The system simply cannot digest additional credit without counter parties to that credit calling a halt to capital risk. Today's world is a bit more complex. Global flows of capital don't allow this to be so simple. Specifically we are referring to the massive U.S. trade deficit. This forestalls credit problems that may be brewing domestically.
Foreign economies are dependent on the U.S. economy for their own growth at the moment.
The circle of credit expansion becomes global. Again, at some point, the risk is that foreign capital calls a halt to risk lending. It's not something whose solution is completely in the hands of the U.S. Fed. The incredible credit expansion of the last few decades really has little precedent in U.S. history in terms of longevity and absolute dollar significance. Then again, in prior periods the U.S. did not have a significant non-bank sector that was allowed to create massive amounts of credit without being subject to reserve requirements.