Maybe we're not thinking big enough.
What would bring this about ; make it more than acceptable to the masses -
Policymakers learn a new and alarming catchphrase
by Gillian Tett, FT.com
...A few weeks ago, Carmen Reinhart ... produced a joint paper for the International Monetary Fund on the topic of "financial repression" in the West. And while this phrase is not yet mainstream news, it is starting to generate a buzz among the policy elite...
The issue ... revolves around the question of where investors "choose" to put their money. During the past three decades, western savers have generally assumed they could put their money wherever they wanted, since financial markets were organized according to the mantra of globalization and free market capitalism... But as Ms Reinhart and Belen Sbrancia, her colleague, point out, this freedom was unusual..., from the 1940s to the 1980s, western governments operated capital controls and interest rate caps that restricted financial flows, limiting investor choice. ...
Ms Reinhart and Ms Sbrancia argue that these controls also had a crucial fiscal impact. After the second world war, the debt of the advanced economies spiraled to about 90 per cent of gross domestic product ... which meant western governments desperately needed to find investors to buy the bonds.
One consequence of the controls was they created a captive domestic audience for those bonds. Better still, because these bonds paid a yield lower than inflation, ... they effectively paid a hidden subsidy to the government, enabling them to reduce the debt.
Ms Reinhart and Ms Sbrancia argue the world has forgotten that the widespread system of financial repression "played an instrumental role in reducing or 'liquidating' the massive stocks of debt accumulated during World War II". ...
[S]ome free-market economists ... argue "repression" crimps private sector investments, thus undermining growth. But postwar politicians clearly decided this was a price worth paying to cut debt and avoid outright default or draconian spending cuts. And the longer the gridlock over fiscal reform rumbles on, the greater the chance that "repression" comes to be seen as the least of all evils...
http://investor.news...d?GUID=18404380
The book "Macrowikinomics" is an interesting read along these lines.
If the Arab Spring is real, and illustrates the strength of self-organizing -- more democratic wiki/social network type systems --then a key big picture impact from the internet revolution is obvious.
According to logic outlined by Macrowikinomics, using the power of social networks, the masses could somehow learn how to exert more control over the greed and rapaciousness of Wall Street, the complicity of government leaders, and the flecklessness/self centeredness of obscure actors in important command and control points and structures of society, and the ability of a small group of actors to capture almost all of the wealth created by the vast network impacts of new technologies.
One the other hand, Geithner just exempted huge parts of the swap and forward markets from transparency, at the behest of Wall Street.
If the economy turns down and we have hard times, expect the masses to try to figure out how things got so screwed up and try to figure out how to better control these kinds of abuses in the future.
Carmen Reinhart, et al are doing everyone a great service with their work and insights. The term "financial repression' is apt. Just tell the millions of savers in this country who have sufferred under the Bernanke QE.
Opportunity knocks on your door every day-answer it.