Many people believe there is a significant risk that the Irving Fisher debt-deflation theory of great depressions is still an economic threat today. They overlook the fact that Fisher published his theory examining debt-deflation events under a gold standard.
It has been obvious for some time that banks in many jurisdictions are insolvent and that they are simply too big for governments to rescue. It should come as no surprise that central bankers have been considering how to deal with this problem and that they have resolved a solution.
The liabilities of the biggest U.S. bank equal half the U.S. tax revenues; the ratios in Europe are bigger. Deutsche Bank's liabilities are one and a half times Germany's annual tax revenue; Barclays' are twice Britain's. This crisis will either leave European financial integration in tatters or quicken the development of European fiscal capacity. European integration is a historical process that routinely stumbles upon crises that threaten to destroy it, only to find that it has been deepened by the crisis.