Donald Kohn said the worst crisis to hit the country since the 1930s points to the need for more research on how higher interest rates can be used to limit financial speculation. Kohn suggested that, and other "homework assignments," in remarks prepared for a lecture at Davidson College in North Carolina.The guy has some serious misunderstandings as to how the global credit system functions. Once you go down the path of an exponential growth model to sustain your existence, there is no turning back. You have the required amount of gas flowing into the engine or you don't and the engine starts to die on you. The credit market is one big bubble and has been since the beginning, why else would you have credit if other then to borrow for the future what you can't afford today?
Once you attach compounding interest, and millions and billions do the same thing it's over... it just takes 60-80 years to see the results of your stupidity. There is no beating the equation, you either supply it what it needs or starts to consume the non-performing liabilities.
Let me see... raise short-term rates right now up to 10% and let me know how that works out you retard.
The image below shows what happens at the end of the cycle. The Fed had no ability to push rates higher, the system is coming to an end. Sure the Feds could have jacked up the FFR up to 10% and the mushroom cloud would have looked awesome.