The drama may be prolonged and could take its toll on one of the world's most successful currencies: the euro .

If this crisis happened 15 years ago, currencies of various countries in Europe would have depreciated and this would have mitigated some of the shock, Hendry said.

During the recent boom years, Europe was captured by private equity mania, small businesses were laden with debt, credit cards and consumer credit flourished. Now the debt must be paid and Hendry says it may take 10 years for this to be achieved.

A 10 percent to 15 percent contraction of the European economy is possible over the next 36 months and after that "we'll spend six years recouping to the GDP level of 2007," he predicted.

Without a flexible exchange rate, unemployment will surge, especially in the weaker euro zone members, the PIIGS as Hendry calls them – Portugal, Italy, Ireland, Greece and Spain – and these countries will break out of the single currency.

How Zero Rates Can Sting

The problem with massive easing is that once interest rates have hit zero there is nowhere they can go, analysts said. And rates at 0 percent can start to do damage.

Rates below 0.5 percent in the U.S. could generate losses at money market mutual funds, which charge a fixed management fee, Paul Ashworth, an analyst with Capital Economics, wrote in a research note.

In turn, outflows from these funds would have a knock-on effect on already battered credit markets, as money market funds have over $3 trillion under management and a third of that is invested in commercial paper and corporate bonds.

Redemptions will mean funds will dump these assets and forced selling could push up borrowing costs for businesses, choking them even further, Ashworth wrote.

In the UK, rates at zero may mean that savers will not feel any incentive to keep cash in long-term deposits, making it harder for banks to meet their regulatory liquidity ratios, economists from Investec said.

"What is currently more important than the price of money is the quantity of money," Investec's Philip Shaw wrote, adding that UK rates may get close to zero by the spring.

Printing Money

The Fed has already moved on from using interest rates as a monetary policy tool and the next fed funds target rate after the Dec. 16 meeting is "almost academic," ING economist Rob Carnell said.

The Fed's balance sheet has expanded to more than $2 trillion, made up of collateral received in exchange for liquidity provision, or loans of Treasurys.

"In our view, this is, for want of an alternative description, 'printing money'," Carnell wrote in his research. "And our assumption is that there is more of this to come."