Economic cross-purposes: Lend, borrow or pay off debt?

IN THIS economy, voices run at cross-purposes. "Please borrow," says one. "The economy won't move until you do." It is an official voice, from Washington, D.C., and there is desperation in it.

Another voice, with a note of moralism and I-told-you-so, says, "You Americans have borrowed too much. Borrowing was your downfall. You need to pay down your debts."

The moralistic voice is right. For most people, restraint has to come first. Debt has to be paid down, which takes time, or else be dumped unpaid, which shifts the burden to lenders.

There is a third way, followed by the financial sector and two carmakers: Hand a heavy stone to the government. But that merely spreads the burden to everyone, through taxes or inflation.

The government is not worrying about inflation just now, nor is it waiting for households to pay down debt. The Federal Reserve is providing overnight loans to banks at 0-to-0.25 percent annual interest, and longer-term loans at half a percent.

In other words, it is offering almost zero-interest financing to the entire financial sector.

The Fed also says it will aggressively buy government debt, which is the same as printing money, and already it has injected public capital into the banks.

Its message is clear: Lend! Lend! Lend! But all the other signs lenders see, from the stock market to the price of houses, says, "Be careful."

Lending will come back. Rock-bottom interest rates will do their work, at some point. But for the moment, much of the American economy is snowed in.