Unfortunately, it's also brain-dead to continue trying to prop up this debt-based house of cards we have now, repeatedly rewarding the very same bad actors who have brought our nation to this pretty pass in the first place.
There's going to be a world of hurt any way you look at it. Denniger's point, and to some extent Paul's, is that constructive reform can only happen if the old, corrupt system is flushed clean. Yes it's more than an upheaval, it's a cataclysm. But it would offer the signal virtue of setting things somewhat to rights. What we're doing now doesn't offer that; quite the contrary. Not to mention, it's not working.
I don't argue at all that this patchwork is a marginal solution at best. I just think that the alternative solution of flushing the old system clean is going to be devastating on a level that folks are not realizing.
I don't think folks realize just how much commerce would simply STOP. Companies like IBM and GE would lay off 50,000 each within weeks. Entire industries would simply drop off the horizon. R&D into new technologies would cease as companies held onto cash for "necessities". Customer bases would drop. As unemployment rose, foreclosures and repossessions would grow exponentially, backloading losses to companies from expected revenue.
Contingencies of governments, which would have to address the shortfall of tax revenue would cut services. That would impact many of the government/corporate cooperatives that help business move through daily commerce [think Port Authority, airports and container management].
An interesting parallel look at what could happen is to look at the Japanese Recession of 1986-1990 which continued until 2003. It is known as "The Lost Decade"
. The differences between Japanese and American cultures, including our Capitalism and Entrepreneurism are widely different but there are some striking parallels. We DON'T want the same thing to happen to this economy. Being larger, inertia will make the problems worse than what Japan suffered.