The Austerians love to point at the 1930s as “proof” that Keynes was wrong. Look at the huge “New Deal,” they say. Look at all those expensive public works projects. Look at all the spending the government did to try to get us out of the Great Depression, and it never really worked. What got us out of the Depression, the Austerians smugly observe, was World War 2.
But what was World War 2 if not an absolutely gigantic Keynesian stimulus?
Seriously.
The Federal deficit in World War 2 was massive—much bigger than any time during the Great Depression. And we built up a huge Federal debt load. And… we set the stage for two decades of amazing prosperity, in which we worked off those debts.
Read more: http://www.businessinsider.com/keynes-was-right-2011-12#ixzz1goSdQBz3
