The Problem

... with the Fed's alphabet soup is that it is institutionalizing the credit crunch. Let's take the Fed's announcement that it will pay banks interest on reserves. The problem is not that Ben can't print. The problem is that the banks don't want the money. If they wanted the money, the Fed wouldn't be lending at 1.35%. Printing more money for the banks that have reserves won't make them lend.

I don't know what will, but it will probably take a lot of time for confidence to be restored.