The result was that the quantity of money rose steadily from 1932, while from 1934 the budget deficit was being reduced (yes, reduced). Hawtrey's prescription was adopted and Keynesian public works were sidelined. What happened to the economy? Demand, output and employment all moved ahead nicely from 1932 to 1937. In September 1933, one Treasury memorandum noted: "Despite the rejection of the public works programmes put forward by Mr Keynes, the building industry is doing very well."

In the US, also, the actual conduct of policy was very different from the myths that have later circulated about it. Roosevelt liked Keynes personally but found him difficult to understand. The critical change to economic policy in the early years of the Roosevelt presidency was to buy up the American public's gold and then to devalue the dollar against gold. The resulting capital gain provided the backing for a surge of money creation, so that between 1933 and 1936 the quantity of money soared by 12 per cent a year. As in the UK, the economy recovered.

Obama's Treasury team are kidding themselves if they think their policy is "new", "radical" and "a change". As in the 1930s and during the Bush presidency, the prospects for recovery depend far more on the behaviour of the quantity of money and the conduct of monetary policy than on fiscal packages and budget deficits.