Your above post contains so many inaccuracies and establishment spewed lies, that it's frightening.
I'll try to be brief.
1-The models you are blaming are NOT Keynesian models, they are neoliberal models. It's a big difference between the two.
2-There has been no decline in productivity. You are gravely mistaken.
3-Currently, no government in the developed world is printing money in response to the crisis. The US is practicing QE, which is useless in triggering a revival of crediting, and it is NOT money printing. Japan practiced QE for 10 years and still had deflation. Also, 81% of all QE is in a vault and stagnant. http://forum.ars-regendi.com/wow-81-all-...23609.html
4-Money is and always has been a "creature of the state". Money is a government issued liability, a public IOU. Fiat money is backed by taxation. Taxation ensures a constant demand for the government's money; and because of this, a government with monetary sovereignty is NOT a household. It is not revenue constrained. Public spending finances taxation, not the other way around. Unemployment is a policy choice. So long as you have unused resources, spare production capacity, and unemployment (people willing and able to work) - the government is either taxing too much, spending too little, or both.
5-Present establishment models don't take into account the government and private debt. The financial crisis is a crisis on paper. Private debt is the problem, not government debt. Aggregate demand is income plus the change in private debt. Private banks can fuel short term economic growth, but it is not sustainable in the mid to long term. When private debt levels get too high, households start reducing their consumption in order to be able to make bank payments. That hurts the rest of the economy. Lower consumption means lower sales, lower sales means lower production, lower production means laying off workers (rising unemployment).
The austerity imposed by idiotic neoliberal governments, see the EU - only made the crisis worse. That's because during a downward economic cycle, the government deficit is supposed to grow not shrink. The private sector cannot deleverage if the government is working to reduce its budget deficit or transform it into a surplus. Historically speaking, government deficits are way too low compared to the private sector debt levels.
6-Throw away all a priori assumptions, and take a look at double-entry bookkeeping. (S-I)+(G-T)+(X-M)=0 There are 3 sectors to the modern economy, government sector, private sector, and foreign sector. All 3 cannot be in a position of surplus at the same time, someone needs to run the deficit so the others can run the surplus, and the only one able to do this without going bankrupt is the government (the currency sovereign).
The government deficit equals the net savings or net surplus of the nongovernment sector in a given fiscal year. All transactions (horizontal) within the private sector net to 0. Someone's spending is another's income. One man's liability is another's asset. Every debit has a corresponding credit. The only way that that net in the private sector can be positive or negative, is via vertical transactions. Meaning? Government spending more than it taxes, or taxing more than it spends. The former fuels the private sector with net savings. The later erodes accrued savings over time.
7-The notion of apolitical money is a lie or scam (depending on context).
8-Countries in the developed world don't grow as fast as developing countries; because they're already at a certain level of development. And the establishments are content to simply import the real wealth from third world countries. The US for instance is a net exporter of aggregate demand - the whole world wants to sell its physical products to it in exchange for paper dollars. That being said, geopolitics is one thing, economic reality and potential reality is another. Developed countries are in NO danger to lose their ability to produce.
9-The fundamental problem of the 21st century capitalist economies is the financial system. It's predatory, and it doesn't work like Adam Smith and others hoped that it would. The parasitical banksters don't issue credit for real production. They simply gamble on the prices of existing assets, in order to bankrupt firms and seize existing assets. What is bankruptcy (caused by predatory lending) if not a transfer of ownership at bellow real market value?
The great bulk of private investment comes from accrued earnings over time, not from bank loans.
10-The Eurozone is another problem in and of itself. The euro is a foreign currency to all member states. Member state government are constrained by the 3% arbitrary rule of Maastricht. Despite having a common currency, there are no common banks. The ECB doesn't guarantee euro deposits (like the FDIC does in the US). Member states do. But they can't in reality. How can they, when they are currency users, not currency issuers? That would be like Andora guaranteeing dollar deposits, or Argentina guaranteeing ruble deposits. And sine Europe chose the path of austerity, here's how real domestic aggregate demand looks.
