One important point though is that welfare provided by local governments cannot be sufficient. Local governments are entirely dependent on tax revenue and the goodwill of creditors. If a local government is hit badly enough by an economic crisis, they will be unable to continue providing this welfare.
This is especially true if other local governments in the same currency zone are less badly hit by the crisis. In this case, creditors will "flee" towards those other local governments, which creates a vicious cycle.
The previous paragraph is exactly what happened in the Eurozone, except that national governments played the role of local governments.
http://research.stlouisfed.org/fred2/series/W022RC1A027NBEA?... http://research.stlouisfed.org/fred2/series/GDP
Fact 2: State and municipal governments have subsidized borrowing costs via the federal tax exemption. I don't know where you live, but are your state and local governments borrowers? What about the road money from the Federal Government?
Fact 3: Private savings come from public deficits
http://research.stlouisfed.org/fred2/graph/?g=mzu
What if, what if, what if...
Well, you will discover in due time what all of this nets out to and no one will enjoy it. The forces of deflation are far mightier than the forces of inflation for inflation requires persistent and exponentially increasing consumption, fueled by net-borrowing of the combined public and private worlds.
As it turns out, the zombie apocalypse isn't triggered by an infectious disease or rapidly mutating virus. Instead, it's capital destruction via chaining debt defaults.
What if these "stabilizers" (i.e. money creation) are doing more harm than good, or even causing the business cycle? What if social safety hammocks decrease growth? What if welfare provided by prudent local governments through savings, or even private means, are sufficient? What if there are a ton of differences between the Europe and America other than the Federal Reserve?