It's the lack of fiscal policy response by Congress that really is putting us in a bind. Currency is draining out of circulation into the bank accounts of the 1% and the trade deficit. The only actor capable of replacing it is the federal government, which is, courtesy of its power to coin money, unconstrained in the amount of money it can inject into circulation. An increase in the deficit spent wisely would result in economic growth that would shift private sector actors from saving toward investment (not stock market "investment," but economic investment that increases productivity). Spent foolishly, a deficit increase would cause inflation, which would also drive savers into riskier, higher-return opportunities. Most likely is some mix of the two.

In truth, Bernanke has been doing his best to achieve the Fed's dual mandate given the limited toolbox at his disposal. Whether you prefer "liquidity trap" or "circulating currency drain," the only humane way forward is for Congress to act. The Fed just doesn't have the tools to fix this kind of problem.