Liquidity v/s Solvency

We seem to be hearing a lot about the "liquidity crisis". However, this is fundamentally a "solvency crisis".

Here's the situation in a nutshell:

Money was loaned in copious quantities on the basis of highly inflated appraisals of questionable collateral. Then the system leveraged the motherfuckin'-crap (to use a technical term) out of an already highly leveraged position. The money was spent and is not coming back.

Please show me how "printing money" can reverse anything.

Let's review the above in terms that we can all understand:

You sell cars. I buy two with counterfeit cash. Your suppliers balk and refuse to replenish your inventory. Meanwhile, I've sold the cars, and blown the money on booze and hookers.

What are you gonna do? Possibly have me arrested but you're still out the cars and the cash.

Now add the above stated leverage, and you will see the problem.