to cut interest rates, and even to create new pounds with "quantitative easing" from the Bank of England's cheque book, sterling has not had a simple devaluation but a sharp fall in the early days of the euro crisis, followed by a rise. Bank of England data shows the value of the pound against a basket of its trading partners falling by 20% in the 15 months from January 2008. It has risen 9% since then, but that mostly occurred in 2009. For the last three years, this "effective exchange rate" has shown little change. Large deficits, low interest rates and bank vaults full of cash ought in theory to be bad for sterling. In practice, this has been overwhelmed by the flight to "safety" sparked by the euro crisis. Sterling is some 10% cheaper than at the start of the Great Recession. The alarming thing, from a UK point of view, is that it appears to have suffered some of the theoretical ill-effects of devaluation, but has not reaped the theoretical advantages. One of these ill-effects is inflation - which has certainly reared its ugly head. This time last year, UK consumer prices were rising at 5% a year, when Ireland's increase was 1.5%. The gap has narrowed since, with the July figures at 2.6% in the UK and 2% in the Republic, but price levels in the two countries are not narrowing. Last month's trade deficit was the worst for 15 years. Exports to all of the UK's