Actually, you are almost right. Our system of government where most of the power has been transferred to a central authority away from the states is what does not scale.
Originally the system was designed with Federalism that distributed power. That is almost entirely gone now with nearly all power residing in D.C.
As an avid centrist (and frankly, an Obama supporter) - I couldn't agree with you more here (weird right?).
Repeal the 17th Amendment (let states decide for themselves if they want to elect Senators by popular vote in their states, many will do so on their own and some will not)
What is the problem with the 17th Amendment exactly? I feel like the Senate is a lot less dysfunctional than the House. I attribute this to 6 year terms, so they aren't as worried about short term political gains. Maybe you have some good examples for me? I grant the fact that the states 'lose rights' here to a federal mandate, but isn't a popular vote the epitome of a republic? Lets not forget the Blago scandal.
Get rid of the Federal Reserve system. Competitive banking instead of a monopoly cartel where the same commercial banks who in many circumstances have their CEO's running Federal Reserve regional banks that control the money.
There is obviously something that needs to be adjusted in the federal reserve. If for nothing else, than to allow for more transparency so we can have confidence that they are doing the right things for our country. But really.... I do NOT want the stability of our economy in the hands of elected representatives.... nor do I want a bunch of people (with no understanding about any of the prevailing financial theories) calling up their representatives to tell them they should raise/lower interest rates because some talk show host made them feel like an expert.
I'm not insane for wanting what Jefferson and Madison wanted and designed instead of what Alexander Hamilton and John Adams thought would be cool (American Empire)
I believe from time to time, the responsibilities of the federal government will need to be shifted in order to benefit our nation as a whole. Even the most right wing among us, believe we should all have clean food and water, and a national effort to prevent the spread of diseases when they outbreak. We can either have 50 different organizations, each tasked with doing these tasks... and hope they work together... or we could have some sort of central command to make things run more efficiently.
Question to you: For each of the situations you believe the government is overstepping... Is your stance based on what you believe will run the most efficiently, and be the most effective (bang for your buck), or is it based on a belief that just because it worked in the past, it is the best and only solution to every problem?