1) When Bear Sterns fell, i read that the Fed flooded the US economy with fresh money. Where does the money go? How does this help?

2) Few months back Ron Paul said "Fed is printing more money to keep the interest rate low". How does interest rate go low with more money? Are the two questions related?
(Source : YouTube - CNBC: Ron Paul's question makes Ben Bernake's voice quiver - 00:58)

All i understand is, with more money in the system, inflation climbs still further!!