Emergency QE
The central bank buys £200bn of gilts from the market. Is that free money?
Mechanically correct — illustrative calibrationThe transmission channels are engine-correct; the magnitudes are teaching values, not a forecast.The verdict
Pensions & insurers pay 25p of every £1 of pressure. Central bank gain 50p.
25pof every £1 of pressure lands on Pensions & insurers
Where the pressure moves
The £1 pressure trail
Green trails = cash / relief received. Red trails = pressure absorbed. Every £1 has to land somewhere.Every £1 of pressure · rebased to 100p
How to read this — three tiers
Ledger— Real cash, deposits or reserves move between actors. Conservation-checked.
Valuation— Existing assets are marked up or down. No cash changes hands, but balance sheets move.
Indicator— A directional pressure gauge only. Not a cash movement and not a balance-sheet entry.
Who gains
- Central bank+50p
Who pays
- Pensions & insurers−25p
- Overseas−12p
- Banks−12p
What it means for one person
A pension fund
manages retirement savings for 400,000 members
It sells long-dated gilts to the Bank of England and receives cash reserves. Portfolio value unchanged; liquidity higher; gilt yields lower for everyone borrowing.
The context
QE looks like the central bank creating money and handing it out. It isn't. It's an asset swap — the same wealth in a different form — and the winners are the people who already owned the assets.
Explore further
Change a lever. See how the trail moves.
Sources
More scenarios