Yep, that's it.
It would be nice if these people did something useful, but Keynes' point was that this is an optional feature which should not be allowed to detract from the main goal.
It would be nice if these people did something useful, but Keynes' point was that this is an optional feature which should not be allowed to detract from the main goal.
But why should that be a main goal? Why have money changing hands for the sake of changing hands? Isn't money just a medium of exchange -- a go-between, a currency -- used to convert one type of good into another? We don't just want money to circulate, we want money to circulate purposefully -- in transactions on the free market.
I still don't see how burying money and having miners dig it up helps anything. It doesn't create value. Those miners could do other, more productive things instead.
I'm tempted to answer "no". Money has properties -- the very ones that prompted its design -- that make an exchange of money quite different from an exchange of goods or services.
The important property for this discussion is: an exchange of services doesn't offer you a reliable medium of savings. If I offer to shingle your house in exchange for you shoveling my snow, but it's January and I can't shingle the house until May, we're stuck. You can shovel the snow first and have me owe you the shingling, but what if I flee the state, or injure myself? Or what if May comes around and you have decided that you'd rather have the lawn redone than the shingles replaced? I don't know lawns! I only do shingles!
But money solves this problem because you can put it in the bank (or a piggy bank, for that matter) and decide later what to trade it for and with whom.
Which leads directly to the problem we're worried about: deflation. Right now is a very bad time to hire someone to reshingle my house for $75 an hour, because in six months another 3-5 million people will be out of work and there will be a lot more unemployed people with building skills, some of whom might be willing to reshingle my house for $50 an hour. But, of course, at that point I might be out of work myself, and $50 might seem like a lot of money, but no problem, because if I wait another six months the price might be down to $25 an hour...
In a depression people hoard their money, because there isn't a lot coming in and because it's worth more the longer you wait. That's the phenomenon which Keynesian stimulus seeks to prevent. You have to offer folks $50 an hour (or whatever) to do anything -- twiddle their thumbs, if necessary -- to keep money flowing into and through the system and to fight the universal tendency toward deflationary deadlock: The situation where everyone sits on their cash and their labor, waiting.
(Since the 1930s, we've prevented our economy from falling into this terrible state by using monetary policy. But you can't use monetary policy to maintain equilibrium once the real interest rate is zero. Which it apparently now is.)
Unfortunately, a depression is one of those nonlinear, non-equilibrium, black-swan situations that relatively few living Americans have experienced, and we're seeing the very real danger that people will refuse to recognize the possibility this time until it's too late. You have to anticipate these things, because economies have a lot of momentum.
As for deflation: Isn't there a cost to not reshingling your house? You don't have a reshingled house, something you presumably want. You shouldn't just look at the price of labor, you also have to look at the value of what the labor does: the house, reshingled. Compare that to the cost of reshingling the house. (Opportunity cost, in so many words).
I still fail to see the point of offering folks money to do something pointless, nor how it helps stop deflationary deadlock. If there's a deadlock then they'll just sit on that money as before, no?
I'm not sure I understand the deflationary deadlock -- you posit a situation where everyone sits on their cash and their labor, waiting -- waiting for what? Eventually someone is going to stop waiting and start working, eventually the gap between desired state and existing state will loom larger than the value of sitting on that money. In the house-shingling example, eventually you will value someone shingling your house for $X/hr today more than you will value having a not-reshingled house until the price drops to $Y/hr in Z days. When that point comes, you'll stop sitting on your money and hire someone to reshingle your house. Wouldn't a series of such events unlock the deflationary deadlock as the market reaches the new price point?