Every textbook Keynesian solution to escape the black hole of liquidity entrapment has been tried on a grand scale, and failed on an even grander scale."Global Grand Policy Failure: Liquidity Traps and Financial Black Holes." By Charles Hugh Smith, of two minds.com, 8/9/11.
The solution is simple: renounce/write down all impaired debt, wipe out the "too big to fail" banks, and restrict the reach and political power of the remaining banks and Wall Street.
Until we're willing to do that, then the liquidity trap will remain a black hole that the economy cannot possibly escape.