Can a 72-year-old innovation save the world?

Of course.  Here is how.

In 1936 John Maynard Keynes, a Cambridge economics don, published his book The General Theory of Employment, Interest and Money, Keynes wrote the following ridiculous proposal to battle the ravages of the Great Depression:

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez faire to dig the notes up again… there need be no more unemployment. . . . It would indeed be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.”

What did Keynes have in mind?

Speaking to the Israel MIT Enterprise Forum on Nov. 20, Prof. Lester Thurow recalled Keynes’ prescription and urged governments everywhere to “flood the system with money.” This was Keynes’ innovative idea. When panic reigns and demand shrinks, governments must fill the gap, in any possible way, even through the “bury banknotes” scheme. Anything to get money and liquidity and demand into the system.

Keynes has for years been discredited, as free-market capitalist ideology reigned and government intervention was regarded as destructive. Now the same persons who preached this theory are now massively bailing out failed banks and insurance companies and, soon, automobile companies.  

Memo to old ideas: Never despair. You are like old clothes. If you wait long enough, soon you will come back into fashion.