Disliked{quote} I understand but don't understand why go through the motions if it is at par ? This is why I'm a sceptical bastard.Ignored
The government is buying its' own debt by printing money, it is a way to fund spending without increasing taxes. It's ingenious.
That's the purpose of the trick but what is the cost?
On the face of it there is no cost because the money is lent out, to be paid back at par, and the profits from interest payments are then sent back to the treasury. But did we really pay nothing? That's not the full story.
We pay for it through inflation via the multiplier effect of the government spending money, it's a stealth tax paid by everyone through the erosion of our purchasing power.
That's the trick, a stealth tax by inflation.
Calling the 'Bank of England' a 'bank' and 'independent' helps to maintain the illusion. So does the 'lending' money to the government, just to be paid back again.
Milton Friedman says it much more succinctly than I can:
https://m.youtube.com/watch?v=qmndhS-Qf20
2