The correct course is to slash government expenditures and to cut wages to raise business confidence and willingness to hire unemployed workers. And that nature would make its course solving the downturn automatically by "shaking out" unneeded productive capacity.

During the Great Depression, the collapse was simply a lost incentive to produce. Mass unemployment was caused only by high and rigid real wages. The proper solution is to cut wages, abolishing minimum wages, unions, and long-term contracts and increasing labor-market flexibility.

The fall in income will do most of the job ending excessive saving and allowing the loanable funds market to attain equilibrium. Instead of interest-rate adjustment solving the problem, a recession does so.

Fiscal stimulus (deficit spending) could actuate production. There is no reason to believe that this stimulation will outrun the side-effects that "crowd out" private investment: first, it would increase the demand for labor and raise wages, hurting profitability. Second, a government deficit increases the stock of government bonds, reducing their market price and encouraging high interest rates, making it more expensive for business to finance fixed investment and worse, it would be shifting resources away from productive use by the private sector to wasteful use by the government. These kind of policies will typically be dominated by special interest groups, including the government bureaucracy.

The solution is to increase labor-market flexibility, i.e., by cutting wages, busting unions, and deregulating business and stop labor unions or the government "meddle" in the free market, creating persistent supply-side or classical unemployment.

That what start as temporary governmental fixes usually become permanent and expanding government programs, which stifle the private sector and civil societyv

Leave the banks and funds of Wall Street that are bankrupt go under, the strongest ones will then become healthier and strongest. The rescue of those entities require centralized planning, which as Hayek argued leads sooner or later to totalitarian abuses.Keynesianism is topsy-turvy policy, almost literally fiscal madness.