I want to hone in on a couple of points that may better crystallize where I feel your analyses is unconvincing. 1. The Great Depression and deflation is a cas

I want to hone in on a couple of points that may better crystallize where I feel your analyses is unconvincing. 1. The Great Depression and deflation is a case of a general glut -- ie a lack of demand. This wasn't supposed to happen in an economy, but can from time to time due to problems with the "symbol economy" of money and credit messing up the "real economy" of goods and services. This was Keynes' insight. This has nothing to do with agricultural surpluses, and there is no evidence that depressions will be made obsolete. 2. I also suspect you may be underestimating the size and influence of the Financial sector and people's general desire to make money. Reducing friction in transaction costs will not change or reduce the desire for specilation or arbitrage. That usually has required governmental control. Our current economic crisis is based on banks making a lot of bad, questionable bets on mortgage debt - fed by poor ratings agencies, lax regulation, a housing bubble, and monetary policy that encouraged a real estate bubble. Technology and poor regulation made us all interconnected and fragile. 3. I also suspect you may be overestimating the reduction in transaction costs that bitcoin enables. Electronic funds transfer is pretty frictionless these days, as is FOREX. Large amounts need to be flagged for potential criminal, fraud, or terrorist uses - do we really want to give up those checks? Most transaction costs have to do with human capital - we tend to be slow, yet indispensable for many initiatives. 4. Stagflation was caused by a pile of supply shocks in the Nixon era in combination with very expansionist monetary policy assumptions in the early 70s. The inflation part was fixed as soon as Volker decided to kill inflation in 1982 by tightening the money supply. The stagnation got better by the mid-late 80s. Note that Reagan was arguably the mother of all stimulators (cutting taxes AND spending like mad). But typically Keynesian dont encourage deficit backed stimulus -- except when dealing with liquidity trap (deflationary) conditions like the Great Depression, and um, now. 5. Encouraging full employment through economic policy is quite a bit different from holding back progress to keep workers employed. That's social policy, and a different argument - how do you insulate society from the "creative destruction" of capitalism? Go too far and you rid yourself of capitalism's core benefit (growth through innovation). But fail to protect people in the short run, and you have regional unrest and revolt, as we've seen in 18th and 19th century attempts to impose free markets on traditional communities and exchange systems. Or in Thatcher's crushing of the UK coal industry and unions in the early 80s. On the other hand, encouraging full employment through monetary and fiscal policy is just another way of promoting an efficient market that takes advantage of all the resources (eg labour) that is available to it. It is underproducing if people aren't working and want to. Perhaps that is structural (people need training, education, etc) but in the current global recession all quantitative evidence points to it not as structural but rather a lack of demand - ie. people sitting on cash instead of spending it, which makes a lot of sense when you realize this was triggered by a debt crisis. When everyone rich is paying off their debts, people aren't going to be working as much. Unless, of course you realize that it doesn't have to be this way - since interest rates are 0 and inflation is negative.