A top news item today in the UK is that the price of gilts on bond markets have fallen, therefore increasing the interest rates on those bonds - BBC: Pound falls further as borrowing costs rise again
What is not reported is the fact that the Bank of England is today selling £750million of Gilts in the secondary bonds market. This is highly relevant information, given that this is likely to lower the price of Gilts and therefore could be a significant factor contributing to the high rates of borrowing arising in the markets…particularly today of all days!
Richard Murphy reported on this on Friday - The Bank of England is crashing the UK economy - claiming that the reason it was being done is because the Bank of England is primarily concerned with maintaining “real net positive interest rates” and their motivation for this is to ensure ongoing conditions that are “great for bankers”.
The government has the power to fix this Bank of England problem. As Bill Mitchell wrote recently, The British government does not have to appease the financial markets.
Sadly, we are heading the other direction - towards austerity - which is only going to make the economic situation in the UK worse. We know for sure it will make the situation worse because that is what it has been doing since it was ramped up dramatically by David Cameron in 2010. The evidence is strong that austerity costs lives. Some even say austerity is murder.
This great article by William Thomson of Scotonomics explains why and how Austerity is baked into the UK.
Bank-of-EnglandBOEAusterityEconomicsBill-MitchellWilliam-ThomsonScotonomicsSteve-GrumbineDavid-CameronGiltsQuantitative-EasingQuantitative-TighteningBondsRichard-Murphy