I dont think QE3 will involve an overt bailout. QE3 could be wildly inflationary though if it actually goes down the way I am proposing. I think the most politically reasonable option is to lower the reserve rate that the Fed pays on aggregate reserves:
1.6 trillion dollars of ticking time bomb just waiting to be put through the fractional reserve multiplier. No money has to be "printed" for this to happen. These reserves were created, and have been stacking up since the 2008 bailouts. I think this is a more feasible option for Bernanke than just handing the banks more money with the entire financial community watching. Bernanke has to be a little bit more subtle this time around.
What do you guys think?