Bank of England to directly fund UK Government Spending

KyussB

Something that is routinely and incorrectly panned by economists worldwide, as inevitably leading to hyperinflation - will now be undertaken by the Bank of England - they will be directly funding government spending:
https://positivemoney.org/2020/04/major-breakthrough-on-public-money-creation-the-bank-of-england-will-directly-finance-government-coronavirus-spending/

This completely removes the need for Public Debt and Government Bonds, the interest paid on those bonds, and the need to go to bond markets to secure public funding - and the entire concept of there 'not being money available' for government.

This is a complete change of the public narrative on how government funding works, which was unthinkable 10 years ago - and it eliminates any justification for austerity policies that have been undertaken in the past.

In effect, it shows that the limits on government spending are not financial, they are based on the real economy - on bottlenecks and resource constraints in the real economy (e.g. a shortage of labour) - which would cause inflation to increase, if the government does not stop spending when bottlenecks are reached.

Harry Palmr

They did this to the tune of 20bn in 2008, no inflation to speak of.

Geuze

Note that this is a loan, with interest.

This loan must be repaid.

The loan is an asset to the CB.

So although it is much more direct than issuing a bond, and then having the CB buy the bond later, I don't think it qualifies as outright direct monetary financing?

However, it is getting closer to that.

Geuze

In my mind, there are three ways to finance Govt spending.

(1) taxes
(2) borrowing
(3) direct money creation by CB to finance Govt exp (not a loan)

This is still no.2, so it is not direct monetary financing?

KyussB

The central bank is a part of the state - so it's the state owing money to itself. The state is not in debt to anyone - yet when government bonds are used instead of this, the state would be in debt to others.

So, at a state level, this is monetary financing.

Geuze

So whether or not it is direct monetary financing depends on who holds the bonds/debt?

So when the ECB buys Govt debt in secondary markets, years after the bond has been issued, is that monetary financing?

KyussB

You understood what I said perfectly well, so don't play the game of rephrasing it. You know the difference between the BoE and ECB in the context of what I sad as well.

coolshannagh28

Its just another trick the government is using to mask its insolvency .

KyussB

A state which prints its own currency, can't involuntarily become insolvent.

coolshannagh28

KyussB wrote: »

A state which prints its own currency, can't involuntarily become insolvent.

Eventually it will be insolvent if its currency loses its trading value .

KyussB

Not as long as a countries debts, are denominated in their own currency - trading value doesn't affect that.

As for trading value (i.e. foreign exchange): As long as a country produces goods that other countries want to buy, and need to exchange into the local currency in order to buy - then that solidifies the demand, that will keep a currencies trading value.

As for the value of the currency itself: As long as the government isn't pouring money into supply constraints/bottlenecks - which would cause inflation - then there is ample room for spending in this manner. General rule is government stops spending when Full Output is reached - and that point, is roughly around the point of Full Employment - otherwise they'll be pushing inflation.

coolshannagh28

KyussB wrote: »

Not as long as a countries debts, are denominated in their own currency - trading value doesn't affect that.

As for trading value (i.e. foreign exchange): As long as a country produces goods that other countries want to buy, and need to exchange into the local currency in order to buy - then that solidifies the demand, that will keep a currencies trading value.

As for the value of the currency itself: As long as the government isn't pouring money into supply constraints/bottlenecks - which would cause inflation - then there is ample room for spending in this manner. General rule is government stops spending when Full Output is reached - and that point, is roughly around the point of Full Employment - otherwise they'll be pushing inflation.

To me it would indicate that the government has given up in maintaining balance by financing on the markets and risking insolvency and has instead decided to finance from its central bank on the promise that it can maintain the stability of its currency .

Geuze

KyussB wrote: »

You understood what I said perfectly well, so don't play the game of rephrasing it. You know the difference between the BoE and ECB in the context of what I sad as well.

I am not playing any game.

I have often seen the phrase "debt held by the general public".

When you referred to different owners of the debt, I got to thinking that I see your point: if another arm of the State owns the debt, then it isn't "debt", as The Govt is repaying another part of itself.

So I was thinking out loud: does the BoE transaction classify as direct monetary financing?

I don't know the answer.

I might ask Karl Whelan.

I don't get your reference to ECB vs BoE.

I am thinking you mean that as the ECB isn't part of any Govt, it isn't directly comparable to the BoE situation / transaction???

KyussB

Ya, the BoE is part of the state - the ECB isn't - hence, holding debt denominated in Euro's, is a lot like holding foreign debt.

