It hasn't dawned on John Key, but the idea that growth in the developed world may have stalled for more than a year or two is now dawning on central bankers, economic thinkers and protesters around the world.

The realisation that real growth may not have happened in the developed world for the past 20 years is even more unsettling.

Here's the thinking. Oil production peaked about a decade ago. Technical innovation has been stagnant for at least 20 years. Populations began ageing. This meant per-capita growth in output was much slower than in the post-war years up to the 1970s.

Any growth that was produced was gobbled up by the richest 5 per cent of the population as the financialisation of the economy shuffled more profits to banks, traders, executives and their shareholders.

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A relaxation of the Depression-era rules stopping investment banks from joining commercial banks, plus rewarding executives many multiples of average incomes accelerated the surge of income to the top tiers.

This non-growth and the increasing inequality of incomes was disguised, particularly for the middle classes in developed economies such as Britain, the United States and New Zealand, by borrowing from the savings in export-rich economies such as China, Japan and Germany.

The debt crunch we now see in Europe and America is the moment of truth for this strategy.

Various desperate attempts over the past four years to prop up a system smothered by debt are now being exposed with the return of debt crises in Europe and the US.

The extraordinary outpouring of anger in America and Europe in recent weeks is the sound of the streets waking up. The debt can't be sustained without some sort of debt jubilee, where debts are forgiven, or by a burst of inflation. This is shaping up as a battle royale between savers and borrowers, with the shareholders of banks and taxpayers stuck in the middle.

Regular savers want a debt jubilee where bank shareholders and bond-holders take the pain. Borrowers want inflation where regular savers take the pain.

Policymakers and voters have two choices. They can destroy banks by forcing them to forgive the now-unsustainable debts. That creates obvious problems for financial system stability and creates a monster moral hazard for borrowers.

Or they can bail out the banks and shift the debt on to the balance sheets of taxpayers while encouraging inflation. This spreads and delays the debt problem, and ends with sovereign credit rating downgrades and the bankruptcy of countries.

So far, politicians in the US, backed by their political funders in the banking sector, have chosen to shift the burden to taxpayers while inflating away the value of money. This has created banking monsters that are even more dangerous and too big to fail.

New Zealand has also had its share of bailouts. It is also seeing plenty of inflation.

So what is New Zealand's Plan B? I doubt we'll see it in this election campaign.