I'm having problems getting my head around this, I'm fairly good at Maths and thought I had a fair grasp of economics but this has just got me going around in circles, perhaps someone who works in the economic sector (if there is anyone left) could explain it. According to the news this morning the Bank of England have a new tool in their arsenal against economic meltdown: quantitative easing. Now, because their attempts to prop up the economy by reducing interest rates has failed they are going to reduce them further? In addition they are going to put more money in the economy to encourage lending by banks............. now is it just me or won't putting more money in the economy just devalue that which is already there? Do I see inflation about to raise it's ugly head and haven't we been here before in the 70's? Am I missing something here? or do these questions still seem unanswered: Why will this make the banks lend more money? Will it not effect the exchange rate and value of the pound making imports more expensive? (exports possibly more viable I suppose) Aren't the people who prop up the entire financial system (savers and investors to the tune of 1 trillion pounds) being further screwed? Are we about to see inflation go through the roof and a lot of old people (lets remember we are all going to be there one day) fall into extreme poverty - not to mention all those who have just been forced to take pay cuts or receive no pay rise this year? Leading questions I know, but answers on a postcard to: Mervin....... Edited to add: That's not Mervyn King, Governor Of the BoE but Mervin the chimp at my local zoo who now appears to be running the economy.