Thus the six years since 2008 have provided strong empirical support for the supposedly outmoded Keynesian view that government borrowing is more powerful than monetary policy in stimulating severely depressed economies and pulling them out of recession. In a sense, it is odd that the power of fiscal policy has come as a surprise - or that it continues to be categorically denied by the German government and the U.S. Tea Party. The underlying reason why fiscal policy is so important in recessions, and has now come to dominate over monetary policy, is a matter of simple arithmetic that should not be open to debate.

the French and German governments have ended their shadow-boxing over European budget "rules,"

Willem Buiter: Four rescue measures for stagnant eurozone (FT.com)

... The first is a proper AQR and stress test followed by a speedy recapitalisation of the capital-deficient banks and a wave of consolidation in the eurozone banking sector to bring higher profitability, and efficiency, to a banking sector with too many undersized banks. ...

The second measure is a temporary fiscal stimulus (say 1 per cent of eurozone GDP per year for two years, concentrated in the countries with the largest output gaps, that is, in the periphery), which is permanently funded and monetised by the ECB. To make the mechanics of this helicopter money drop more transparent, the ECB could cancel the sovereign debt it purchases. This third measure would be economically equivalent to buying and holding the debt forever (rolling it over as it matures), but rather more dramatic. ...

Finally, to achieve debt sustainability for the eurozone sovereigns, radical supply side reforms are required that boost the growth rate of potential output to at least 1.5 per cent in Italy, Portugal and other sclerotic countries.

The eurozone's `no monetary financing of sovereigns' fetish hamstrings the ECB. The instinctive anti-Keynesianism of the Teutonic fringe emasculates countercyclical fiscal policy. Domestic political paralysis inhibits structural reform. The AQR stress test was a fudge. Good luck, eurozone.

Why John Maynard Keynes's Theories Can Fix the World Economy - Businessweek

The big question is whether today's international financial architecture is up to the challenge of restoring balance to global trade and investment. The IMF, to its credit, has pivoted away from the austere prescriptions of the "Washington Consensus" that it championed through the 1990s and toward a more Keynesian perspective. "His thinking is more relevant at the current juncture than it had been in previous troughs of the global economy," says Gian Maria Milesi-Ferretti, deputy director of the IMF's research department.

But the IMF lacks the authority that Keynes's stillborn international clearing union would have had, and it's perceived in some quarters to be beholden to U.S. interests. Brazil, China, India, Russia, and South Africa are trying to set up an alternative. Germany isn't heeding the IMF much either as it presses France and Italy to take the same austerity medicine as Greece, Ireland, Portugal, and Spain. "Flash-in-the-pan, short-term stimulus programs" aren't the way to boost growth, German Economics Minister Sigmar Gabriel said on Oct. 20 in advance of a joint ministerial meeting in Berlin.

The progressives and their labor class supporters had some successes, but many of them were stolen by the Supreme Court [...] As legislative victories turned to dust, economic progressives became more aggressive. Leftist intellectuals and labor leaders turned to Socialism and Marxism as alternatives to bloody capitalism. Workers continued to strike and there was violence in the streets [...] The few public figures who espoused Socialism were subject to bad-faith prosecutions and jailed, among them Eugene Debs, jailed on specious charges on the watch of the Democrat Woodrow Wilson, and his horrid Attorney General A. Mitchell Palmer. This was an early example of Democrats running from the shadows of non-capitalist economic theory [...]

The economic elites suffered short term defeat in the 30s and 40s, but unfortunately, their views were not eradicated. The Republicans took over Congress in the wake of the war, and launched an assault on the Democratic party and its labor allies as infiltrated with communists and socialists. The attack on labor resulted in the passage of the Taft-Hartley Act, weakening the ability of unions to organize and setting the stage for further weakening of the union movement and the ability of the working class to protect itself. Majorities of both parties joined approving the bill and in overriding President Truman's veto.

It probably wasn't necessary to attack the Democrats, because they were purging themselves [...]

It turns out that the Socialists and other leftists never really had much influence on the economic policies of FDR. The actual policies were drafted by reformist Democrats, who believed that tight economic substantive regulation would solve the problems created by rampant capitalism. They and FDR effectively co-opted the activists seeking genuine change, people like the millions of supporters of the Townsend Plan who had to accept FDR's Social Security, a much weaker version of that proposal. It was easy for the Democratic party to dump the few real leftists and start their inexorable movement away from leftist economic issues and towards the American Celebration of Capitalism.