Douglas Carswell's Blog

Bond bubble? What bond bubble?

Mr Douglas Carswell (Clacton): In 2007, 50% of UK gilts were purchased by insurance companies and pension funds. Last year the figure had fallen to 22%, the lion's share of UK gilts now being bought by the Bank of England. Does my right hon. Friend share my concern that we are funding public sector overspend by having one branch of the state write out IOUs for another? Can that be sustained?

Mr Osborne: The arrangements for quantitative easing are well established, and the decisions on whether to increase asset purchases are within the envelope that I set for the independent Monetary Policy Committee. I think that an active monetary policy has helped sustain demand over the past few years. It is anchored in a credible fiscal policy, the next stage of which we will set out tomorrow.

Yesterday, as you can see, I put my opposition to the government's monetary policy on the record in black and white.  A loose fiscal policy is being financed by a loose monetary policy.  It will not end well. 

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