New Money

A March 3 article in the International Herald Tribune states that the Bank of England may soon start buying government bonds, corporate bonds, and "commercial paper" with new money to ease the credit crunch brought on by the world economic crisis.
It's hard to wrap your head around this kind of power but I've been trying recently to do just that. Silly little questions pop into my head when I think about this level of power, such as:
Why is it that the Federal Reserve can earn interest on government debt when the Federal Reserve has the power to simply create new money with a few keystrokes on some magic computer somewhere?
If money is in short supply, why don't we just print new money and inject it into the economy by spending that instead of taxing the existing money supply?
Why is it that when the government does do that, it winds up owing interest on that money in perpetuity to unspecified and generally unidentified "investors"? Since there are no actual investors in the Federal Reserve Bank, where does this interest money go?
Does the Federal Reserve Bank have vaults filled with money? If so, why? Whose money would that be? If not then where does the interest money on US Treasury debt held by the Federal Reserve Bank go?
Why do we use this system in the first place? If we do it to protect the value of our money, then why does gold cost so much more now than it did when we ceased using it as the basis for our currency? That's what we call protecting the value of our currency?
How much new money could the Federal Reserve inject this way into the economy before it triggered inflation? If there's some headroom here, then why aren't we doing it?
Oh, yeah, right... We ARE doing it! That's what the stimulus package is. That's what deficit spending is. Two questions, though. Why do taxpayers wind up paying interest into perpetuity by doing it this way and why are Republicans against doing this?
Perhaps this article will help - Creating New Money by James Robertson. Also this article from a link in the previous one - HOW PRIVATE, COMMERCIAL, NATIONAL and INTERNATIONAL MONEY is CREATED; abridged from the works of Michael Rowbotham.
By the way, if ever the right by nations to print their own currencies is terminated and a central international currency is established, the owners of that currency would virtually dictate the entire world. No doubt this has been the dream since the days of the Phoenicians. Carthago delenda est!