Last week’s news that the Bank of England had stopped Quantitative Easing early because it was not needed was a load of rubbish.  The truth is that it was stopped early because MORE COUNTERFEITING WAS NEEDED, and the BOE figured out a way to directly monetize the debt, while out of public scrutiny. 
QE will continue TO INFINITY….AND BEYOND!!!  on both sides of the pond.
The MSM story actually compares the practice to Weimar Germany.

As the Telegraph reports:

So now we know why the Bank of England’s Monetary Policy Committee called a halt to more Quantitative Easing this week – it’s because the Chancellor and the Governor of the Bank of England have concocted a backdoor way of doing the same thing.

The latest little (actually quite big at a tidy £35bn) money printing wheeze comes about as close to outright monetizing of government spending as it is possible for the Bank of England to go without simply creating the money and handing it by the lorry load to the Treasury, a la Weimar.

What the Treasury has decided to do is take the accumulated interest payments on the stock of government debt the Bank of England has bought under quantitative easing, and credit it to the Government’s books rather than the Bank of England’s. The total is £35bn, of which the government intends to take £11bn this financial year and £24bn next.

 

It is now full blow QE or instant collapse:

The Government excuses its actions by saying that it is only bringing itself into line with practice in Japan and the US, the other major economies to be practicing substantial QE right now. It might also be argued that to the extent the European Central Bank indulges in bond purchases, it practices something quite similar too.

In any case, you might reasonably think that it doesn’t really matter how the government accounts for the interest on the Bank’s stock of gilts. Since the Bank of England is 100pc owned by the Treasury, the government has in essence only been paying interest to itself, so why not just stop the charade and save the money?

Wrong, wrong, wrong.

 

Even the MSM now realizes that the BOE is in effect defaulting on gilts:

Never the less, a reasonable argument could be made for QE as a mere liquidity operation – the swapping of one asset, gilts, for another, cash – that could quickly be reversed when the economy picks up momentum again. But this is very different. A key part of the contract under which gilts are sold – the coupon – is now in effect being waived. Though the government vehemently denies the notion, the Treasury is in essence defaulting on the gilts held by the Bank of England. Not good, not good at all.

This is a slippery slope, and I regret to say that the Bank of England is now very much on it.

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  1. Currency is just a sub-division of the government Bond. Both are nothing less than demand for Human Labor (time expended from the limited precious resource … LIFE). That government has reduced life’s expense in Labor for recompense in Plantation Scrip is all necessary to explain the inter-relationship between government’s officers and their constituency.

    Once one sees the world RATIONALLY, one then draws the starkly obvious analogy between Labor and precious metals. The impetus to work toward a greater degree of productivity than one needs to simply live, is futile, if that effort can’t be provisioned for the inevitable time when feebleness of age arrives. The precious metals endure undiminished!  Much is said lately about ‘symbols’ and their ‘meanings’. The symbolism natutally inherent in this regard, deserves so much contemplation!

    Paper Rots, Coin Does Not. 

    • Also, precious metals have intrinsic values and they are produced with the humans’ labor forces and with energies. Precious metals were never worth nothing or less than that. Paper currencies are more fragile than precious metals because they could get destroyed very easily at high temperatures.

  2. Follow The Leader, give me a break. Boy reading all this shit today is so depressing especially on Veterans Day where so many lifes have been lost just to enrich so many greedy BA&%R@S. I need to go offline for a while it’s making me sick.

  3. Hello M45. Thank you for the V-Day comment. I am a veteran and this is a day for reflection for me. Now, I need a silver recliner report. I’ve read a lot of V-Day comments here and elsewhere and I thank all of my silver stacking friends and patriots. You are true Americans.

  4. Hey 2 oz, where have you been?  After work today, when I drink my nightly shot of Vodka I will take a second toast for you and for all the other Veterans.  BTW my father is a WWII Veteran and is still around.

  5. In theory the BofE is owned by the gov’t – which begs the question why the gov’t borrows from the BofE/supposedly itself…..and pays interest…allegedly to the BofE/itself….
    - why not just print it ….at no interest….for ALL the full gilts issued….not just those with the BofE…
    - the interest saving
    - would give a HUGE drop in the annual budget deficit
     

    The answer to above question - because the banksters borrow from BofE at 0000.5%
    - invest in gilts at 5%
    - trouser the 4.5% profit
    - lodge the gilts back at the BofE
    - borrow again at 0000.5%
    - rinse and repeat… till the cows come home

    And incidentally – it’s – we the taxpayers that….
    - pick up the tab on the 4.5% rinse & repeat…bankster’s trousered profits

    Not enough in the kitty to pay the Banksters
    - raise taxes
    - cut benefits
    - public sector redundancies

    For “THEY shall be paid”

    • Most of the people still think that their taxes are going for good causes but they won’t know that in reality, the taxes are going to banks. You know that something bad is going to happen one day to your country’s currency when it is issued by the banks.

  6. “QE will continue TO INFINITY….AND BEYOND!!! on both sides of the pond.”
     
    HA!  I just love reading comments like this.  I would rephrase it to “QE will continue until the paper paradigm implodes… which is likely to be sooner rather than later!”.
     

  7. But if the Bank Of England keeps printing pounds out of thin air forever, then hyperinflation will arrive soon in the UK and then the collapse of its currency will happen. The centrals banks’ tricks won’t work forever!

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