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Hanno Lustig questions the Bank of England's decision to sell gilts, arguing that the move appears driven primarily by a desire to avoid accumulating a balance sheet similar to that of the Bank of Japan.
Lustig warns that holding excessive government bonds could distort yields, asset returns, and fiscal policy incentives, while also potentially engineering large wealth impacts.
Lustig has previously discussed low interest rate policies and financial repression in Japan and other countries on the Monetary Matters Podcast. He has also raised concerns about how Eurozone experience challenges the effectiveness of central bank independence and narrow mandates, according to a recent article. These earlier comments provide context for his latest critique of central bank strategies.