The government’s announcement of another £75bn to be spent on buying government and corporate bonds is in effect a bank bailout right across the banking sector.
The money is being printed and will used to buy these bonds from next Wednesday. But the only organisations that hold these bonds are bank and pension and insurance funds.
Normally when the Bank of England loans money to the banks it takes as security or collateral these bonds and makes a principal loan and charges interest (the base rate which was cut on Thursday to 0.5%).
Now the banks can sell these bonds to Bank of England (BOE) and receive the loan without paying the interest. The banks need this cash desperately to shore up their balance sheets and offset it against losses (write-downs) on the decaying assets and loans they hold. They also need this money to make the daily margin calls on over-the-counter (OTC) derivatives losses.
The money will not as the government hopes find its way into business and individuals pockets through the banks’ lending this money out.  If they were in a position to lend money they would take advantage of the 0.5% interest being charged by the  BOE, the lowest rate in the banks 300 year history,  and pledge their bonds as security and make loans at fat spreads to this 0.5% they are being charged by the BOE.
Pensions and Insurance funds hold the bonds as investments and sources of income. They will not sell them and take cash which is yielding 0.5% or push the cash into the system. In fact the buying of these bonds by the BOE is bad news for pension and insurance funds because it pushes up the price of the bonds and hence pushes the yield (income) down. So as well as tax payers having to pay for this printing of money later they will get a reduced income on their pensions and insurance funds.
The government has another £75bn lined up for later in the year to repeat the process. The two tranches account for 10% of our economy (GDP) and the government has already spent 20% of GDP so far bailing out the banks, the highest of any country (the US have spent about 7% of GDP) indicating the depth of the financial crisis and hence the economic crisis in the UK.
Quantitative easing will not be inflationary because the money will not find its way into the economy because as we said above it will be hoarded by the banks.
Brown or Darling are either being plain stupid or carrying out a massive con to hide another bank bailout or both. You decide!