Better off asking Stephen Kinsella - more familiarity with Post-Keynesian views on money. I only partially remember Karl Whelan's writing, but my impression was, that his views tend to stick to outdated mainstream views (could be wrong - been a while).

coolshannagh28 wrote: »

To me it would indicate that the government has given up in maintaining balance by financing on the markets and risking insolvency and has instead decided to finance from its central bank on the promise that it can maintain the stability of its currency .

The term 'maintaining balance' here, doesn't have any meaning. Issuing debt/government-bonds doesn't risk involuntary insolvency, for a state with control over its own currency.

coolshannagh28

KyussB wrote: »

Ya, the BoE is part of the state - the ECB isn't - hence, holding debt denominated in Euro's, is a lot like holding foreign debt.

Better off asking Stephen Kinsella - more familiarity with Post-Keynesian views on money. I only partially remember Karl Whelan's writing, but my impression was, that his views tend to stick to outdated mainstream views (could be wrong - been a while).


The term 'maintaining balance' here, doesn't have any meaning. Issuing debt/government-bonds doesn't risk involuntary insolvency, for a state with control over its own currency.

That will come on trial soon enough , if a govt continues to issue its own paper regardless of tax revenue or trade deficits eventually that paper will become worthless , something like that is happening in the US

KyussB

The limit to spending is not based on tax revenue, or based on the trade deficit - it is based on reaching Full Output in the economy - which is analogous to the point of Full Employment.

If a government spends past that point, it will push inflation (money won't become worthless, unless the government goes completely ape-shit with spending past that point).
Nobody advocates spending past that point - so that argument doesn't apply. Governments who control their own currency, are free to spend up to (and not beyond) the point of Full Output i.e. Full Employment.

Danzy

KyussB wrote: »

Something that is routinely and incorrectly panned by economists worldwide, as inevitably leading to hyperinflation - will now be undertaken by the Bank of England - they will be directly funding government spending:
https://positivemoney.org/2020/04/major-breakthrough-on-public-money-creation-the-bank-of-england-will-directly-finance-government-coronavirus-spending/

This completely removes the need for Public Debt and Government Bonds, the interest paid on those bonds, and the need to go to bond markets to secure public funding - and the entire concept of there 'not being money available' for government.

This is a complete change of the public narrative on how government funding works, which was unthinkable 10 years ago - and it eliminates any justification for austerity policies that have been undertaken in the past.

In effect, it shows that the limits on government spending are not financial, they are based on the real economy - on bottlenecks and resource constraints in the real economy (e.g. a shortage of labour) - which would cause inflation to increase, if the government does not stop spending when bottlenecks are reached.

The reality of a crisis.

Meanwhile the ECB and EU go the more loans route, as if years of near zero interest rates hadn't exhausted that.

This isn't a pro or anti EU thing, even the most committed supporters of the EU, its past leaders etc are aghast at the current position.

It does not mean that such an approach should he permanent or long term, it's to help avert an economic depression.

Once in a century response to once in a century crisis.

Danzy

Geuze wrote: »

So whether or not it is direct monetary financing depends on who holds the bonds/debt?

So when the ECB buys Govt debt in secondary markets, years after the bond has been issued, is that monetary financing?

In a roundabout way, yes.

coolshannagh28

KyussB wrote: »

The limit to spending is not based on tax revenue, or based on the trade deficit - it is based on reaching Full Output in the economy - which is analogous to the point of Full Employment.

If a government spends past that point, it will push inflation (money won't become worthless, unless the government goes completely ape-shit with spending past that point).
Nobody advocates spending past that point - so that argument doesn't apply. Governments who control their own currency, are free to spend up to (and not beyond) the point of Full Output i.e. Full Employment.

That's a viewpoint , governments since 2007 have been finding ways to pump more money into their economies successfully so far without creating inflation , however this may be a tipping point as output falls drastically and debt exposure increases .

KyussB

Danzy wrote: »

The reality of a crisis.

Meanwhile the ECB and EU go the more loans route, as if years of near zero interest rates hadn't exhausted that.

This isn't a pro or anti EU thing, even the most committed supporters of the EU, its past leaders etc are aghast at the current position.

It does not mean that such an approach should he permanent or long term, it's to help avert an economic depression.

Once in a century response to once in a century crisis.

It's effectively a lie about how the monetary system works, to continue to pretend that Public Debt is needed - the way the BoE is using, absolutely should be permanent - it completes changes the narrative of all of macroeconomics, and permanently removes any justification for e.g. austerity, or even unemployment itself.

