I'm no economist, but here's my (probably crazy) idea to fix this.<p>A lot of the problem is supposedly that, seeking higher earnings, banks bought long-term bonds with slightly higher annual yields. Then as interest rates went up, the value of these existing long-term bonds dropped (because who wants to buy an old bond with a low interest rate when a brand new bond has a higher one?).<p>This is OK as long as nobody withdraws their money. The bank could simply proceed with the original plan: pay its depositors the same rate it has been, wait for bonds to mature and sell them for their full face value. It's only when people pull money out that they have to sell bonds before their maturity.<p>So, the government could (here's the crazy part) just let banks and everyone else redeem bonds early. You've got a 3 years left on bond for $10K paying out 1% interest, and you can't wait the 3 years to get your $10K? Fine, we will let you cash out before the 3 years is up.<p>Yes, it would cost the government a huge pile of money to do this, but the government borrowed that money at (what are now) insanely low rates, and it locked in those low rates. They're getting a super sweet deal on those bonds. Giving that up is not an outrageous ask.<p>Basically, this would kind of act like an infusion of money for the banks, but only in the sense that the rate they borrow at is more in line with the rate they lend at, i.e. a more typical, natural state of affairs.<p>This would probably need to be done gradually, like tell everybody you can cash in your bonds 3 months early if you want. If that's not enough, change it to 6 months, and so on.