Question

Why did John Maynard Keynes support the idea of pump priming, despite increased federal budget deficits?

Answer 1

He believed that deficit spending would create more jobs, therefore, stimulate the economy.

Answer 2

Despite increasing federal budget deficits, and enlarging the functions of the State, Keynes believed that his theory was the only way to save capitalism from totalitarianism. And the only practicable way of avoiding the destruction of existing economic forms in their entirety and as the condition of the successful functioning of individual initiative.‟ The popular and widely held misconception of Keynes‟ theory is that he simply prescribed that States operate national deficits in times of economic recession in order to stimulate demand.