📽️"Make a 9min TV piece about quantitative easing with loads of charts". These are words no-one in TV has ever uttered. So I just went & did it👇 This primer covers perhaps the most important, under-discussed topic in the UK right now. Have a watch & lemme know what... you thinkshow more

Good stuff. Why not make a 9-minute piece about how Brexit is still causing massive economic drag nine years later? All the major parties could do with the refresher, not to mention the general public. It's like travelling in a boat with a huge leak that nobody mentions any more.

Very good explainer, save for the last bit. Truss didn't cause interest rates or bond rates to rise as they were already rising due to the inflation issue, which started before she even became PM. The IMF review of her budget was just used as an excuse for triggering the LDI problem caused by, funnily enough, rising market interest rates. That was always a ticking timebomb. But back to the point of why UK 30yr yields rose more than US30's. Take a look at UK inflation vs US inflation. It went up later, quicker and higher than the US (it also came down later than the US), hence why you see that divergence in yields. Plus, purely on economic size (being able to weather stress moments), the UK (unfortunately being smaller) will always see an additional premium on yields in times of stress compared to the US. Right now, the main reason for divergence is fiscal worries, which both countries are facing. Trump with his spending and Reeves with her "blackholes". The higher premium in the UK is because Reeves hasn't got growth to raise spending (or taxes), where as the US does, so she's about to double whammy the UK by cutting spending and raising taxes in a low growth environment, which is not good for investors, hence they again, want a higher premium (rate) to lend the UK money.

But this isn’t complicated it’s just very costly. BoE printed £895bn out of thin air, bid up gilts and now selling at give or take 28p in the pound. HMT indemnity means the taxpayers on the hook. OBR suggests, to the tune of £134bn or around 5.4% of our GDP. Reeves has zero headroom. If a fund manager did this, they’d be sacked.

Hi Ed. Can I arrange that call with you and @ProfSteveKeen that we spoke about last year? Because this is 100% solid neoclassical framing, which totally misunderstands government financing. I do think you will come to regret this framing. I know you are happy to be challenged.

I think the more pertinent question at the end is did QE contribute to the reaction to the mini budget (it did).

I'll shorten it for you, money printing, QE, gave us this inflation, yes they're reducing your monies spending power. All your hard work is worth less. They are debasing the currency. Your weekly shop costs more because of the Bank of England's funny money printing scam.

A good piece, but again, you follow the herd and take the cheap and incorrrct 'Truss did it' line, when it was excessive money printing and an inept Bank of England that has caused most of the problems.

Very good Ed. I believe you could have just added a little more context on your final graph showing the gilt yields. 1. The end of QE and the start of QT was announced the day before the mini-budget when the BoE also raised base rate less than forecast. So the trigger for the spike in government borrowing was the day before the mini-budget. 2. The BoE took 2/3 of the responsibility for that initial disruption earlier this year. If a body like the BoE is admitting to 2/3 it's fair to say it's probably higher. All your other charts underline this. We did more, for longer and the BoE has been poorly run for 15 years.

Nice analysis, good to see granularity by someone in the media. A good topic next would be why we somehow chose to have 25% of our debt as Index-linked gilts. Which is developing country territory!

Got bitcoin? 🇬🇧

How can it be 'taxpayer' money? Even in neoclassical framing, you said yourself. - QE, government electronically created ££ - QT, government sold off QE bought bonds for less. So no taxpayer money was involved in this. So why say it?

How the £160 billion in interest paid on government liabilities (in the last 12 months) is a policy choice and why no one ever questions that, while analysing every penny spent on Social Security and the Health Service? Can't wait to watch and share!

Ed, you’re right to look at these operations but you’re focusing on the wrong side of them. From the CB perspective they are changing one type of money for another, not creating new money. This is why QE didn’t work to encourage credit generation or generate inflation. >

You're talking nonsense. The entire point of the CB is financial stability and targeting interest rates. It does that through reserve management. Being the buyer or seller of last resort. That's their job! There is no downside risk.

QE doesn’t help anyone or anything, it pumps stuff up for a while in a fake inflated way but really it just kicks the can down the road until it explodes years later in an almighty way

You had to get the bit in about blaming @trussliz didn't you. Looking at the chart you were fingering as you said it just how can anyone in their right mind thin Liz did that !

Completely misses the forest for the trees. :(

If I am given the power to issue reserves out of thin air - how do I make a loss on those reserves? If I could legally print ££ to buy a Ferrari for £100k and then sold it for £30k, how much have I lost?

Great piece... Also of note, one of the reasons the UK is an outlier.

Do 9 minutes on "Where does money come from?" As in literally where do the credits in our bank accounts come from. I expect people would be interested to know.

George Osborne on QE " It's purpose is that people who already have something like a house or some shares see the value of those things go up , that's what the policy is designed to do "

Markets people have been saying this for years. The UK government issued too much inflation-linked bonds with Rishi as Chancellor, which were even worse to sell-off, so they were stuck. Selling shorter dated would have been better as they are less rate sensitive but they panic-sold long-dated in the worry that interest rates would go much higher. With all the continuous spending pledges, they got even more worried about inflation keeping rates higher.

This is just terrible “economics” there is absolutely nothing correct about what you’ve said.

After unexploded missile that hit Ukrainian parliament building awas found to contain loads of US, UK, European & Chinese technology It's time to do another video on sanction breaking Netherlands to Kyrgyzstan in particular

The key question is Why is there such a desperate hurry to sell all the Gilts and bonds accumulated at stonking losses? No other central bank is doing that!

Ed, if the BofE creates £101 (out of nothing) and buys bonds, then sells those Bonds for £28, they haven't lost any money, because they created £101 out of nothing. They've gained £28.

Why did the BoE think it needed to unwind the QE quite so quickly, seems mad to deliberately make a loss?

@RichardJMurphy can you make sense of this and make a video explaining if this is correct?

Good way of demonstrating the lack of general confidence in the UK fiscal policy, the long end yields were being kept low pretty much entirely by the BoE, now they are easing there are no buyers willing to step in, even with the 30y well over 5%. Not helped by the risk off environment in equities. The risk on trade is no longer bonds….its Gold and Silver. Confidence in global central banks and debt markets is running extremely low

Asking for a friend.. As QE was essentially fabricating electronic monies, there's no loss from selling what was gained for free, at a lower price. Its all profit ?

9 minutes without mentioning Reform or Farage? You'll be getting an entry in the Guinness Book of Records for a Sky presenter!

Thanks. The real cost is that QE ensured that no lessons were learned. A post-crash recession would have been cheaper and more instructive

Thank you. I think I understood some of that. @johnredwood has been banging this drum for quite a while!

A decent piece Ed. Why has the governor decided to sell? The bonds could have been held to maturity with no loss, and there would be far fewer bonds on the market now, when this will increase downward pressure on prices. All quite bizarre from 'out to lunch' Bailey.