Most economists do not accept the do-nothing theory. They believe that
government must play an active role in stimulating growth when the economy is
suffering from a large, sustained deflation. Government spending must compensate
for the fall in private spending that results from a deflation--people and
businesses will put off buying when they think prices will be lower in the
future. Only when spending is again rising will monetary policy become
effective; until then it is like pushing on a string to get money circulating
and prices rising again.

In the 1930s, there were a number of economists who argued strenuously for a do-nothing policy. But as the Great Depression dragged on and collapsed in 1937--when conservatives were successful in having the federal government slash the budget deficit (it fell from 5.5% of GDP in 1936 to 0% in 1938)--they lost credibility. Economists today generally believe that it was the unprecedented deficits resulting from World War II that actually ended the Great Depression.