It has passed largely unnoticed, what with the panic induced by an escalating health crisis and stock markets ravaged by relentless selling.

In the past week, however, something far more insidious has begun to unfold which threatens to unhinge the global economy and thwart efforts to repair our financial systems.

In what is shaping up to be an even more severe rerun of the events of 2008, credit markets have completely seized. Think of the shelves in your local supermarket and transpose that to money markets.

Cash supplies have evaporated, money is being hoarded and market interest rates — the price of cash — are soaring.

Central banks, and particularly the Reserve Bank of Australia, now find themselves staring into the abyss, on the verge of losing control of the only real weapon they have at their disposal — interest rates.

The implications, particularly if they can't get the situation back under control, potentially are dire.

Is this the point when a virus jumps the barrier, when a health crisis infects the global financial system and sends the world economy into a severe depression with waves of corporate collapses and mass unemployment?

Ever since the US Federal Reserve slashed cash rates to near zero at the weekend, money markets have headed in the opposite direction.

Similarly, a public announcement by the Reserve Bank on Monday, that it would begin pumping in billons of dollars to depress market interest rates, was ignored.

In fact, it was worse than that. Market rates boarded Apollo 13 and headed to the Moon, breaking every rule in the Central Bankers Guide to the Universe.

Even after Wednesday's confirmation that it would step into the market for Australian government bonds in an effort to lower rates, the market snubbed its nose at the RBA and sent rates higher.

Just think about that: at a time when the RBA is desperate to cut interest rates, when the popular press is ruminating about what negative interest rates might mean for you, cash has become almost a black-market commodity.

You can only get it if you're prepared to pay through the nose.

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Why is this happening?

There have been endless warnings about the enormous build-up of debt, particularly amongst big corporations and especially American companies, over the past few years. American corporate debt has ballooned to about $US19 trillion.

The International Monetary Fund, the Bank for International Settlements, the World Bank and the OECD have been banging on about it for years.

While a day of reckoning always was expected, no-one anticipated a health issue would be the catalyst.

Money markets are hoarding cash at a time when the revenues of many businesses have dried up.

In a blink, human beings have stopped congregating and, en masse, halted spending. Revenue has dried up. Money has stopped flowing through the system.

Airlines and tourism have been the first to fall victim. But they are just the first-line casualties.

Service industries across the globe have seen revenues crater as customers have fled for the safety of home. Businesses that provide those companies with goods and services have been hit.

The sudden drop in revenues — in some cases to almost zero — means that a large proportion of those massive corporate debts no longer can be serviced. They can't afford to pay the interest, let alone the principal.

That has sent shivers through the financial world. Actually, that's an understatement. Financiers are in a mad panic.

Companies don't just borrow long term for big investments. They also borrow cash for as little as a week and, in some cases, overnight. Occasionally, it is for finance just to pay wages.

With money, even on short-term loans, in such short supply, desperate corporations have looked to draw down any reserves and lines of credit they can find.

Unlike 2008, when bankers were caught red-handed after pouring cash into dud US real estate, this crisis originated in the corporate world.

Starting from a position of weakness

When the proverbial really hit the fan in mid-2008, the RBA was sitting on cash rates of 7.25 per cent. Within a few months, it had slashed rates to 3 per cent. It was swift, decisive and effective.

This time, it is starting from an incredibly depleted position.

When this current crisis began brewing a few months back, interest rates already were below 1 per cent. Now, at 0.25 per cent, it is as low as the RBA is prepared to go. From here on, we venture into unexplored territory.

Not only that, rate cuts this time are unlikely to be effective. This is a crisis that won't be solved by debt because no-one wants to spend.

People are fearful. They're unwilling to mix in public. And many face the prospect of losing their livelihood. A large number will lose their lives.

The only quick way out of this crisis is a vaccine that can save lives and restore confidence. But there's precious little sign of one.

With central banks now firing blanks, it will be up to government to fill the breach.