On EconomicsStagflation is the critical flaw in Keynesian economics. Keynes believed it could not happen. Effectively, stagflation is what happens when government starts increasing its spending during a depression - prices start rising (inflation), and the depression isn't reversed, partly because rising prices discourage additional spending. A more complicated, in-depth explanation would take a block of text you wouldn't care to wander through.More Like This
In short, Keynesian economics relies upon the idea that inflation is strongly associated with economic growth, and that if government engages in inflationary economic activities, it will spur economic growth. That strong association has been proven false, and we have encountered stagnant inflation with every recession and depression since Keynes was in office, eighty years ago.
Essentially, laissez-faire economics has been shown, in the experiment of the last eighty years, to be at the very least no worse than Keynesian economics, and likely better.