I don't think IIRC (worked in the city,systems design IT bod) it's legally possible to set interest rates to zero. I mean, that creates a stagnant market, stagnant markets aren't markets. Basically a stagnant market just simply dies. But yeah, the market, as compared to it's activity previously is pretty much stagnant. It's trading in bursts at the moment it seems, but it's hard to really know without actually being in it as a lot of trades aren't that visible (particularly in our own domestic market which has odd laws/loopholes when it comes to publishing trades, I'm simplifying though). A zero percent rate may be applicable to inter bank lending, I'd have to think about it a bit more, it would be a serious headfuck however. But that wouldn't be trading, it would be something, well, amazing. It wouldn't solve any problems though. Zero percent rates is end game, all over.
Yes though, it's fucked, seriously, seriously fucked. Thing is debts are in fact assets to banks. They have their realisable value, which is massively out of whack with their current value if they were to be sold, so they're not moving. If they shipped out these toxic assets for their current worth (fuck all), they would be open to some serious legal action from their investors. Writing off these assets is also legally, and economically, impossible. The 'toxic bank' idea that would buy all this shit up is pretty reasonable,but it assumes that they will at least get close to their marked value eventually. IMO, they won't get near to it, the various states of the world are going to have to get us to make up the massive shortfalls. The toxic bank idea also assumes that removing these assets/debts will mean the banks will be mad keen to lend again... er..risky assumption.
The TARPA hearings still available on the C-SPAN site are a good place to hear these problems being discussed.
Hyperinflation ? meh, deflation is more likely imo. Which will lead to whole areas of the market ceasing to be economically viable. The best indicator is the commodities market at present (as in, real things and their supposed real value). Just check it out since this year started, it's fucking insane, it's slipped by around 50% since this year started. Even copper is getting cheaper. If it ceases to be economically viable to produce, farm, mine commodities then WAAAHHH!!!!!! .
I think, personally, that the major thing to avoid is massive levels of unrest caused by sudden swings into uncontrollable poverty. What I'd like to see is a lot of these bail out billions being used to create a credit union like bank that will lend to us (as in consumers). Set the maximum loan to something around 1K to 5K with stupidly low interest and mad long repayment schemes. Just so a lot of people can bridge their way out of their immediate shite. A small, seperate, macro economy that runs fundamentally parallel to the larger market. That maybe, maybe, could then feed upwards. Mind you, I'm just plucking ideas out of my arse here, I've not thought it all through properly.
If you have a credit card though, clear that thing asap, things are going to go crazy in consumer credit shortly.
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