There is no truth so obvious that it doesn't generate an opposing following. The most elementary economics primer tells us that flooding the system with money causes prices to rise and purchasing power to fall. Yet the Treasury's pact with the Bank of England (BoE) is designed to stimulate the economy by pumping hundreds of billions of fiat pounds into the system. Despite its failure Sir Mervyn King, the outgoing BoE governor, recommends more of the same – disregarding the inflation that must follow.