There has been much discussion over whether the generally-Keynesian approach, along with Bernanke's "Depression Thesis", have in fact staved off Armageddon in the financial world, or simply played "extend and pretend" on the fuse, clearing and solving nothing.

It is my position that we have in fact not only solved nothing we have made the situation materially worse than it would have been if we had left things alone.

Two days ago Ambrose Evans-Pritchard opined that Japan is staring down a dramatic implosion in their economy and government:

Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return

Right.  But then he goes on to close with:

Japan's terrible errors are by now well known. It failed to jettison its mercantilist export model in time. It resisted the feminist revolution, leading to a baby strike by young women. It acquiesced in a mad investment bubble (like China now) in the 1980s, stealing growth from the future.

It wasted its immense fiscal firepower, scattering money for 20 years on half-baked spending projects to keep the economy afloat. QE was too little, too late, and this is the lesson for the West. We must cut borrowing drastically over the next decade, and offset this with ultra-easy monetary policy. Does Downing Street understand this? Does the White House? Does the European Central Bank? Clearly not.

What?

No, Japan's error was not "being less than properly forceful in their printing of money" (which is what "Quantitative Easing" really is.)

Japan's error was in papering over bad debt with more debt, transferring defaults that had already taken place but were being hidden to the public treasury and, as a consequence, to the taxpayer.

This in turn put in place a structural drag on GDP that cannot be jettisoned, as that debt did not go to build a road or bridge over which commerce flows, but instead went to bail out oligarchs who successfully persuaded lawmakers to kneel before them and perform obscene acts.

Bernanke's and Treasury's gambit has and will continue to fail because they refuse to honestly discuss and operate upon the actual failure that occurred in the marketplace.

That failure was lending money to people on obscenely-easy terms with no reasonable expectation that they would be able to pay as agreed, creating a churning business out of a legitimate lending business.

If I loan you money at a ridiculously low original interest rate with a built-in "jack it up" escalator in the deal I strongly encourage you to come back from another bite.  This is extremely profitable, as these fees are not "interest" and yet they amount to a huge mark-up on the market.