While there is a danger of inflation, the alternative may be unconscionable.
The problem with credit is that people don't want to borrow on, nor do lenders want to lend against diminishing assets, nor do they want to invest in companies with diminishing assets and markets.
Where does is start? Although interest rates are already low in the US, they can go lower and many other countries have very high rates - such as Australia. The ability to repay a debt is diminished when rates are higher, especially when wages are shrinking
even more. A solution which enables borrowers to repay their debts is better than one of foreclosure and lessens further devaluation of assets not currently under threat of failing to repay.
The other issue is that if banks are paying interest on deposits they must lend it out at a higher rate. If no-one is either borrowing nor lending then the banks will be unable to loan profitably and the rate of interest they can pay will fall, and eventually
investors will look to get a better return - the precise reason they are currently depositing their funds into banks, as other investments currently provide negative returns. Our financial system needs funds to be available for investment, and in more than
just banks. Unfortunately this cycle is not as quick as we would need to counter a collapse in the financial system, which would be widespread and prolonged.
Rates must go down now.
Clever government economic management (if there is such a thing) includes as a primary goal - the prevention of a prolonged failure of the financial system.
The ancillary losses and suffering would be too high a cost and lead to dis-unity and general social disorder at a time when the world needs to be united and looking to the future with optimism in order to overcome the challenges we all face, and will still
face, whether the financial system is intact or not.
If it isn't working there will be a dangerous loss of progress on environmental, human rights and the general well-being of every person on this earth, not just Wall St and not only Main St - every street and village everywhere.
While we do not need to go forward blindly and without discipline back into the type of chaotic financial maelstrom we have just seen, it is equally irresponsible to just let it all crash down and start again trying to build something from the rubble. We
can however maintain the engine at least ticking over as we get together and look to our mistakes, set defined goals and move forward towards the 21st century which so many of you with greying hair dreamed of when you were young. It is not out of reach.
I'm all for not reinforcing bad behaviour by providing judgement and punishment to wrongdoers, however collective punishment is neither logical, moral or practical.
Rates must go down.
Governments can control inflation if they stick together and deliver on well-defined goals and a common approach.
Governments cannot control chaos nor a multitude of disgruntled and dispossessed citizenry whom they have failed in their duty to protect.
Keep that engine ticking over, and chaos at bay, while we work out the right direction together - because we're all in it together - like it or not.
The 21st century should be beginning with optimism - who'd like to lead?