Understanding Qualitative Easing

The best brains in the Empire have been puzzling over the problem of the implications of the Bank of England's Qualiltative Easing Strategy. Those in the Empire's Museum have come upon an ancient papyrus originally found in a jar in a cave in  desert mountains somewhere in the middle east. Apparently it has all happened before and is to be found in the Third Book of Kings. The text is as follows:

'In the beginning was the Credit Crisis and all was chaotic, opaque and applications for funds were declared void.

Then the Spirit of King hovered over the chaotic opacity and said:

"Let there be 75 billion of liquid Sterling Assets"

And there were 75 billion of liquid Sterling assets.

& King saw it and even he was Amazed at what he had wrought!

And that was the evening of the First Day.

Then the King rose up and took a hands measure of Sterling Assets

and scattered it upon the face of gilt edged market.

And the gilt edged stock rose up, and the King gave measure for measure

And gathered up the gilt edged that he had bought.

And the gilt edged stock rose up mightily.

And that was the evening of the Second Day.

Then King took up a second and larger measure

Scattered it again  and so on for four days 

until the 75 Billion of Sterling Assets was all scattered and there was nothing left to scatter.

Then were the gilt edged sparse upon the earth

Yet those that were left waxed mightily but yielded little.

Then the Serpent Milliband looked upon the Earth and said:

"This is Too Good to Miss" and he sowed a Leviathan of gilt edged

upon the Earth, but it was of low coupon and extremely long dated (not to say irredeemable)

That no man under normal circumstances would take it up.

But being intoxicated by low interest rates the peoples of the Earth  did take it all up using much of the Sterling Assets scattered upon the Earth.

Then the mighty King said "What is this that thou hast done?"

And the Serpent Milliband answered saying 

" Thou art a Mighty King and who but thou can create 75 billion Sterling assets from nothing?

Create thou then another 75 billion Sterling assets and scatter it too

That the low coupon extremely long dated gilt edged no longer afflict the Earth."

The mighty King was very wrath but spoke with a still small voice saying:

"Thou shalt redeem my 75 billion book of gilt edged in due season and at par.

And although par was more than I have paid, yet as I created 75 billion of sterling Assets ex-nihilo, 

I shall still have done rather well out of it whilst succouring the people,

But thy low coupon extremely long dated gilt edged with which you have beguiled the people,

I shall not redeem it:

On their bellies will the people eat of it all the days of their lives

till it be redeemed on  the Day of Judgment.

For am I not an omniscient King and  do  I not remember  5 per cent War Loan?"

And it was the evening of the Seventh Day,

And the Lord King looked upon the Earth and saw that it was very Good

And he gave a self-satisfied smirk and spoke and said:

"Let the bank base rate be raised by 150 basis points!"

And it was so.'