Geuze

I am trying to think through the accounting of the BoE Ways and Means transaction.

The loan to UK Treasury goes onto CB assets, and is matched by what on the liability side of the CB balance sheet? I'm not clear on that.

I presume it is Govt deposit a/c at the CB.

Ok, so the CB balance sheet grows, but remains balanced.

So it's like when any bank makes a loan, the loan amount is an asset to them, and on the day of the loan, they add to the balance in my current a/c at the bank, which is a liability of the bank.

OK.

Now, a year later the UK Govt uses real tax revenue, or other new debts, to repay the loan.

They transfer the amount into their a/c at the CB, and the debt is wiped?

If the loan is repaid after a year, with real tax revenues, surely it isn't money-financing?

KyussB

There's no evidence of time limit or other restrictions like you mention - the UK government has perpetually had 370 million outstanding on the balance sheet for an extremely long time, without touching it.

All money is created as debt, because central banks use double-entry bookkeeping - monetary financing is impossible without the central bank noting the amount created in both the Asset and Liability columns (because it's impossible to create money any other way, with double-entry book keeping) - exactly like this does.

The Liability side of the balance sheet from monetary financing, is no more 'debt', than the Liability side is for this.

Geuze

https://www.bankofengland.co.uk/news/2020/april/hmt-and-boe-announce-temporary-extension-to-ways-and-means-facility

Published on 09 April 2020

As a temporary measure, this will provide a short-term source of additional liquidity to the government if needed to smooth its cashflows and support the orderly functioning of markets, through the period of disruption from Covid-19.

The government will continue to use the markets as its primary source of financing, and its response to Covid-19 will be fully funded by additional borrowing through normal debt management operations. Any use of the W&M facility will be temporary and short-term. As well as temporarily smoothing government cash flows, the W&M facility supports market function by minimising the immediate impact of raising additional funding in gilt and sterling money markets.

The W&M facility is the government’s pre-existing overdraft at the Bank. Any drawings will be repaid as soon as possible before the end of the year. HM Treasury, the Debt Management Office and the Bank will continue to cooperate closely to support the orderly functioning of the gilt and sterling money markets.

https://www.bankofengland.co.uk/-/media/boe/files/news/2020/april/hmt-and-boe-announce-temporary-extension-to-ways-and-means-facility.pdf?la=en&hash=974CAE1A89719CFB8CAAC7233C95842E2B763895



The BoE seem keen to stress that this is normal Govt borrowing..........

KyussB

What you quoted doesn't say that - neither does it say there is a time limit or any other restrictions that you've mentioned.

If the treasury intends to repay it by the end of the year, that's up to them - there is no evidence of them being restricted to doing that.

Again - they have had a perpetual overdraft of 370 million that never gets repaid, for a very long time.

KyussB

Here is a further good article, clarifying this:
https://positivemoney.org/2020/04/the-ultimate-magic-money-tree-has-been-unveiled-dont-let-the-government-tell-you-otherwise/

A snippet:

...even if the Treasury insists on repaying the overdraft, its extension still shows the public that government spending need not depend solely on taxation and the bond market, and adds to the already strong case against austerity. The public can now see for itself that the Bank is able to finance the Treasury’s spending in the most direct of manners without any strict limit. Rapid repayment and freezing of the overdraft would be a purely political choice, which we would deem difficult to justify.

Keeping the Ways and Means facility open for flexible use would have clear benefits. In particular, it would ensure that the government is always able to spend without relying on debt markets, which may not offer such favourable financing conditions indefinitely.

KyussB

Bill Mitchell is another good economist who keeps an eye on the Bank of England's changing narrative, and here he looks at a speech recently made by a BoE MPC member, which also covers the Ways & Means facility - and on some of the 'smoke and mirrors' aspect, of how they try to frame it as short term (like I described above):
http://bilbo.economicoutlook.net/blog/?p=44808

Unfortunately, most of Bill's writing is fairly longwinded - but covers this topic well.

Arthur Daley

The problem with once in a century crises is that they seem to have a habit of appearing every decade at the moment.

andrew

KyussB wrote: »

Ya, the BoE is part of the state - the ECB isn't - hence, holding debt denominated in Euro's, is a lot like holding foreign debt.

Better off asking Stephen Kinsella - more familiarity with Post-Keynesian views on money. I only partially remember Karl Whelan's writing, but my impression was, that his views tend to stick to outdated mainstream views (could be wrong - been a while).


