[Rubber Duck]

Basic problem is that Bernanke and Paulson still don't get it, or if they don they won't own up.

The US needs new investment in wealth generating industries. To get this investment they need to borrow money and lots of it.

The problem is that since the last time they were in this mess, and since the text books they are using were written there has been a paradigm shift. Not only is there a global market in goods and services, but there is also a global market in Finance.

The US is now having to compete with every other country in the World that is seeking investment funds. Fortunately, most of the competition at this present time are saying enough, we cannot take much more investment with the risk of triggering hyper-inflation. China has been tightening fiscal policy for some time. Sweden and Australia are putting up interest rates and Europe is in no mood to go toe to toe with the US on interest rates, but there are still plenty of others out there hungry for the cash.

When Bernanke sets Interest Rates, he is effectively tendering on International Credit Markets for cash. At 3% he is lowballing the market, and not only that he is offering to pay in dodgy paper. So although, in theory you can get cheap money in the US, you can't. The reason for that is that the Banks balance sheets are destroyed so they don't have the Reserve Ratios they need to lend. They cannot borrow money cheaply enough to be able to act as the middle man, and probably most importantly there are a lack of viable ventures that would be considered credit worthy enough to make the loans anyway. As Bernanke prepares to drop rates even lower, he is only poised to make things far worse than they already are. The one thing he has understood, however, is that if he even breaths the word recession the US is likely to end up in a long depression. The only thing that is keeping the US moving forward at present is a somewhat misplaced confidence in their own economy. Once that evaporates the shit really is going to hit the fan.