Money: time to turn the tap on?

It's another few weeks before the wise men and women at the Bank of England get round a table and decide to cut interest rates again (and I don't know something you don't here – the decision is simply a foregone conclusion).
But there's a sense that whatever they decide to do it won't make a massive difference to the economy.
Under any other circumstances, a decision to slash interest rates as fast as the Bank has done would have us dashing straight up to the flat screen department at John Lewis.
And while the Bank doesn't want to encourage credit card profligacy, it is trying to encourage more lending and spending to get the economy started again.
Interest rate cuts no longer seem to be enough, though.
While the marketing departments in High Street banks are telling us they're organising a 'new deal for small firms' and all sorts of other PR guff, the reality is a lot less impressive: demands for money back, blocking of routine overdrafts, increasing charges and even the refusal to fund production of signed orders.
Why? Well, while bank marketing and PR sounds like it's in a parallel universe, the banks themselves are still worried about something painfully down-to-earth: existing and future losses.
And the wholesale money markets they used to raid to shower us with cheap mortgages are welded shut.
So the stifling financial squeeze on business and the housing market continues.
Consumers are just the same. Even though interest rates are at historic lows – making borrowing more attractive than saving – people are showing every sign that they'd rather stash the cash than hit the shops. They're worried.
So what's left for the economy if interest rates at close to rock-bottom aren't having much impact?
Two things, and I suspect they go hand-in-hand.
One is the Bank of England engaging in a tactic that economists call 'quantitative easing'. What it boils down to is printing a whole load of new money and pumping it into the economy. More money tends to push prices up, and if asset prices are rising banks are happier to lend money to buy them.
It sounds simple, so why hasn't done it before now? Because it tends to cause inflation.
The second is the Government investing taxpayers' money in industry, through either direct loans to key businesses or by setting up its own Government industrial investment fund.
I suspect we'll see something emerge pretty soon, as the financial pressures on businesses starved of cash may soon reach crisis point.
UPDATE: Since I wrote this blog, the BBC has been trailing an interview the boss of Barclays has given to Monday's Panorama(click HERE). In it, he forecasts lending will stay tight for up to two years and admits the banks are suffering a PR crisis. As I mentioned above, the Government may be able to take the sting out of the lending crisis. But I sincerely hope bank PR teams wake up soon to what their own bosses are saying. Some of the slogans they're trotting out at the moment are likely to be seen as rubbing salt into some very sore wounds.