The FT reported yesterday evening that:
The Bank of England is set to create a permanent lending facility for non-bank financial institutions such as insurers and pension funds during times of stress, its markets boss Andrew Hauser said on Thursday.
In a speech Hauser outlined the need to “urgently” plug gaps in the central bank's current toolkit, which has traditionally been geared towards lending money only to banks, who then lend on to other financial institutions.
Hang on a moment. Let's unpack that, shall we?
What the Bank is saying is that it can create money whenever it wants to save insurers and pension funds.
At the same time, the Bank is saying right now that it must do quantitative tightening to withdraw £100 billion from the economy, which is the money it created to manage the Covid crisis.
So, apparently, the Bank can use its ability to create money for its mates in the City of London but not for the benefit of society as a whole, let alone the government to which it is responsible and which owns it.
Am I alone in thinking this stinks?
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Hello Richard,
So, apparently, the Bank can use its ability to create many* -> money
Angus
Thanks
Something might once have been rotten in the State of Denmark but now its rotten here
You are not alone, Richard. This stinks to high heaven, as we used to say in my youth. To paraphrase John, it is absolutely rotten. Bailey is a ‘creep’ (family blog).
It stinks.
Worse still is that previously they only lent to banks who lent it on (at their discretion, for a profit). A nice little earner (when there is a problem in the rest of the economy) if you can get it.
Definitely not alone – I had to have a peg on my nose to read that from the BoE.
The BoE has once more stated in plain sight that it is here to the help the rich because of course, the rich rule.
The thinking is that the rich hold the nation’s wealth – monetary and intellectual – and the rest of us are just not worth it. Redistribution is a waste of money, and as we know, macro economics for Neo-libs does not exist.
You’re either High Net Worth in Britain or you’re nothing.
And that’s a lot of nothing, and I prefer the company of the ‘nothings’ any time of the day.
“a permanent lending facility” suggests to me that it is a loan that must be repaid, presumably with interest. Can’t banks do this already every time they make a loan?
Once the loan is paid off, the money must be extinguished, except for the interest charged which must be found somewhere. In my eyes, this just ultimately moves money to the bank.
Tragically, across developed nations, central banks are quietly committing us all to permanent austerity in their dogmatic determination to wipe out all the QE created money. It’ll mean no effective collective response to the climate emergency either. It means mass death. It is terrifying.
More here: https://gezwinstanley.wordpress.com/…/dont-destroy…/
That, and spiralling inequality (though none of this is unconnected) is the nightmarish background to all of this. It’s kept as obscure as possible and not talked about openly.