The Fed's problem is that it can't drop the OCR any lower without requiring lenders to pay for the privilege of lending their $. ;-)

You're right, the monetary system needs an overhaul and may bear only a passing resemblance to classical capitalism once its over. IMHO it's time to focus on what is best for Joe Citizen, not what fits best with Keynesian or whatever other market mechanism "makes sense" to the people who screwed up this time.

If that means increased government oversight, so be it. If it means partial loss of sovereignty for everybody- including the US- are you ready for a committee including Iran, Biafra and New Guniea to have some say on internal fiscal policy? - then so be it. Of course politics will come into it again with factionalism, lumpen adherence to theories on non-scientific grounds and we'll end up with something that can be gamed by people who think unnatural riches for themselves are good for society, even if everybody else gets fired.