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LISA MULLINS: And at the other end of Europe, the Bank of England is going to fatten up the British economy – or at least offer it the equivalent of a gazillion calories: newly minted money. The Bank's taking the unprecedented step of shoveling out $75 billion pounds, which is about $94 billion dollars. It's hoping that, and another interest rate cut, will turn things around. The World's Laura Lynch reports from London.

LAURA LYNCH: In this computer age, don't expect to see truckloads of cash rolling out from the Royal Mint. It's an electronic funds transfer to the country's banks. But the money is real and it will find its way into the economy over the next three months. It's a radical move, and Central Bank Governor Mervyn King believes there's no other option since he can't cut interest rates any further.

KING: Interest rates have fallen to a very low level. We need to increase the supply of money, and what we're announcing today is measures to increase that supply directly.

LYNCH: It's supposed to work like this: The government spends new money buying bonds from the banks. Those same banks, flush with a lot of extra cash, are supposed to start lending to the public. And the public is supposed to start buying again. It raises the specter of inflation. But wait – the past tell us that a little inflation can sometimes be a good thing.

ADVERTISEMENT: Well, lads and lassies, it's been tough going as we say in less-refined circles. Old kid depression had us groggy for a spell but we've socked him right on the button with inflation. The wheels of industry are beginning to turn again. People are beginning to buy more steel, more automobiles, more gasoline, and more beer. What inflation has done before it will do again! Everything is looking up! Snap into it! What a man and what a leader. Yowza. Happy days are here again.

LYNCH: That's from a 1930's political ad praising Franklin Roosevelt's efforts to lead the US out of depression. Economist Jim O'Neill says the British public should learn to love inflation, too.

O'NEILL: In the current juncture, a bit of inflation as a threat would be a nice problem. Output's fallen so sharply, so quickly that it's very difficult for anybody to be raising prices. So what the bank is trying to print money for is to bring the chances back for output to stop dropping, and to stop the risk of prices actually falling and us getting into a deflationary spiral.

LYNCH: But this is all risky business. If the bank doesn't create and spend enough money, it won't have any impact. If it creates too much, there could be runway inflation. The opposition's lead critic on finance, George Osborne, calls it a leap in the dark.

OSBORNE: It is in effect printing money, and it's not something that's been done in our lifetimes. But I don't think the Bank of England had many other options because the government's other measures like that VAT cut, have clearly not worked.

LYNCH: In all of this, some see shades of Zimbabwe or Weimar Germany with their wheelbarrows of worthless currency. It's not exactly the same – both nations printed money just to pay the government's bills. Britain is instead hoping to prevent deflation and get the economy moving. At this point, hope – and billions in brand new cash—is pretty much all the nation's got. For The World, I'm Laura Lynch, in London.

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