Except the governments are all telling us the bits that were loaned to prop them up have all been repaid so the money isn't going there. And at this point the regs have all been at the high point for more than 4 years, so that should have equilibrated by now and we ought to be seeing some improvement in the economy and hence the interest rates.
No the problem is more fundamental and Tim names it by missing it here:
Our transmission mechanism, V, may be broken or partially malfunctioning, but we can overcome that simply by flooding the place with M, so as to avoid that fall in PQ.
There's a whole lot more to this MV <--> PQ thing than M, V, P, and Q. Whatever that more is, the artificially inflated housing prices broke it so badly that it isn't translating to inflation. But what's broken so badly is the job market which isn't recovering. There was something of an astute observation on these pages a few days/weeks back: the inflation is real and its there if you know where to look for it. They pointed at luxury goods, I'd point at food prices. The inflation is real, but the numbers used to measure it are being manipulated to make it seem like it isn't. IF we ever do gain traction again in the job market, the Central Banks won't be able to stop the hyperinflation building because they're flooding M because the job market broke V. The instantaneous transmission will just take over.
Any rational person looking at the US economy right now can't have a positive outlook. One of the places the inflation is going is right back into a housing bubble. Most people aren't buying because they can't get the loan (a few are worried they might get stuck when the next shoe drops), but if you look at what is selling (because they have money or access to money) THOSE prices are headed back into pre-collapse territory.
St. Milton was right: don't fuck with the money supply. Keep the money supply growing at the rate at which the economy is really growing (which also means don't fuck with your GDP statistics) and make the politicians solve the problems they create.