The situation that 'Helicopter Ben', student of the Great Depression, sought to avoid is now upon us. At yesterday's Fed meeting, Bernanke disappointed the markets by simply extending Operation Twist (using proceeds from short-term debt maturing to buy long-term debt), which will have limited impact because there is only ~$260 billion in short-term debt left i.e. that game has almost run its course.
So the situation we now find ourselves in, is a classic 'Liquidity Trap' - wherein additional monetary stimulus fails to impact the economy. That comes as no surprise to anyone who assumes that there is a natural limit to the amount of borrowing that can occur in any economy i.e. it's not just the cost of money (interest rate) that matters - ultimately it's the repayment of principal that matters.