SAN FRANCISCO (MarketWatch) -- It's official. We are Japan.

At least when it comes to monetary policy. The Federal Reserve's decision to slash interest rates by a half percentage point to 1% on Wednesday to help boost the economy was snubbed by the stock market, even though it had demanded the cut like a petulant child for more than two weeks. See full story

There was nothing the Fed could do, and it's likely the European Central Bank will fall in line next week, as well as the Bank of Japan on Friday. Central bankers know they need to show coordination and the ability to do something -- anything -- in the teeth of this bear market.

But Bernanke is quickly running out of monetary bullets, with the risk of having to take the extraordinary step of someday lowering interest rates to zero just a bank run or two away right now. Japan, which spent five unproductive years at zero between 2001 and 2006 before boosting to a half percentage point, is now talking about a quarter point cut and possibly a return to zero, even though it didn't work last time. See full story.

The economic theory behind zero rates, called quantitative monetary easing -- a term so heinous it isn't recognized by my computer's spell check -- allows a central bank to run monetary policy by focusing on money supply instead of the cost of the money, i.e. interest rates.

It also means that Joe the Plumber and his elderly parents would get nothing on their savings account or certificates of deposit, which so many people depend on for their fixed-income lifestyles. How's that for an invitation to go out and spend?

Arguably, it was a dramatic easing of interest rates after the tech bubble collapsed that plunked us into the systemic soup in the first place, allowing people to take out mortgages at ridiculous rates and Wall Street to make a killing by packaging the mortgages and playing various rates off each other. But it won't work this time around. Nobody's lending, and nobody is borrowing.

Next week, we'll find out how many Americans bought new cars in October. Estimates vary, but it's likely to be about the same number of people who attend a Sen. Ted Stevens rally this weekend. Some analysts predict it will be the worst month ever for the automakers, with sales falling between 30% and 50% year over year.

Why combining General Motors Corp. GM, -2.37% and Chrysler, other than to get private equity firm Cerberus off the hook, is considered a good way to sell more cars is beyond me. Even if people wanted to buy, they can't get the financing.

That brings us to the major problem the Federal Reserve and the Treasury face if they want to get this bailout out of the showroom. They have to get the banks to start lending the money they've been given by the taxpayers. Hoarding the cash, waiting for another wave of bad loans to come as the economy gets worse, just feeds the bear.

Congress is right to be concerned about this, and to force the Treasury to press Wall Street and the banks to get lending again. Instead of freaking out about banker bonuses, just tie the bonuses to how much money their institutions lend, not how much they make. Yes, over-lending got us into this mess, but the global economic engine remains stalled, and needs to be jump started.

Interest rates at 1.5%, or 1%, or zero aren't going to do that for us. I suspect even Ben Bernanke realizes that by now. It's time to start cracking heads.

Big pension funds and young investors might be able to wait the months or years it might take for the stock market to come back, but for many Americans, it's not about whether to sell or hold stocks now. It's about getting enough cash to make payments at the end of this month, tomorrow. Just ask the poor savers whose money is still tied up in The Reserve Fund, the money market fund that froze assets last month after a run. See New York Times story.

Americans are going into this election next week as angry as they've been in a long time. Bankers, politicians and economists would be wise not to mess with them.