Keep in mind when you say the Debt has lasted forever that doesn't take into account the rapid growth in the last 30 years. From 1946 to 1980 the debt growth was essentially flat (which means it went down when you consider inflation). Then from 1980 to 2011 we went from $2 Trillion to $14.5 (and according to usdebtclock.org we'll be at $22.8 in 3 years at our current rate).

As far as infinite debt I don't think anyone argues that anymore. There was an argument to be made for that back when the great majority of our debt was owed to people in the U.S. Because then you could say the interst stimulates the U.S. economy. But now that foreign owners hold 47% of the debt held by the public that argument makes a lot less sense.

As far as Keynes is concerned he didn't really address debt all that much. Keep in mind when you hear people talk about Keynes they generally are referring to the Obama Administration but the truth is the Obama Administration isn't practicing Keynesian Economics.

Read Keynes and the phrase that comes up over and over again is "Full Employment". Keynes believed in spending as much money as was needed to create full employment and then increasing taxes to pay off what you spent. If I recall he actually used the phrase "Retire the debt" which I take to mean paying it off completely.

Keynes theories have never fully been tested because no politician has been brave enough to ask for that much money. But if they worked they would create the mother of all booms so increasing taxes to pay off the debt wouldn't be as big an issue (again we're talking full employment)

But the retirement should be gradual right? When the economy slopes back down I was under the impression that Keyne's theory would suggest deficit spending again. Hence you'll always be yoyoing but never fully paying. You're right that his full theory has never been tested. I haven't seen many politicians really advocate increase taxes during booms.

Tax (rate) increases during booms aren't required.

The idea is that the increased economic activity leads to additional tax revenue, which leads to surplus budgets. It is often possible to reduce tax rates during a boom and still keep a budget in surplus (eg, Australia managed that between 2005 & 2008)

I agree with most of what you're saying, but why do you write that the debt is a drag on the economy?

I'm not trying to be obtuse here. There are a lot of orthodox claims about how the debt is a drag on the economy, but they're all bogus. There's the group of people who think that the debt makes it harder for private entities to borrow because of crowding out (both theoretically and empirically false) and there's the group of people who think that the debt is a drag on the economy because the government raises taxes in response to increasing interest payments - but they completely ignore the fact that the government doesn't have to raise taxes to pay the interest, and the government could in fact just use monetary policy to avoid paying any interest in the first place.

So in the end, the whole debt-drag thing is just a neoclassic platitude. It's false, but conveniently used to further the conservative agenda.

>the government could in fact just use monetary policy to avoid paying any interest in the first place.

Could you elaborate here? If you are suggesting the government inflate its way out of paying interest on debt, creditors will not be happy and will demand higher interest rates.