M&G's Woolnough: What should Mervyn do with his QE gilts?

QUANTITATIVE EASING

M&G's Richard Woolnough explains how quantitative easing is being used as free finance by the government, but what does it mean for investors?

"My colleague Jim Leaviss recently discussed the merits of officially cancelling the gilts bought back through QE, so I thought I would discuss another option that maintains the status quo through the Bank of England (BoE) simply rolling over the QE gilts into new gilts at maturity. "In order to understand the results of this process it is useful to re-examine how QE works. "Simply, QE is the willing exchange of gilts for cash between the BoE and the private sector. "What is the difference between a gilt and cash? Both are denominated in the same common currency, the main differenc...