.
“the Treasury now has to bail out the Bank to the tune of around £188bn at today’s 3.5pc 15-year gilt rates.
“£188bn is a truly enormous amount of money – dwarfing the Energy Price Cap cost.”
“Who is responsible for this sorry state of affairs? The answer is complex – but I would point the finger at democratic politicians of all hues across the West.
“They allowed themselves to be persuaded by radical economists who peddled a strange theory called ‘Modern Monetary Theory’ (MMT). The politicians didn’t understand the theory, but they liked the idea that they could spend money without taxing their electorate, and without raising interest rates.”
Neil’s full article can be read here.