Introduction:

Andrea Terzi, in a chapter on "The 'Keynesian moment' in policy making and the perils ahead", discusses the question of whether the alleged 'Keynesian moment' has marked a deep reconsideration of a policy regime that Post-Keynesian economists have long criticised. The author places special emphasis on the Euro zone countries which accept an institutional structure that removes monetary sovereignty from all existing fiscal authorities. While making these countries repellent to 'Keynesian moments', this also meant that the degree of tolerance with fiscal deficits is even lower than in nations that use their domestic currency. According to the author, this has moved the Euro zone, without a deep political reform of fiscal authorities, on a deflationary, if not implosive, path. In his contribution, the author contrasts the long-run character of the policy implications of Keynes's General Theory with the short-run character of current policies; discusses the question of the limits of fiscal deficits and the nature of the question 'where does the money come from?' from a functional finance perspective; and touches the shortcomings in the institutional structure of the Euro zone and argues that the euro has been ailing from 'too much virtue'. It is concluded that the global crisis may become a turning point, in that those countries that will boldly use fiscal actions will find a way to strengthen their economic welfare and power, while others may be doomed to economic and social decline.