Quantitative easing is a party with a nasty hangover. After the binge of creating money and buying debt, the received wisdom is that the Bank of England will sell the debt it has purchased back into the market. But this will be deflationary and raise interest rates. It is an unnecessary hangover.

Instead of selling the debt back into the market, the BoE can retire the debt. At a stroke, ￡325bn of UK government debt would disappear. If America followed suit, about $1.5tn of US government debt would be retired.

To understand why this is possible, you have to simplify QE. After buying ￡325bn of debt from the market, the public sector (the Treasury) is paying interest to itself (the BoE) on debt that it owes to itself. It makes no sense for the public sector to owe itself money. Retiring the QE debt puts an end to this accounting nonsense.