It remains to be seen how this will end.

There are a lot of very smart people who believe very strongly that this "longest sustained period of economic growth in human history" is absolutely unsustainable in a very, very dangerous way. It is built upon the runaway exponential exploitation of fossil fuel energy, and on economic systems that require constant exponential growth to sustain themselves.

A crash of this system could be catastrophic-- as in millions or even billions of lives lost and a new dark age.

Without Keynesian economics, growth might have been much slower... perhaps slow enough for its underpinnings such as energy technology to keep pace. It's also possible that without Keynesian economics there would have been less waste-- less "empty calories." Keynes argued that even seemingly pointless economic activity could be good in that it employed people and permitted debts to be repaid, but the problem is that all this busy-work is powered by unsustainable fuels. So in reality it's drawing down on a massive ecological line of credit that took hundreds of millions of years to accumulate.

China is presently running the largest experiment in Keynesianism in human history. Here are some of its results so far:

http://en.wikipedia.org/wiki/Asian_brown_cloud

http://www.businessinsider.com/pictures-chinese-ghost-cities...

http://www.geni.org/globalenergy/library/technical-articles/...

So basically they are incinerating a century's worth of coal to build things nobody wants.

This is also very, very relevant:

http://physics.ucsd.edu/do-the-math/2011/10/the-energy-trap/

An intelligent species would use its fossil fuel reserves wisely to construct renewable energy or develop sustainable ways of using nuclear power. The Keynesian orgy of "growth" has biased us toward spending these reserves foolishly.

"But these predictions have always been wrong!"

In any iterated debate between an economist and a physicist, the economist will win N-1 times and the physicist will win 1 time.

I have a strong suspicion that the Keynesian miracle is simply an unimaginably huge bubble founded -- like many financial bubbles -- on a novel "creative" accounting technique that temporarily hides underlying physical realities. If I'm right, its collapse could be ugly... like canned food and shotguns ugly.

Of course there's a lot of good news in renewable energy these days. My optimistic hope is that we'll avoid the full-blown energy trap "Olduvai theory" scenario. The collapse of the Keynesian exponential growth bubble will still occur since eternal exponential growth is physically impossible (and physics always wins), but the collapse of industrial civilization may not.

Edit:

One other point. Its true that the goldbugs and "pop Austrians" have been repeatedly wrong about hyperinflation. I think that's because many of them don't understand the present-day credit-based economy. The vast, vast majority of dollars in circulation are M2 and M3 (credit), not M1.

I personally think the bursting of the Keynesian bubble could result not in hyperinflation but in a chaotic series of inflations and deflations. Depending on policy responses, a hyper-deflationary collapse is one possible failure mode. Credit dries up and boom... the dollar hyper-deflates and wave after wave of mass defaults destroys the financial sector. Or you could have that followed by panicky money printing resulting in weird localized hyperinflations, short-lived explosive bubbles, etc. Various economic graphs such as stocks, bonds, exchange rates, etc. could start looking like random noise.

I also have other issues with Austrian economics, so I don't consider myself a follower of that camp. But I do-- as I wrote above-- have serious problems with the fantasy physics underlying Keynesian economic practices.