Paul makes the Chicago point

Paul notes that producer prices rose much faster than consumer prices before the crash.

'What I see here is a secular upward trend, presumably driven by rising demand from emerging economies in the face of limited resources, culminating in a big price rise in 2007-2008;'

Precisely the problem, the existing production relationship we had is no longer profitable, we have exited that configuration because of real shortages, and not a general glut. Hence, Keynesian policy does not work, in this instance. That is not to say the there are not Keynesian points, but this is not one of them. It also does not mean that stimulus theory is dead, stimulation is a search activity the economy engages in when monopolies become constrained, I think its real, but it is part of the Recalc process and not well understood.