Even the rich can't fight markets.

"The boss of the Bank of England has said a bond-buying scheme to stabilise pension funds must end on Friday, despite pleas to extend it." BBC. "Earlier the Bank of England made a fresh bond-buying move to try to calm markets." Purchasing securities from the open market to increase money supply and bring down interest rates is also known as 'quantitative easing'. Investopedia. "The pound dropped sharply against the dollar to below $1.10 after Mr Bailey's statement." This turmoil is a result of a mini-budget presented by Prime Minister Liz Truss's Chancellor of the Exchequer Kwasi Kwarteng which proposed "a combination of 45 billion pounds of unfunded tax cuts, a removal of bonus caps on financial firms and the reversal of a corporate tax increase from 19% to 25%," wrote Narayan Ramachandran. The duo was forced into an embarrassing u-turn on the proposal to abandon the top income tax rate of 45% by the huge negative reaction. TOI. "Liz Truss's budget plan was spectacularly ill-timed, was defended in doctrinaire terms and at cross-purposes with the action plan at the Bank of England (BoE)." "Pension funds are designed to be dull." CNN. "As the price of government bonds crashed, the funds were asked to pony up billions of pounds in collateral." The pension funds were using derivatives to hedge their bets. When bond prices crashed their 'mark to market' value fell. "Mark to market (MTM) is a method of measuring the fair value of accounts that can fluctuate over time, such as assets and liabilities." Investopedia. When MTM falls below a certain level it triggers a 'margin call'. "A margin call occurs when the percentage of an investor's equity in a margin account falls below the broker's required amount." "When a margin call occurs, the investor must choose to either deposit additional funds or marginable securities in the account or sell some of the assets held in the account." "In a scramble for cash, investment managers were forced to sell whatever they could - including, in some cases, more government bonds. That sent yields higher, sparking another wave of collateral calls." "And across the Atlantic, the market for US Treasuries is raising liquidity concerns," wrote Profs Raghuram Rajan & Viral Acharya. Between March 2020 and March 2022 the US Federal Reserve was buying $80 billion worth of US Treasuries and $40 billion of mortgage-backed securities (MBS). From September the Fed started to reduce its balance sheet by not reinvesting what it receives from maturing $60 billion worth of Treasuries and $35 billion of MBS. stlouisfed.org. This is quantitative tightening or QT. Problem is that funds, including pension funds, "compensate for the QE-induced low return on long term gilts, they increased the risk profile of their other assets, taking on more leverage and hedging any interest risks with derivatives." As happened in the UK. In India the Reserve Bank "had to burn $110 billion in desperate attempt to arrest rupee's slump to a lifetime low, dragging the forex reserves to the lowest level in over two years." ET. Perhaps we should learn from rich countries. Can't fight markets.