After Lehman fell, the scope of the financial crisis became so great that the fiscal and monetary authorities throughout the world possessed the only balance sheets large enough to resolve the crisis. In essence, the ills of the private sector were set to shift to the public sector. The sense at the time was that it would work; after all, the borrowing ability of the United States and the rest of the developed world were proven, and the ability of central banks to print money was and remains indisputable. Nevertheless, there was a sense of discomfort in the supposed solution.
In articles I wrote in 2008, I posed a question, calling it the question of our age: If the U.S. is backing its financial system, who is backing the U.S.? The basic premise rested on the idea that efforts to stabilize economies and markets looked likely to work if investors tolerated the additional debt the efforts required. If not, there would be financial Armageddon. The direst outcome was of course avoided, but dark days have returned to some nations and are threatening to return to the world at large because the solutions themselves are being seen as a magic elixir that has morphed into poison.