I’m no expert, but I think there actually is money floating around which is what gives us rampant inflation, but banks don’t want to lend as much as they did prior, and the mortgage heavy ones are scrambling to raise capital. Coincidentally it’s those banks that pay higher rates on CDs, but still nothing much over 4%.

Which brings it back to the Fed. You’re basically right in them being a big (if not entire) cause of it and the weak dollar high inflation recipe for recession, because banks aren’t going to pay that much more to borrow your money if they can borrow from Helicopter Ben. They’re probably only borrowing at this point to survive, instead of funding thousands and thousands of Alt-A and subprime mortgages and furthering consumer debt.

I think the true cause of the entire mess is people have been spending more money than they could afford for too long. Now that revolving debt is catching up to itself and banks are making it more costly to borrow to make up for their losses, but the Fed thinks it’s easy money is still the answer.

I don’t know how much that helps, and I’m sure many here can answer your question better than I.