There is an easy way to break the loop and that's for the fiscal and monetary authorities to sidestep it by having the Central Bank create the money to fund direct productive investment by the government.

However, in order for this to be politically feasible, let alone thinkable for the authorities, the financial system and the real economy must remain in a seizure for a few more years.

The problem with this is that, like any complex system, prolonged starvation actually damages the productive economy, eventually beyond repair. As money to spin the wheels of the real economy remains scarce, it will slowly be stripped/scavenged/liquidated and the longer the crisis lasts the lower the attainable level of activity will be when it resumes.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan