The smoky room scenario is the most likely, but it is not the only possibility. With the internets organizational capacity, a worldwide movement could begin to insist on a different solution. What is needed is a forum for intellectuals and citizens of the world to discuss and organize our future and not depend on secret deals cut behind closed doors. If there was any doubt about Obama being "our savior' his shotgun marriage to Wall Street should dispel any doubts. We, the citizens of the world, must organize ourselves, as simply citizens of the world, and create the political organization and power to make the needed changes.
What could another solution look like? First, let's define what money is, how it is created, and what debt is. Money is the equivalent of human labor, whether that labor is getting a hair cut, getting crude oil out of the ground, writing a book, building a table or making bread. Interest payments are simply the cost of using money, rent on money. But how is that money created? Is all our work and efforts calculated, an estimate made, then money printed and put in to circulation to represent that effort? No.
Money is created in two ways, fractional reserve banking and quantitative easing.
The Federal Reserve, in the case of America, and reserve banks in general, lend money to financial institutions, i.e. banks and the banks take the money and loan it out keeping about 10% on deposit and loaning out 90%. So if someone deposits $1,000 in Bank of America, BofA keeps $100 and lends out $900, which is eventually deposited somewhere else, where $90 is kept on deposit, and $810 is loaned. At the end of the cycle, the $1,000 deposit becomes $10,000.
There is also the concept that the economist Herman Daly discusses which the absurdity of compound interest is. Simply put, if someone borrows $20,000 to buy a new car, they exchange the money for its equivalent in a machine. But as the years go by, the debt multiplies, while the car depreciates. Why? Nothing else in nature multiplies like that, except money. Gold doesn't, oil doesn't, and computers don't? There is an intrinsic absurdity in compound interest that is rarely addressed.
As mentioned before, total world yearly GDP is $60 trillion, total world debt is about $150 trillion, and world wealth is about $160 trillion. If we assume, and it is a big assumption, that the debt lent and borrowed is evenly divided, if upon creating a new currency we simply payback 50% of what is owed in the new currency and cancel all debts public and private, current liquidity levels would stay more or less the same, and we should have no inflation.