So that’s why the Bank buys all that government debt

September 17, 2009

I’ve found the answer to the monetary puzzle de nos jours. The ritual of the UK Treasury’s DMO issuing new government debt one day, only to have the Bank of England buy similar amounts of almost identical stock the next, has puzzled me ever since Quantatitive Easing began.

from Neil Collins:

Gilts buyers forced to pay protection money

June 25, 2009

It's expensive, this risk-free investment business. You can lend to the UK government for 28 years and be guaranteed a real return, after inflation, of  a magnificent 0.816 per cent on your money.