The term 'maintaining balance' here, doesn't have any meaning. Issuing debt/government-bonds doesn't risk involuntary insolvency, for a state with control over its own currency.

I'm not sure there's a meaningful difference between the ECB and BoE here. BoE profits after costs go back to the state. ECB profits go to national central banks in accordance with the capital key, and then back to each member state.

It's not monetary financing because the BoE's balance sheet only goes up temporarily. Loan to government (asset side) and cash to finance it (liability). Govt. issues bond, and then the loan is paid down and the assets and liabilities go away.

I don't buy that the decision to repay these loans is purely political or that there are no restrictions. I'd be surprised if repayment isn't legally required. But even if it's not legally required, it'll be required insofar as repayment is a precondition for the BoE offering that facility in the first place.

So overall, I don't buy that this is evidence in favour of MMT.

Geuze

Paul de Grauwe calls for monetary financing of budget deficits, and says the higher price level is a price worth paying.

https://voxeu.org/article/what-price-pay-monetary-financing-budget-deficits-euro-area


What price to pay for monetary financing of budget deficits in the euro area
Paul De Grauwe, Sebastian Diessner 18 June 2020

There is growing acceptance that some form of monetary finance is needed, if not inevitable, in light of the severity of the downturn in the euro area. This column argues that while a monetisation of the deficits induced by the COVID-19 crisis would eventually increase the price level so that, after a return to economic normalcy, inflation would rise for a couple of years, this is a price worth paying to avoid future sovereign debt crises in the euro area. Moreover, the ECB, as the most independent central bank in the world, would be well equipped to prevent the inflationary upsurge from becoming permanent.


Conclusion
It remains true that there is no such thing as a free lunch, but not in the sense that the critics of monetary finance imply. We have argued that a monetisation of the deficits induced by the COVID-19 crisis will eventually increase the price level so that, after a return to economic normalcy, inflation will rise for a couple of years. Thus, there is a price to be paid for monetary finance. It is the price we would pay for avoiding future sovereign debt crises in the euro area, which could fragment, or worse, unravel it. We have also argued that a limited programme of monetary financing could be designed in such a way that it respects EU law. Finally, the ECB, as the most independent central bank in the world, would be well equipped to prevent the inflationary upsurge from becoming permanent.

KyussB

andrew wrote: »

I'm not sure there's a meaningful difference between the ECB and BoE here. BoE profits after costs go back to the state. ECB profits go to national central banks in accordance with the capital key, and then back to each member state.

It's not monetary financing because the BoE's balance sheet only goes up temporarily. Loan to government (asset side) and cash to finance it (liability). Govt. issues bond, and then the loan is paid down and the assets and liabilities go away.

I don't buy that the decision to repay these loans is purely political or that there are no restrictions. I'd be surprised if repayment isn't legally required. But even if it's not legally required, it'll be required insofar as repayment is a precondition for the BoE offering that facility in the first place.

So overall, I don't buy that this is evidence in favour of MMT.

Legal requirements are determined politically, economically it isn't required.

The difference between the BoE and the ECB is whether insolvency is voluntary or not. The UK government always has the option to legislate to finance debt directly from the BoE - but individual Euro nations do not, as the ability to legislate that can only be done at a central European level.

The UK can not involuntarily go insolvent, Euro nations can. This is not MMT, it's just macroecononics.

I haven't fully looked back at the context of the discussion you are quoting (will do so later), but I think the above does fit in reply to it.

KyussB

andrew wrote: »

I'm not sure there's a meaningful difference between the ECB and BoE here. BoE profits after costs go back to the state. ECB profits go to national central banks in accordance with the capital key, and then back to each member state.

It's not monetary financing because the BoE's balance sheet only goes up temporarily. Loan to government (asset side) and cash to finance it (liability). Govt. issues bond, and then the loan is paid down and the assets and liabilities go away.

I don't buy that the decision to repay these loans is purely political or that there are no restrictions. I'd be surprised if repayment isn't legally required. But even if it's not legally required, it'll be required insofar as repayment is a precondition for the BoE offering that facility in the first place.

So overall, I don't buy that this is evidence in favour of MMT.

So, replying to the monetary financing side of this, after reading back:
The state in the UK is the Government and the Central Bank - the assets and liabilities of the CB and the Government may differ when one extends a loan to the other, but at a state level there is no net liability from such a loan. There is no practical difference between that and monetary financing - only a technical/pedantic difference, of no use or worth to the discussion - the state has full control over its own finances.

