'Printed money' and regulatory diktat are keeping UK gilt yields low

[Freamon]

There are two ends to printing money - one is bed for you and me

Oh dear. I'd be worried if I were you, TimberWolf.

[AtW]

I hear it's very hard to give up once you start.

Indeed.

Why take risks and attempt real reforms when lack of demand in borrowing auction can be more than made up by BoE?

[TimberWolf]

There are two ends to printing money - one is bed for you and me, and good is for people who run BoE and some in Govt.

I hear it's very hard to give up once you start.

[AtW]

Has printing money ever resulted in anything but a bad end?

There are two ends to printing money - one is bed for you and me, and good is for people who run BoE and some in Govt.

[TimberWolf]

Has printing money ever resulted in anything but a bad end?

Another mind bogglingly large tranche of QE coming up in February?

[Jeff Maginty]

..

[AtW]

"So why are gilt yields so low? Quite simply because the UK debt market is being propped up by "printed money" and regulatory diktat. I've argued this for a long time now, ever since the UK's "quantitative easing" programme was launched, back in early 2009. Originally dismissed as "outlandish" and "irresponsible", my position is increasingly becoming conventional wisdom. That's because the evidence is undeniable, at least to those who bother to look.

During 2009 and 2010, the Government issued a massive £475bn in gilts. That's equivalent to more than a third of the UK's annual GDP. No less than £241bn of those IOUs - more than half – have been sucked up by the Bank of England. In other words, the demand for UK gilts has been strong, pushing yields down, because the majority of them have ultimately been bought by our central bank, using "electronically-created" credits.

The powers that be deny the UK is engaged in Zimbabwe-style deficit monetisation, seeing as the Bank has been buying its gilts off existing investors, many of whom, in turn, have been purchasing fresh ones at more profitable yields. The distinction, between QE and "circular financing", though, at best, is metaphysical.

An additional net £87bn of gilts have been bought by UK banks - which, to a large extent are being forced to buy them. Such banks are now state-controlled and/or subject to new regulatory requirements requiring them to hold more "high-quality" assets. But are such non-indexed gilts really "high-quality", when they are denominated in a currency that has been so clearly debased?

Source: 'Printed money' and regulatory diktat are keeping UK gilt yields low - Telegraph

That's pretty much what I said for some time - good news is that the Govt will pay 2% interest rate on some loans, but bad news it that everybody in UK will pay 5-6% per year in inflation for that