Matthew Russell, one of the bond vigilantes at M&G, reckons that the Bank of England is sitting on a profit of £32 billion from its Quantatitive Easing programme. Yields have come down so far since it started buying that his estimated purchase prices look like bargains for the taxpayer.

Unfortunately, even a student from the Gordon Brown school of national accountancy would be hard-pressed to book the paper profit on this pile of paper. Not only is the Bank a natural seller of UK Government stock, but there is the little matter of the impact on gilt prices and market behaviour of a £200 billion forced buyer.

Pushing the price up is the easy bit for a large, determined market player. Realising the gain without pushing prices all the way back down again is much harder. Eddie Murphy’s fictional attempts to corner the orange juice market in Trading Places, and Anthony Ward’s determined buying of cocoa at Armajaro both show that crystalising your profit is tougher than it looks.

In todays’ near-panic, investors may be happy to lend to the UK government at 2.25% for a decade or 3.5% for a generation, while inflation is eating their capital at 5% a year. Yet this equation is a triumph of hope over experience. When conditions return to normal, and the Bank is forced to sell new gilts as well as the old, today’s buyers will have plenty of time to rue their purchases.

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