There is no EU state, there are member states at an individual level, and effectively one central bank for all those nations at an EU level (the NCB's are just arms of the ECB - delving into their technical setup is of no worth to the discussion, it's only obfuscatory and beside the point) - if the ECB lends to a member state, then there IS a net liability at the state level. This has serious/real practical differences, which can (in extreme cases) affect the solvency of a member state, and which limits member states control over their own finances.

KyussB

Geuze wrote: »

Paul de Grauwe calls for monetary financing of budget deficits, and says the higher price level is a price worth paying.

https://voxeu.org/article/what-price-pay-monetary-financing-budget-deficits-euro-area

That article relies on the largely debunked Quantity Theory of Money, in trying to model inflation - he also says QToM applies in the long-term, yet he is applying QToM to analyze the short/medium-term. That is bad economics.

One of the core things the QToM depends on for its validity, is the concept of the neutrality of money (the idea that the stock of money doesn't affect the 'real' economy, only affecting nominal variables) - which is also false and bad economics - and it's very easy to show that money is not neutral: Debt.
Inflation and deflation affect the 'real' value of debts (reducing and increasing it), and this has a real effect on the economy - e.g. through debt deflation.

Geuze

KyussB wrote: »

One of the core things the QToM depends on for its validity, is the concept of the neutrality of money (the idea that the stock of money doesn't affect the 'real' economy, only affecting nominal variables) - which is also false and bad economics - and it's very easy to show that money is not neutral: Debt.
Inflation and deflation affect the 'real' value of debts (reducing and increasing it), and this has a real effect on the economy - e.g. through debt deflation.

Is it not the case that money neutrality more or less holds over the long-run?

But that in the SR, the classical dichotomy breaks down, and money and prices can affect the real economy, like the debt-deflation theory?

The debt-deflation process will only work with unexpected inflation?

Geuze

KyussB wrote: »

That article relies on the largely debunked Quantity Theory of Money, in trying to model inflation - he also says QToM applies in the long-term, yet he is applying QToM to analyze the short/medium-term. That is bad economics.

They do defend/justify the use of the QTM.

KyussB

Debt deflation has been going on for decades in Japan. The effects of inflation and deflation on debt have a real and often long term effect on the economy, even without debt-deflation as an example - as e.g. for long term mortgage holders, it affects peoples lifetime spending and quality of life etc..

Be suspicious of when theories shift from a 'strong' to a 'weak' form, citing 'in the long run' often coupled with ceteris-paribus i.e. 'all other things held equal' - they are often (but not always) variations of holding on to dead theories, by assuming multiple can openers.

andrew

KyussB wrote: »

That article relies on the largely debunked Quantity Theory of Money, in trying to model inflation - he also says QToM applies in the long-term, yet he is applying QToM to analyze the short/medium-term. That is bad economics.

One of the core things the QToM depends on for its validity, is the concept of the neutrality of money (the idea that the stock of money doesn't affect the 'real' economy, only affecting nominal variables) - which is also false and bad economics - and it's very easy to show that money is not neutral: Debt.
Inflation and deflation affect the 'real' value of debts (reducing and increasing it), and this has a real effect on the economy - e.g. through debt deflation.

KyussB wrote: »

Debt deflation has been going on for decades in Japan. The effects of inflation and deflation on debt have a real and often long term effect on the economy, even without debt-deflation as an example - as e.g. for long term mortgage holders, it affects peoples lifetime spending and quality of life etc..

Be suspicious of when theories shift from a 'strong' to a 'weak' form, citing 'in the long run' often coupled with ceteris-paribus i.e. 'all other things held equal' - they are often (but not always) variations of holding on to dead theories, by assuming multiple can openers.

I really don't think that the QTOM has been as debunked as you think it has been, and when someone cites an article by someone who definitely knows what they're talking about then I think it warrants a more considered response than 'they're wrong'.


My understanding is that there is some decent econometric evidence out there at money is neutral in the long run but that there is some variation in the strength of the effect and the extent of the effect cross countries. Though it's not a new theory, even a quick Google scholar search shows that it's still an active area of research. That indicates to me that it's not quite as open and shut a case as you're suggesting.

s for trading value (i.e. foreign exchange): As long as a country produces goods that other countries want to buy, and need to exchange into the local currency in order to buy - then that solidifies the demand, that will keep a currencies trading value.

