Maybe we should take the "states as laboratories for democracy" concept to an extreme. Designate some state--I offer you my home state of West Virginia--and isolate it from the current system. Then try the craziest stuff we can think of and see what works. People are pretty risk-averse when it comes to things this big, so if we lower the ante (WV is pretty low, love it though I do) maybe the other 49 states will agree to go along ;-)

Traditionally, California's been used as the test state: http://www.google.com/search?q=%22as+california+goes%22

So the process is something like this:

The government encourages banks to engage in risky lending.

Banks, with government support, make unusually risky loans and get into a bunch of trouble when the loans start going bad. This causes the banks to begin failing.

The government takes 700 billion dollars to fix the problem that they contributed to creating.

It is quickly discovered that the government is not spending the money effectively and banks aren't doing what the government intended them to do with it

Now... these Harvard grads suggest that rather than giving the money back to the American people to start over where the government went wrong in the first place, we instead entrust the government to create federal banks and hope they don't screw it up again. Sounds like a great plan. Really.

Sources on the govt's role in it all: http://en.wikipedia.org/wiki/Government_policies_and_the_sub...

As long as lobbyists exist, this won't happen.

You are right. After reading the title for this post, it occurred to me that we are at a pinnacle moment in US history. We suffer from slow innovation, excessive consumerism and financial greed, but any attempt to change these problems is quickly shot down because nobody wants to risk damaging the economy. But now, with a failing economy that fear, at least in political terms is gone. If our new President really wants to represent change then leading congress against the lobby must be the first place to start.