Economics 101

I am a Davidson grad ’81 and did not take introductory economics, like I should have, so please excuse what I ignore in asking this question. All of us want the best crystal ball to see where our current mess takes us. How would you critique this logic?
Assuming no other macroeconomic factors of major impact (crazy big assumption):
1. If a) individuals, businesses, and corporations face a reduction in economic activity (by any of most metrics you might choose), and b) the Federal Reserve responds with an offer of sufficient liquidity at its window with the banking system, then historically the American economy responds by recovering, with inflation.
2. If a) individuals, businesses, and corporations face a 10% contraction in economic activity, and b) the Federal Reserve responds with an offer of sufficient liquidity at its window, but the banks and the individuals it serves are unable to take advantage of it because the basis for the individual’s credit (house equity) has been decimated, then, in the absence of practical credit utility, the American economy will respond with a deflated currency and no immediate recovery.
3. If a) individuals, businesses, and corporations face a 10% contraction in economic activity, and b) the Federal Reserve responds with an offer of sufficient liquidity at its window, but the banks and the individuals they serve are unable to take advantage of it because the basis for the individual’s credit (house equity) has been decimated, and c) the Federal government spends an amount equal to one year’s GDP in domestic programs aimed imperfectly at job growth, then the American economy will respond with no or weak recovery, with inflation.