Is the modern (21st Century) Economy 'dysfunctional'?

Still rather unexpected, but obviously hoovering around in our minds the question popped up: 'Is the Economy dysfunctional'?
The debate; 'Inflation or Deflation' is not even finished, although there is enough opinion and evidence - 1929 Crisis and Japan in the nineties- to keep the dicussion going.
In the last one and a half years we have seen something which is unprecedented in modern history, something which at first looked like a minor spot or unregularity in the financial markets, developing into a Global Economic Crisis. It looks like it suddenly happened, and every day more evidence is shown it is for real, many people still cannot comprehend it. How could this happen and so fast?

In the past week we did not hear very much from the World Economic Forum in Davos about the dysfunctionaly of the Modern Economy. In general the mood was not so great between the mountains there. There was a lot talking about what everybody already knows, e.g. the need for green and sustainable energy systems, but no great new creative breakthrougs.
Voices (from everywhere) are beginning to be heard about de-globalisation.

In fact our economic and monetary fundamentals are still based on Bretton Woods from just after the Second World War. Our primary Economic system is still based on Adam Smith's idea and philosophy. Nothing wrong with his systen, we think.
But one of the troubles right now and from the last 20 years is a matter of supply and demand, plenty of supply for the better paid consumers, but the less earning consumers simply do not have the money to buy these goods. The divide between rich and poor is getting sharper. Governments have not shown much restraint in taxation and waisted enormous amounts of money in useless project and bureaucracy.
At the same time they did not do what they should have done, regulate markets if necessary, provide infrastructure and education, and stimulate new ideas.
Money was abundant, but taxing everything takes money out of the smaller pockets first.
The poor are more and more subsidizing the rich.

The increasing amount of cheaper producing nations, together with the expanding consumer base is having its impact on the Global changing environment. Western Nations have become fat and lazy, but they have to offer a better outlook for (at least) this century to the rest of the world. It's not only Politicians or Economists which to come up better ideas.
(More to follow...)