Over the weekend, I just happened to catch the "Bob Brinker" financial talk show (http://www.bobbrinker.com/). A caller stated that Hayek was right and Keynes was wrong.
Bob got very irate (he's a Keynesian after all). He told the caller that America is NOT practicing Keynesian economics because Keynes specifically called for balanced budgets during good times and only to deficit spend in bad times.
Bob Brinker COMPLETELY misses the point. John Maynard Keynes idea on economics is analogous to telling an alcoholic he is only allowed to drink during a wedding or funeral. Once the alcoholic gets drunk again, he will fall off the bandwagon.
Politicians are no different. Keynes economic model doesn't take into account politics - which DOOMS it to failure. Another analogy would be having a diet that only allows rice cakes and water. When the dieter fails to lose the desired weight, you could argue the dieter ate items that were not part of the diet. But the reality is that diet plan wouldn't work for any human being. The Keynesian argument is that if you DID follow the plan, you would have lost weight. It's a useless argument and the Keynes supporters know it.
Hayek, and others who advocate sound money, are right. The punch bowl needs to be taken away from the politicians. The Great Depression was caused by the Federal Reserves lax policy's with easy money and was extended for almost 15 years by Hoover and Roosevelt who spent like drunken sailors - never letting the economy truly recover from the hangover.
Keynes lack of political history and human nature, has doomed his economic model. The same can be said of Marx and Communism. If everyone just worked for the good of all, we'd all be living in Utopia. But that isn't reality nor is it realistic.