"The losses from unwinding its QE programme are eye-wateringly vast. Yet Threadneedle Street remains seemingly above reproach"


Telegraph: 22nd March 2024: Philip Pilkington reports on the huge cost to UK taxpayer of Bank of England mistakes

"In 1997... Gordon Brown committed to making the Bank of England independent of the government. The policy... promised to empower various organisations... to make policy choices independent of the centralised government. In the case of the Bank of England these people were professional economists... for all intents and purposes... rule by experts.

But economics is a language of ceteris paribus – “all else being equal” – and if the economy underperforms under the stakeholder regime, as it undoubtedly has, the experts can expertly come up with reasons as to why this is that exculpates them from any blame...

In a recent report published by Macroprudential Matters economists Stephen Cecchetti and Jens Hilscher calculate that losses from unwinding the Bank of England’s Quantitative Easing (QE) programme will amount to some £191 billion between now and 2031. That amounts to around 7.5 per cent of GDP...

The problem here is that the experts the time of writing, it looks like it will be the public that will foot the bill, not the experts... all the losses that accrue to the Bank will be immediately transferred to the Treasury and, via the Treasury, onto the taxpayer.

...these are losses from the same Bank of England that chastised Liz Truss for her tax cuts when she was Prime Minister... Yet while Truss’s tax cuts were set to cost the Treasury £30 billion in 2023 alone, the losses from the Bank’s QE programme cost £40 billion and will cost £40 billion again this year.

Why was the Truss administration pilloried when she tried to cut taxes, but the losses the Bank of England is passing on to the Treasury are politely ignored? Money lost is money lost, after all...

Rule by experts becomes posterior protection the moment said experts get it terribly wrong. Meanwhile the rest of us are obliged to not simply foot the bill but also to pretend that the emperor is fully clothed as he rides his horse naked through the streets".