Yesterday it was Ben Bernanke who tacitly handed over control of the global economy after the Federal Reserve’s base lending rates hit rock bottom – zero percent.

Today, Britain’s counterpart, Mervyn King, has admitted that he and the institution he represents – the Bank of England – no longer have control over inflation.

If Alastair Darling expects a letter from Merv to explain what the Dickens is going on with the Consumer Price Index, he’ll be disappointed. Merv has sovereign stamped his last letter on inflation for a while; he is suspending predictions during this period of “shocks and disturbances”.

Inflation is still persisting in spite of an eight percent fall in oil prices compared with October. But this will fall – of course it will as people spend less.

Mervyn King has recently come in for criticism due to what was perceived as dallying. If interest rates should now be at 2 percent, why were they at 5 two months ago? The answer is simple: ignorance is bliss.

It grates me as much as the next man whenever I hear Mr. Darling’s woefully optimistic predictions, but they have some merit. People who here that the economy is fine will be slightly more inclined to spend and, in turn stimulate growth (or at least stave off shrinkage).

Once you tell people that we are in serious trouble, they, for some reason, trust you. They stop spending on the anticipation that prices will fall further and deflation becomes a self-fulfilling prophecy. They must think you’ve got an economics degree or something.

In the past few hours, the US Federal Reserve – the body in control of more money than any other on the face of the earth – has announced base interest rates of “between zero and 0.25 per cent“. This is not only unprecedented: this was, until recent weeks, utterly unthinkable.

Think for one moment what this means. If a bank borrows $1m, it will have to pay back, at most, $1,002,500 over the period of the loan. This is free money.

The aggressive action from Ben Bernanke and co comes two weeks after the Bank of England cut its base rate of lending to an all time low of 2 per cent. And still people are calling for more.

Interest rate cuts are resorted to when an economy is threatened with deflation. A source working in the currency market reckons that even such cheap money will not stimulate the economy in the short-term. Customers, both retail and wholesale, simply cannot afford any more debt.

“Interest rates are better in punitive terms, for choking off inflation. They’re less effective at producing inflation from thin air,” he said.

There is a further problem. If, by some fluke or miracle, Gordon Brown actually manages to borrow Britain out of a deep and prolonged recession, and the economy starts to recover, what’s going to happen to the pound with such unsustainably low rates of interest?

David B. Smith from the Institute for Economic Affairs, said: “The danger is now we are getting into over-steering territory. Extreme interest movements risk destabilising the economy.” He’d probably know a thing or two.

Concerted and co-ordinated rate cuts are a deliberately decisive attempt to stimulate economic growth by making bank lending and inter-bank lending enticingly cheap. What is the best case scenario, should this manage to magic up confidence?

The liquidity returns to an over leveraged market – a market now with increased levels of liability from these goliath lenders of last resort. This would, in turn, eventually lead to banks ceasing lending once again as currency spirals, unencumbered by interest rates. It wouldn’t be pretty.

With such a slashing of rates, the Fed has also driven itself to the end of the road. There is nowhere left for US rates to go, no space in which to react to the effects of monetary movements, such as, I don’t know, interest rate cuts.

So will Mr. Bernanke’s all-on-red gamble work? Probably, and hopefully, not.