In the world of politics, however, the actual content of an academic movement may be less important than the way it affects the tone of the discussio… - Paul Krugman

The usual and basic Keynesian answer to recessions is a monetary expansion. But Keynes worried that even this might sometimes not be enough, particularly if a recession had been allowed to get out of hand and become a true depression. Once the economy is deeply depressed, households and especially firms may be unwilling to increase spending no matter how much cash they have, they may simply add any monetary expansion to their board. Such a situation, in which monetary policy has become ineffective, has come to be known as a ""; Keynes believed that the British and American economies had entered such a trap by the mid-1930s, and some economists believed that the United States was on the edge of such a trap in 1992.
The Keynesian answer to a liquidity trap is for the government to do what the private sector will not: spend. When monetary expansion is ineffective, fiscal expansion—such as public works programs financed by borrowing—must take its place. Such a fiscal expansion can break the vicious circle of low spending and low incomes, "priming the pump: and getting the economy moving again. But remember that this is not by any means an all-purpose policy recommendation; it is essentially a strategy of desperation, a dangerous drug to be prescribed only when the usual over-the-counter remedy of monetary policy has failed.

The kind of economic trouble that Asia experienced a decade ago, and that we're all experiencing now, is precisely the sort of thing we thought we had learned to prevent. In the bad old days big, advanced economies with stable governments-like Britain in the 1920s-might have had no answer to prolonged periods of stagnation and deflation; but between John Maynard Keynes and Milton Friedman, we thought we knew enough to keep that from happening again.

The first stage of Friedman's attack on Keynes was his effective though somewhat slippery critique of the idea that monetary and fiscal policy can be actively used to smooth out the business cycle. Friedman argued that such active policy is not only unnecessary but actually harmful, worsening the very economic instability that it is supposed to correct, and should be replaced by simple, mechanical monetary rules. This is the doctrine that came to be known as "monetarism."