to think that printing more money is not really the answer the the world's money problems?

[purepurple]

Unless they print millions and give us all some, maybe. If I paid off my mortgage I would be better off

It all sounds very desperate and I have no time at all for this government - yes ScienceTeacher - they did sell off our gold reserves - at rock bottom price . But tbh they are running out of options. Agree that money needs to be linked to work, but it is frustrating when virtually all our manufacturing companies are in foreign hands and they are free to employ non-UK employees.

economics.about.com/cs/money/a/print_money_2.htm

This explains it much better than I did

Ahhh.... it is the bloody foreigners, of course

About to look at the link lou03.. has given but I was alarmed by this idea as from when I was at school I understood that you can't just do this without ending up in a right pickle/downward spiral. So far bankers and MPs have shown that they aren't all that bright and so what hope can there be!

Forgive the thick question but, in relation to the OP, to whom does this extra money belong? Where does it go when it's printed? My brain is frying, it all seems so abstract. That about.com article says "Let?s suppose the United States decides to increase the money supply by mailing every man, woman, and child an envelope full of money" - clearly that's not what happens - so why use it by way of explanation?!

I have a question too - when Gordon Brown borrows trillions, who or what does he borrow it from?

Is the government actually seriously thinking of doing this?

Apparently. I keep hearing about it on the radio and every time I hope they'll actually explain how it works! Quantitative easing, it's called ...

from Reuters

Quantitative easing is when policymakers create new money to buy assets, such as government bonds gilts in the UK or company assets and securities like corporate bonds or commercial paper from commercial banks that hold them.

That does not mean the Bank will start printing more banknotes. Instead it will increase the supply of money electronically by transferring funds into commercial banks' accounts if they sell securities to the central bank.

Franch, the article uses that because the measures taken are in effect doing that.

If interest rates go down, it doesn't mean that you actually have more money, but the money you have can buy more. So if you think of a mortgage holder, they might still pay a mortgage of £500, but instead of paying £250 interest and £250 capital, they are paying £200 interest, so £300 is paid off the capital. Their £500 has paid for 'slightly more of a house' than it did before.

Before VAT went down, £100 would pay for £85.11 worth of goods, and £13.89 of VAT. Now that same £100 will buy £86.96 of goods, and £13.04 of VAT. So your £100 is 'worth' £1.85 more than it was. In effect, you have been handed an envelope with £1.85 in it, every time you spend £100 on VAT rated goods.

There aren't many ways to get more money around. You either make it unattractive to save (slash interest rates) or produce more.