Keynes Revisited

Okay all good Keynesians listen up. If you don't read M. J Perry's blog Carpe Diem you really should. For those not familiar with Keynes' theory here this the Cliff Notes version. John Maynard published his magna opus, The General Theory of Employment, Money and Interest in 1936. He diagnosed the cause of the great depression as being a lack of consumption. He thought that if government could prime the pump the economy would right itself. By deficit spending the government could insulate the economy against business cycles. As the economy slowed down the government should increase spending and, always forgotten by his disciples, it should decrease spending and raise taxes as recovery occurred. How did that work out? Look at the chart below.