Question raised by a colleague whose spouse is a De La Rue printer - how does "printing more money" to help the credit crunch actually work? I wasn't aware of a shortage of actual bank notes - cash machines are still full AFAIK.
Nevertheless, say De La Rue print loads more sterling that (presumably) goes off to a Bank Of England warehouse. Then what actually happens to it that helps the problem that lower interest rates haven't done?
The phrase "printing money" is to be understood metaphorically. It means to increase the money supply, not to print more notes, except perhaps as a consequence.
The government wants to create more money out of nothing, so that it can create jobs and employ people. Even if the jobs involved are unnecessary (like equal opportunity policy compliance inspectors, or bodyguards for traffic wardens), at least it shortens the dole queues and gets people spending. It'll also fuel inflation (they probably see it as a good thing to combat deflation) but that'll just make everyone's savings worthless, or at least worth less.
The primary goal is to increase the amount of money in people's bank accounts. The cashpoints may be full of cash, but people aren't able to withdraw the money unless they have the money in their bank account, or their overdraft facility covers it.
If people have more money, then the idea is that they spend more, or alternatively they leave it in the bank so that the bank can lend it to someone else who can spend it.
Of course, having put more money in people's bank accounts, De La Rue may well need to print more £10s and £20s to cope with increased cashpoint withdrawals.
What will happen is that the government will increase the bank balance they hold in their Bank of England account. They can then lend this newly created money to other banks, or write cheques / make bank transfers to other people for benefit payments or for payments for the provision of public services.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.