The FT has an article this morning headed:
The opening couple of paras read as follows:
The article goes downhill from there. Whilst it is undoubtedly true that there have been considerable book losses on the UK's supposed holding of UK government gilts bought under the quantitative easing (QE) programme to claim that this has any impact at all on the Bank of England is wrong.
It is true that notionally these bonds are held by a Bank of England subsidiary company, the Bank of England Asset Purchase Facility Fund Limited, but this company is not consolidated within the accounts of the Bank of England, and for very good reason. All its losses are fully indemnified by HM Treasury, which also owns all its profits. And it cannot act with regard to QE without HM Treasury's permission. As a result, it is very clearly not an actual subsidiary of the Bank of England, whatever the legal situation implies, because it is very obviously under the direction and control of HM Treasury. As such the losses on bonds, if they exist, are not those of the Bank, but the government.
And are there any such losses? No, of course there are not, because these gilts are not held for sale. As recent evidence shows, with the so-called quantitative tightening programme of the Bank of England being put on hold this morning with a new perpetual QE programme being put in its place this, there is almost no chance of any of these gilts being sold, which is precisely because they were bought to be cancelled, as the Whole of Government Accounts correctly shows to be the case.
If the QE policy is seen for what it actually was then the question of losses simply does not arise, because there were none. It really is time the FT followed the accounting and realised that.
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I tell you what I see?
A typical piece of neo-liberal shit stirring.
How often do you see this sort of headline in articles in the financial press?
Too often.
It’s the financial equivalent of asking ‘Is you brother having an affair with your wife?’.
It doesn’t matter if he is or not: the idea is planted and will be considered.
Very damaging indeed.
CB’s going bankrupt. Really? How do these people get and keep jobs at the FT?
So the BoE buys bonds last week and gets less return than the markets would have, seeing as it cost exactly zero to create that money with which to buy the bond it scarcely matters. Any profit however small is a free lunch. Besides the bank repays this profit back to the Treasury periodically, so most interest paid to the BoE on these bonds goes back to the Treasury. After the BoE no doubt takes a small fee for its trouble.