This is a demand problem, just like the Great Depression. Eventually demand will pick up after obsolescence will mean people would just have to buy new goods to

This is a demand problem, just like the Great Depression. Eventually demand will pick up after obsolescence will mean people would just have to buy new goods to replace the old ones. However government doesn't need to save at the same time as households in business. It can employ unemployed resources to build public goods and provide public services. The extra spending will create a multiplier effect - when the government spends, someone will spend out of his pocket. The multiplier effect is present empirically when short-term safe asset interest rates are near zero (as is now - the liquidity trap) or if exchange rates are fixed - something that fits well theory as well. The Economics of Depression are called "Keynesian" - the set of tools, observations and policy proposals that are shown to work when in such a crisis. They are again fashionable with young stars in economics creating new Keynesian-expired models. All of the criticism of this "Depression economics" is usually valid during normal times, but this is an extraordinary event. The talking heads and politicians never like stimulus - its use implies a different mode of the economy, its much easier to just continue talking as before. Debt isn't an issue, because stimulus from defence spending right before WWII was done with much bigger debt-to-GDP, inhereted from WWI in most countries that did it. Three countries had a successful stimulus package in the last crisis enacted big - China, South Korea and Germany. The third one has the luxury of being a proponent of austerity after fixing the demand gap the first year. The United States hasn't had net stimulus. The package was too little to offset the huge spending cuts at state and local level. If you don't like stimulus a second best idea is to forgive debt when the debtor cannot pay, to increase inflation (hard), and to at least refrain from cutting government spending. No mainstream economic model recommends austerity. The classical types recommend smooth changes in spending, the Keynesian-type fiscal stimulus, the Austrians and other Liquiditionists are a joke. Structural reforms are intended to improve long-run trend growth. This doesn't matter when you cannot return to the previous path.