Brad DeLong outlines scenarios for what the U.S. economy might look like if our current economic malaise ever draws to a close, the last of which is particularly intriguing:

The third possibility is that the economy recovers, the labor market normalizes, but interest rate normalization simply never comes. The 2001 and 2009 collapses of the equity market and the 2007-2009 collapse of the housing market means that for the next 50 years or so everyone is going to be back in their 1950s mode of believing that equities and housing are too risky, and that with a Federal Reserve that hits its inflation target you really want to have your money in safe nominal debt. And especially now the government is the only organization that can issue safe nominal debt–nobody is going to trust any securitizer at any rating agency to produce anything that’s really AAA for a long time to come. The US, the German, the British and the Japanese governments are thus the only places that can originate AAA assets. And in a world of a global savings glut, demand for their liabilities will be enormous. This is a point that Ricardo Cabellero at MIT makes.

The very high equity premium we have right now is a powerful argument that this scenario is the correct one.

In this scenario, we may well find ourselves in a situation in which the U.S; government can simply borrow and borrow and never have to pay it back because the economy grows faster than interest accrues. In which case the U.S. government looks much more like the Renaissance Medici Bank–an organization you are happy to pay to keep your money safe, rather than a debtor from whom you demand a healthy return. The treasury becomes a profit center for the government rather than a cost. We will know if this scenario is true when the labor market normalizes: do we then find the interest rates environment we have had in the past five years persisting, a new normal for the long term? [Emphasis added]

These realization of this scenario would create interesting temptations for Congress.