CHESHIRE CAT, LIQUIDITY, AND WHERE DO WE GO FROM HERE?

You're a domestic BANK and have a pile of cash (paper printed by the Fed) and you're chasing an ever shrinking pool of risk takers (consumers) so that this pile of cash can not be converted into real earning assets. Here's the rub ... the 'shrinking pool of risk takers' are also gun shy and are not willing to leave their comfort zone.  Well, some 'risk takers' have already cast their 2012 vote by taking their 'pile of cash' to other international markets (China) to inject liquidity into those markets. What do you do?  Return to your comfort zone and get out of the rain by getting back under the Fed's 'risk free umbrella' of non-existent overnight earnings.  Under what circumstance and policy does the cycle break out of the Chevy Chase Ground Hog Day?


BREAKING THE SLOWLY CONSTRICTING CYCLE(S) ...  


Now consider the 'highest and best use' of this pile of cash is lending (injecting liquidity) for construction and building in commercial and residential markets that can leverage the credit and spin the wobbling top (economy) faster thereby stabilizing (with reasonable predictability) short-term (within a 10 year window) confidence ... but there are really no takers or qualified takers ... now what ... pick your reason.

"`Cheshire Puss,' [Alice] began, rather timidly, as she did not at all know whether it would like the name: however, it only grinned a little wider. `Come, it's pleased so far,' thought Alice, and she went on. `Would you tell me, please, which way I ought to go from here?'
`That depends a good deal on where you want to get to,' said the Cat.
`I don't much care where--' said Alice.
`Then it doesn't matter which way you go,' said the Cat.
`--so long as I get SOMEWHERE,' Alice added as an explanation.
`Oh, you're sure to do that,' said the Cat, `if you only walk long enough.'"
"`But I don't want to go among mad people,' Alice remarked.
`Oh, you can't help that,' said the Cat: `we're all mad here. I'm mad. You're mad.'
`How do you know I'm mad?' said Alice.
`You must be,' said the Cat, `or you wouldn't have come here.'
Alice didn't think that proved it at all; however, she went on `And how do you know that you're mad?'
`To begin with,' said the Cat, `a dog's not mad. You grant that?'
`I suppose so,' said Alice.
`Well, then,' the Cat went on, `you see, a dog growls when it's angry, and wags its tail when it's pleased. Now I growl when I'm pleased, and wag my tail when I'm angry. Therefore I'm mad.'"