I don't understand the first question.Quote from morganist:
Isn't QE necessary to make the oustanding debt payments back if nothing else.
So who did they buy them from then?
In relation to competitive market auctions. If they are putting in £200 bn in a short period of time they are going to push the price up.
Quote from Martinghoul:
I don't understand the first question.
They bot these assets from the people that owned them previously. I don't see why it matters who held them.
Yeah, of course, but that's not the claim you made. You said that "the Bank paid more than what the mkt would have paid at that time", which is obviously not the case.
Quote from morganist:
The injection of the money to buy the assets would have pushed the price up. Because there would need to be transitional value to get people to sell. £200 bn is a lot of assets to sell in a short period. The amount that would have had to be paid to convince that many people to sell that many asset and not to hold them anymore at a fair price would be high, unless they were bad assets and not worth what they were bought for.
Quote from DontMissTheBus:
(1) It's a competitive bid. (The Fed does the same thing, btw; the results of the reverse auctions, prices, volume, etc are all posted). It's the price at which the market clears. So not sure why it matters who wins.
(2) Yes it pushes up the price compared if there isn't any QE. But that's the whole premise of QE - so it's pretty disingenuous on your part to suggest it's somehow otherwise;
Quote from DontMissTheBus:
WTF? What are you talking about? bond prices rose from when QE was anticipated to announced in all instances.
Quote from morganist:
There was still a low level of demand overall. The inflation did not rise until more recently. It took a while for it to push prices up. So it was not instantaneous.
Quote from DontMissTheBus:
Okay. There you go again. We were talking about competitive bids for QE targetted bonds - and now you are somehow switching the conversation to 'prices' (I assume you now mean general inflation rather than QE asset prices) - because your previous positions were unattainable.
I'm not going to chase you around to talk about what you want to talk about - rather than what we are, in fact talking about.
Quote from morganist:
OK but the comment made by Martinghoul was that the increase price in the bonds bought was the aimed effect of QE and that that was instantaneous.
Quote from morganist:
...It was not instantaneous there was no increase in general prices, which was the real aim of QE.