Though I think this is just posturing by the Bank of England. If they do stop quantitative counterfeiting at £125 billion, then the UK government will no longer be able to sell its bonds without shelling out huge amounts in interest.
Therefore, as the deadline approaches, expect the BoE to 'do the right thing' by the bond traders and money markets, and keep the printing presses rolling. Not that this will be due to pressure by the Treasury of anything.
What a bunch of jokesters.
Oh, what it would be to be a fly on the wall in the Treasury's debt management office when UK government bond yields go over 5%, then hit 10%, then hit 15%.
Oh well, it's only other people's money.
Though as Uncle Murray said, the British government may be rolling up this debt, but though I am physically 'obliged' by the ultimate threat of murder to pay this off for them, repudiation may be the way to go instead.
In order to go this route, however, we first have to rid ourselves of the fallacious mindset that conflates public and private, and that treats government debt as if it were a productive contract between two legitimate property owners.Imagine that it gets so bad for the British government that the whole shooting match collapses, Scotland goes independent, Wales goes independent, and England forms an entirely new government. Imagine if all three governments simply repudiated 'British' government debt as nothing to do with them.
Wouldn't that be interesting.
Why should the poor, battered citizens of the former British countries be bound by the debts contracted by their former Communist masters in Brown's government?
Indeed, why should I be bound now, by the debts Brown is running up? I don't want this money to be borrowed and I have never voted for the man. Indeed, nobody has voted for him to do this. Even Labour backbench MPs have never voted for him.
So I do not regard the debts of the British government as being any way binding on me to pay them off. Yes, the men with the guns will come round, probably, and try to force me to pay them, if I haven't managed to escape this dreadful island first, but let UK government bond buyers beware, and all the other immoral purchasers of future stolen pelf. Just because you've bought them, with a triple AAA rating, don't assume that the Lord God above has determined that you will get your capital back.
All you're actually going to get back is paper scrip or even a full-on default or perhaps the magic of Uncle Murray's repudiation. Perhaps it's time those yields really did start shooting up.
PS> Yes, I know that somewhere along the line, due to some stupid government regulation, I myself have probably been forced into buying UK government bonds, but it's not for the want of trying that I've tried to get myself out of all such immoral positions. Buying government debt is as immoral as living off tax. You are basing your investment upon the threat that the government holds over the population it controls and upon its ability to counterfeit without censure. If nobody bought any government debt, we would also shrink governments down to a controllable size, as they would always be forced to spend in line with their taxation income, would be unable to afford wars, and would be unable to expand government without such increases in expenditure becoming immediately noticeable by taxpayers. Any inflation they tried in such circumstances, without fencing it through the government bond machine, would also be immediately noticeable by taxpayers. So if you want to live a moral life, sell your government bonds and buy gold instead. Indeed, if you want to live an immoral life, you should sell your government bonds and buy gold instead (or gold mining stocks, if you want a dividend stream).