As for the value of the currency itself: As long as the government isn't pouring money into supply constraints/bottlenecks - which would cause inflation - then there is ample room for spending in this manner. General rule is government stops spending when Full Output is reached - and that point, is roughly around the point of Full Employment - otherwise they'll be pushing inflation.

The quotes i have in bold are the key things for me. Leaving aside the Economics of it, I don't think those preconditions could ever be met consistently.

KyussB

andrew wrote: »

I really don't think that the QTOM has been as debunked as you think it has been, and when someone cites an article by someone who definitely knows what they're talking about then I think it warrants a more considered response than 'they're wrong'.


My understanding is that there is some decent econometric evidence out there at money is neutral in the long run but that there is some variation in the strength of the effect and the extent of the effect cross countries. Though it's not a new theory, even a quick Google scholar search shows that it's still an active area of research. That indicates to me that it's not quite as open and shut a case as you're suggesting.



The quotes i have in bold are the key things for me. Leaving aside the Economics of it, I don't think those preconditions could ever be met consistently.

Don't paraphrase me as merely saying "they're wrong", when I've provided direct counterpoints to the QToM - that is extremely lazy when I've provided detailed arguments.

You saw me point out how changes in the value of money (inflation/deflation), affect the real value of debts - and that this leads to decades-long effects on the real economy in many cases, e.g. through debt-deflation like in Japan lasting multiple decades (among other examples).

This means that in the long-term, changes in the value of money affect real variables in the economy - disproving both the short and long term versions of QToM.

There is no evidence for the QToM - there is only evidence of a loose correlation between the money supply and the value of money. That is not evidence that the QToM explains that correlation. It explicitly can't be evidence of that, as long-term debt-deflation (among other effects of debt on the real economy) excludes the QToM from ever explaining that, or anything else.

That means any correlation between the money supply and the value of money, must have an explanation other than the QToM.

Banner fights back

Bank of England governor Andrew Bailey telling sky news today that Britain was on the brink of economic insolvency due to the volatility in the financial markets and that the bank had to intervene by actively buying government bonds or gilts to ease pressure on the price the UK govt had to pay to borrow on the international financial markets.

What are the chances of the UK getting into the same financial crisis when Brexit commences on the 1st of January 2021? What happens in the event of there being a second wave of covid 19? IMO this is a deeply troubling development for a supposed "triple A" credit rating nation. Their debt to GDP ratio is over 100% and rising.

Those that think Brexit is the "best thing to happen to the UK" should think very carefully about what they wish for if events like in the early stages of covid 19 that caused market Armageddon during March of this year are replicated again.

KyussB

Here's an article on it:
https://www.theguardian.com/world/2020/jun/22/britain-nearly-went-bust-in-march-says-bank-of-england

Key point there is, that the UK can only become insolvent if the BoE chooses to voluntarily allow the UK to become insolvent.

The UK (as a state which includes the BoE and the UK government, including full control over legislation/laws) - can never involuntarily become insolvent.

So it's pretty much a non-story. The BoE isn't going to just implode the UK economy by voluntarily allowing the country to become insolvent.

What it should get people asking, is whether there's any point pretending central banks have any independence. If the BoE are forced to help fund the UK government (even indirectly), because the UK will never be allowed become insolvent - then they aren't really independent, it's just a facade of independence.

Danzy

Banner fights back wrote: »

Bank of England governor Andrew Bailey telling sky news today that Britain was on the brink of economic insolvency due to the volatility in the financial markets and that the bank had to intervene by actively buying government bonds or gilts to ease pressure on the price the UK govt had to pay to borrow on the international financial markets.

What are the chances of the UK getting into the same financial crisis when Brexit commences on the 1st of January 2021? What happens in the event of there being a second wave of covid 19? IMO this is a deeply troubling development for a supposed "triple A" credit rating nation. Their debt to GDP ratio is over 100% and rising.

Those that think Brexit is the "best thing to happen to the UK" should think very carefully about what they wish for if events like in the early stages of covid 19 that caused market Armageddon during March of this year are replicated again.

With this BoE move the risk is changed. The BoE is one of the few that have set up to face any economic crisis.

KyussB

An incredibly good economics documentary is The Age of Uncertainty by John Kenneth Galbraith (it's a bit hard to find, the YouTube version isn't complete - need to go hunting for 'alternative' sources) - am rewatching it, and this episode covers the history of money and (23min in) partially of the BoE, including money creation in the American Revolution - really interesting, recommend the whole series: