Bond purchases increase the demand for bonds, which raises their price. Since private banks hold billions of pounds of government bonds, they can sell them and use the money they raise to make loans to businesses.
It has not worked quite as planned – banks have hoarded the money to boost their reserves. But critics of QE who say it is useless must answer the point that without it banks would have withdrawn even more loans, triggering more bankruptcies and repossessions.
Another pitfall is that higher bond prices also translate into lower long term interest rates (because the rate a bond pays is fixed, if investors pay more to get the bond, the rate it yields starts to look correspondingly lower).
So chief among the critics of QE have been pension funds, which argue that lower long term interest rates depress returns on savings while doing nothing for the economy.It's all a bit thin, you say? I would tend to agree. But I'm not an economist; so I must bow to the judgement of those idiots who have dumped us into this mess in the first place ...