Keynesian economics is valid

Alright! First I will justify these principles, and then discuss their implications. #1 and #2: Recessions are caused by inadequate aggregate demand (AD), and government can help. AD is the sum of all spending: private (personal and corporate) and public (government). In a recession AD falls because the private sector either chooses not to, or cannot spend and invest. Normally, the economy is kept afloat by private spending. But when private spending fails, government can temporarily step in, and boost AD. Higher AD will lead to more growth and more employment. #3: Monetary policy alone is often insufficient to stimulate AD. This is because a Central Bank (CD), like the Federal Reserve, cannot lower interest rates below zero. As the Fed predicted in 2009, a -5% interest rate was needed. This was impossible, so something else had to be done. Government should have spent more. Now let me introduce some other arguments. First, the historical argument. The Keynesian spending induced by WWII ended the great depression. This is a consensus among almost all mainstream contemporary economists. Had this (or other) Keynesian spending not have happened, the great depression would have extended into the 1940s or even the 1950s. Second, the government must do what the private sector will not or cannot. Government builds and maintains highways, a cornerstone of the American economy. No private company could or would do this, because it wouldn't be economically profitable. The internet was also a byproduct of government assistance. Again, no private company had the resources or motivation to create the internet. NASA is another example. Beating the Russians to the moon doesn't make money, so private enterprise could never have accomplished it. (Note: I do support what private enterprise can do, and rather enthusiastically. But when it comes to things that the private sector won't or can't do, government must.) Third, suppose government endorses Keynes' ideas, and builds a highway. They hire construction, raw materials, materials, and distribution companies, as well as workers. How is this bad for the economy? This creates GDP and jobs. Fourth, as a practical matter, virtually all mainstream economists today accept Keynesian principles. These include (liberal) Nobel laureates Krugman and Stieglitz, institutions such as the Federal Reserve, the ECB, and most other central banks, and important conservative economists, including John Taylor and Benjamin Bernanke. Fifth, contrary to popular belief, the policies that lead to the 2008 financial crisis were not Keynesian. These include the deregulation of the financial sector (mostly under Clinton with Larry Summers, a small bit under Reagan), which almost no Keynesians supported, and the practice of making reckless loans, which is stimulative, but not Keynesian. Sixth, let me address the debt issue. While debt is not fun, look at the Japanese economy. They have a debt/GDP ratio of 227% (source: trading economics: http://www.tradingeconomics.com...). While the Japanese economy is not performing optimally, this amount of debt is not preventing their economy from recovering under (KEYNESIAN :) Abenomics. We only have a debt to GDP ratio of slightly over 100%, and it has not yet caused problems for us. Empirically speaking, we could probably handle 130% debt/GDP (according to Nobel laureate and Keynesian Paul Krugman) or further. Also, as a note, social security is currently overfunded by 2.7 trillion dollars. So actually, our debt is around 14.3 trillion, and thus out debt/GDP is below 100%. In conclusion: Low AD causes recessions Government spending boosts AD Monetary policy cannot always address inadequate AD because of a liquidity trap/zero lower bound Keynesian stimulus ended the great depression Government can perform essential functions that the private sector will not or cannot (infrastructure, the internet, NASA) As in my highway example, government can create GDP and jobs Keynesian economics is more or less a consensus among modern economists Keynesian economics did not cause the 2008 crisis The US can easily handle more debt caused by Keynesian economics