When Keynes was formulating his economic theories, money was an IOU, that was backed for the most part by a gold standard. Today, it should be standardised against units of energy, to end the ability of some to manipulate it.
The Author failed to explain the Japanese economic miracle, which turned it into the second largest economy on the planet.
Sure it was a mercantile model, but there was no other choice.
We could finally learn and actually understand the lessons of history and junk our current tax paradigm. Then replace all that convoluted complexity with a simple entirely unavoidable single stand alone expenditure tax, which at around 5% could contain or encapsulate a carbon component.
Think, our expenditure patterns are an exact measure of the size of every carbon footprint. Moreover, this reform/simplification will add 7% to the bottom line and then further seriously improve it and household disposals, with the repeal of every other tax measure!
Those with the greatest wealth will finally pay the greatest total tax. No ifs, but or maybes, or escape clauses.
When we finally find the courage to buck a self-serving public service and entirely unproductive tax practitioners, we will be well on the way to reinvigorating the depressed parts of our economy.
We also need to emulate a totally bankrupt post war Japan, and become an economy that serves us instead of we being shackled in chains to it.
We need to change to the cooperative trickle up model, that understands, that with each success story, we are all somehow improved and prospered.
That cooperative profit sharing model could rescue Europe, and also ensure that every worker on the factory or shop floor, has a genuine vested interest in the success of failure of that enterprise; and ensure that all the drones, profit demanding middlemen and unproductive practises, are exposed and eliminated!
Finally, we simply cannot afford to lock up massive megalithic resources that can really power up our economy, all while reducing our total carbon output as well as our foreign debt!
Rhrosty.

Thanks for a very enlightening article Nicholas.

The global financial system in the form it had morphed into a la Thatcher, Friedman, Regan et al,collapsed because of too much deregulation of banking and share markets, not as the Tea Party would have it too much regulation. This has led to huge corporations and monopolies which have usurped the power of government.

I am not an economist so these questions may seem naive but I would really appreciate answers. Why not consider a thoroughly radical solution, with more regulation than that pre-Thatcher:

1/ As I understand it, China sets its own exchange rate (a government controlled banking system). Why do more national governments not intervene to at least modify their own exchange rates? If Australia had had kept their exchange rate down just 5 - 10 points, couldn't we have saved many manufacturing and tourist businesses and perhaps dampened the mining boom? Greece and Ireland could solve their problems by devaluing their currencies thus enabling new industries for both domestic and export production.

2/ Couldn't a new global 'standard currency' be set up, not to be traded in but merely as a benchmark against which other countries could set their currency values? Wouldn't this overcome the problem of the US dollar remaining high (to its detriment) simply because it is the defacto standard and has been the world's biggest economy?

You are on the right track Roses1.We here in Aust need to make our RBA create the new money to equal increases in our productivity.Presently our banks borrow from private central OS banks who just create it with the click of a computer mouse.This is the prime source of our debt.

What's wrong with the RBA's computers?

Yes Roses1, we do need a new globalised standard of currency, that addresses some of the more glaring economic anomalies, vagaries, oddities and aberrations in the Globalised economy.
My choice is energy.
It takes so many ergs of energy to plant a thousand hectare wheat field. So many more to harvest it.
So much to produce steel, and a certain equally predictable or measurable amount to weld and mould that steel etc, into a motor car or indeed, any other energy reliant manufacture or extensive alteration or processing.
Indeed, it takes a very specific amount of energy to produce a dollar coin, regardless of the face or formulated value.
Energy can neither be created or destroyed, merely altered. It takes so many Newton metres of precisely measurable force, to actually generate or manifest electrical energy.
It's a number that simply can't be fudged or misrepresented.
That's why it and it alone ought to be the new X= or gold standard, against which we measure the value or calorific based value of money.
That way, a bushel of hard wheat would always be worth a barrel of oil, a cord of firewood, a bushel or coffee, a days worth of entirely unskilled physical endeavour or a nine carat golden wedding ring.
Imagine, with one single and extremely sensible reform, we could simply eliminate inflation and the eternal race to the bottom, price wage spiral. A dollar would always buy a gallon of gas or a cup of Starbucks coffee?
The only people who need inflation are the over privileged, who basically exploit it in order to transfer wealth from the less privileged; or nation states, who knowingly and quite deliberately undervalue or quantitatively ease their own currency, to get a trade or transfer of wealth advantage.
At one time the most prosperous and developed nations used to financially prop up the poorest ones. i.e., the Marshall plan, which poured billions into bankrupt post war Europe!
Today, it seems, the poor are propping up the richer or larger economies. It's time for a change we can all believe in!
Cheers, Rhrosty.

Fully in favour of such generosity, by the way your Super has evaporated. Where do you think it comes from?