... or we could utilize government borrowing or central bank money creation to soak up the temporary excess capacity in the economy and encourage a more reasona

... or we could utilize government borrowing or central bank money creation to soak up the temporary excess capacity in the economy and encourage a more reasonable level of inflation (say, 4-5% for a few years). The extra spending would mean more workers with jobs, and the extra inflation would mean that existing debt loads would shrink, and those would represent positive feedback loops that would get the world economy growing again. Eliminating cash in order to allow for deflationary policy only invites a death spiral of growing real debt loads. Wage stickiness and a century of economic policies that assume inflation would mire us in an even worse situation for decades to come. This is a perfect example of theoretical thinking. The zero-lower-bound is annoying to someone who wants to construct a perfect mathematical model of the economy. But in the real world, the ZLB is a real barrier, both psychologically and in terms of its impact on existing debt loads. Unless existing debt rated in inflationary terms is either forgiven, refinanced, or paid off as part of this plan, this is a great way to speed up the path to utter financial ruin for the middle class.