Barkley, you believe that I have shifted the discussion. The discussion on this thread has been about government spending and has, until now, neglected how the spending was financed. You implicitly assumed that it was financed by the creation of new money. I implicitly assumed that it was not. Sorry for the misunderstanding. Before I started the thread, the list was already discussing Keynesianism and laissez faire. In a post just before the one that started this thread, I wrote the following: "I would speculate that few noted economists today see public spending, by itself, as a means of avoiding recession; although many support it for other reasons. Most economists do not expect a recession so long as there is monetary stability and consistency in government spending and taxing policies. And, if there was a recession, most would not expect government spending financed by borrowing to reverse it. This leaves monetary policy; and few would advocate expansionary monetary policy, given what we know about the relationship between money and inflation." I suppose that I may be sufficiently out of the Keynesian, or even the macroeconomic, loop not to realize that the clear distinction between Keynesian and monetary policy that used to be present during my school days has been blurred. I certainly did not intend to mislead you about my definition of government spending and I regret that you were misled. I hope it is clear now that we have been writing about different things. So let me try to draw you out. If I understand your theory correctly, you hold the following view. Let us compare two scenarios. In the first the government increases spending, which is financed by additional money. The money is first spent by the government on X. The recipients of the money then spend it again. The result is an expansion -- an increase in aggregate demand in your terms. In the second scenario, the central bank increases the quantity of money by exactly the same amount as the government spending. The bank gives the money to the same people who would receive the additional income from the government spending in the first scenario. You maintain that the former is more likely to have an expansionary effect. This is true regardless of whether X is roads or SS training. Presumably, you would say that the increase in government spending is more expansionary than the increase in money is not. Is this consistent with your views in the game you imply "we" are playing? Regarding the Nazi regime between 1933 and 1936, I am not prepared to learn the history, although I think it is strange that you would use this case, for the reasons I described. There is a paper on the internet that seems to support my reasons. But I have not done the kind of literature search that would be needed to feel confident that your interpretation of the period is wrong. http://www2.wiwi.hu-berlin.de/institute/wg/ritschl/pdf_files/ritschl_dec2000.pdf The paper seems to have been presented at a conference and published in a Japanese journal in 2001. Finally, regarding Andy Denis's point about the Keynes preface, perhaps there is something that you did not quote. In the quote, Keynes refers to a totalitarian regime, not to a command or even an administered economy. For a market economy, a totalitarian regime has an policy advantage over a democracy because it can easily more easily make and enforce laws. It seems on the surface that this is what Keynes is referring to. Do you know whether he meant more than this? If he did was he assuming that the German and British economies in 1933 were similar? Finally, if he did believe this, do you think he was right? Otherwise, why would you regard the quote as relevant? Pat Gunning