The UK central bank has announced another round of economic stimulus in an attempt to kick-start the economy due to unprecedented lock-downs which have brought the country to its knees.
In brief
-
The UK central bank announced a £150 billion stimulus on Thursday.
-
The stimulus is “larger-than-expected” and will be used to prop up bond purchases.
-
The country is in a similar situation as it was in the 2008 great financial crisis.
On Thursday, the Bank of England said it would buy over £150 billion worth of government bonds as it seeks to revive an struggling economy that is set to become further dilapidated as it enters a second lock-down, Bloomberg reported.
The move – considered “larger-than-expected” by media pundits woulc help create market demand and lower borrowing costs for the government, according to the report.
Bonds are fixed-income financial instruments that represent an underlying loan and are used in order to raise capital from wealthy investors such as hedge funds, family offices and endowment funds.
This year, as countries self-flagellate in unnecessary lock-down procedures due to governmental incompetence, bureaucracy and fear, governments have now opened the cash flood-gates everywhere to buy back billions of dollars worth of bonds using freshly minted capital (for which the future pays for).
After Thursday’s move, the UK government has picked up over £200 billion ($262 billion) worth of bonds in total in 2020. Like every other Central Bank-controlled money system, the UK’s debt has ballooned, standing above £2 trillion ($2.62 trillion) at the time of writing.
At the same time, the UK announced an extension for its furlough program, which would see the government pay up to 80% of the wages of 9 million people working in various sectors. This cost is expected to be another £25 billion ($32 billion), per estimations by Bloomberg analysts.
Despite these moves to address economic pain, however, this situation is untenable for a country with barely any economic activity. The Bank of England said it expects the UK economy to contract in Q4 of 2020, adding to its ongoing economic woes amidst ongoing Brexit negotiations.
“It’s an extraordinary situation,” said bank government Andrew Bailey in a statement, adding, “It’s by no means over.”
The current economic backdrop is not dissimilar to 2008’s scenario of infinite quantitative easing and money printing, which gave birth to bitcoin – an asset that is not driven by centralised policies and that is not subject to the whims of humans and their political affiliations.
Join the telegram channel for updates, charts, ideas and deals.
Did you like the article? Share it!
