Only being an amateur economist, I have often wondered if the solution to this "crisis" we are in isn't to lower interest rates, but rather to raise them to attract bond investors.
Let's face it - ala Greenspan and Bernacke, for the last 30+ years, we have put artificial pressure on the bond market to the point it's almost a joke. We have wanted continued stock market rallies.
It wasn't always so in the American economy. I remember reading at one point that 1/3rd of the time in 20th century, the bond market outperformed the stock market.
If Bernacke raised interest rates and all of the sudden you could buy bonds for 8%, to me, there would be money to lend. Yes, at a high interest rate. . .but the liquidity problem would be solved.
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