What is it with macroeconomists? You think you understand how the economy works and then they come up with some subtle new monetary operation called "quantitative easing".

With interest rates rapidly approaching zero, central banks in many countries right now face running out of ways to stimulate their ailing economies. So they have started looking at the policy of quantitative easing, adopted by Japan post-2001.

This policy involved the central bank effectively borrowing from commercial banks to buy bonds or other securities.

When this happens, the commercial banks end up with deposits at the central bank. The creation of such deposits, called High Powered Money (again macroeconomist-speak), is supposed to encourage banks to expand their own lending, generating an expansion in credit and the broader money supply.

But whether or not this really happens is contentious. The experience in Japan was that the Bank of Japan's actions succeeded in boosting High Powered or "narrow" money, but broader measures of the money supply and credit to the wider economy do not seem to have changed.

Central banks' interest in quantitative easing is part of the wider phenomenon in public policy of trying everything in the hope that something will work.

From VAT cuts to guarantee schemes to bank bailouts to novel monetary operations, anything faintly plausible receives not only consideration but also rapid implementation.

The heart of the troubles we face remains the collapse of the structured credit markets. With no one willing to buy or sell, the value of structured products has become a matter of guesswork.

Bank earnings statements are disbelieved because nobody knows what large parts of bank assets are truly worth.

In these circumstances, the banks are unlikely to engage in more lending just because of an adjustment in the Bank of England's balance sheet.

Policies should be aimed directly at the problem and not elsewhere. It is a basic principle of public finance that to rectify a market failure, one should intervene close to its source and not in some other area.

In the current crisis, this means cleaning the distressed assets out of the banks so these institutions cease to be opaque and therefore vulnerable.

It means jump-starting trade in the markets that have seized up so banks and investors start believing they know what things are worth.

If we want to try more imaginative policies, we should look at the steps taken by the US Federal Reserve of lending to non-banks to encourage them to invest in distressed assets.

Or we should consider how state intervention could be used to alleviate the dangerous reliance of the banks on insurer guarantees.

Until vulnerabilities like this are removed, the banks and the rest of the economy cannot recover. Much as we love to hate banks and bankers, they are the key to restoring wider prosperity.

As it happens, quantitative easing might have an impact on the logjam in the credit markets depending on the securities that central banks choose to buy in implementing these operations.

Back in 2001, the Bank of Japan bought long-dated government bonds.

Instead, if the Bank of England were to purchase highly rated (but still, in truth, distressed) credit securities like UK residential mortgage-backed securities, then it could help to clear up UK bank balance sheets, establish prices and get the markets moving again.

Professor William Perraudin is chair of Finance at Imperial College Business School