Earlier this year, someone with boundless creativity and even more free time made a YouTube video called "Fear the Boom and Bust -- a Hayek vs. Keynes Rap Anthem," acting out the philosophies of Friedrich Hayek and John Maynard Keynes. The two famous economic thinkers couldn't disagree more with each other.

A couple of memorable lines:

Keynes: "If the flow is getting low it doesn't matter the reason /we need more government spending, now it's stimulus seasons / So forget about saving, get it straight out of your head / like I said: in the long run, we're all dead."

Hayek: "Your focus on spending is pushing on a thread /in the long run, my friend, it's your theory that's dead."

Alas, neither gentleman is alive today to carry on the debate. Instead, Nobel economist Paul Krugman and Harvard historian Niall Ferguson have stepped in, debating the classic Keynes vs. Hayek fracas: whether more fiscal spending will pull us out of the recession, or whether heavy austerity is in order. Krugman says more spending is vital. Ferguson says history shows doing so will chase bond investors out of town.

To join the debate, I asked a few of our Fool analysts to chime in.

Alex Dumortier, CFA, Fool contributor
The debate between those who support extra government stimulus to avoid deflation, and those who favor austerity to rectify the government's debt position, is needless. In fact, both camps are right -- on different timeframes.

In the near future, the economy may require some measure of additional stimulus spending to avoid another slump. Right now, the recovery is weak and the risk of deflation is significant. Growth is a key part of resolving the public debt conundrum; without it, the economy could sink into a debt trap in which growth is lower than the yield on government bonds. This causes the debt-to-GDP ratio to increase over time -- something we certainly want to avoid.

Nevertheless, in order to credibly advance additional government spending at a time when public debt is already alarmingly high, one must be willing to commit to a longer-term plan to address this problem (as well as the elephant in the room: entitlement liabilities linked to Social Security, Medicare and Medicaid). Failing to address this will cause the U.S.'s competitiveness and political stature to decline.

For an illustration of this at a microeconomic level, just look at the auto industry: Can anyone argue that ballooning health-care costs strengthened the competitive position of Ford (NYSE: F), General Motors, or Chrysler? The automakers are addressing this problem; the U.S. must do the same.

Ilan Moscovitz, Fool analyst
There are three reasons why someone would argue that we need austerity instead of stimulus now, even in the face of devastating unemployment:

  1. A fear of inflation.
  2. A fear bond investors will shun the dollar.
  3. A fear that the national deficit and debt are "too high" right now.

But inflation is basically nonexistent. Banks are hoarding cash like there's no tomorrow, we actually had deflation in June, and the Fed expects inflation to come in below target for years to come.

Similarly, there's no evidence that bond investors are afraid of the dollar. With Europe and Japan arguably in a worse position than us, investors are buying dollars hand over fist. Yields on the 10-year note are near a multidecade low, surpassed only by their mark at the depths of the financial crisis.

Could these supposedly irrational bond investors hypothetically change their minds a few years from now? Possibly, but that's not the problem we're facing. If anything, there's strong evidence that bond investors are actually demanding stimulus, not austerity. While austerity would further weaken the economy, it may not reduce deficits; according to the numbers, the weak economy is causing deficit increases.

The most relevant historical example -- the Great Depression -- supports that point, too. Our fiscal position worsened dramatically under President Hoover's austerity before stabilizing under President Roosevelt's stimulus, because the former presided over a shrinking, deflationary economy, whereas the latter's grew dramatically. Connect the dots.

In short, we may need long-term solutions to deal with long-term fiscal problems (the biggie would be reducing health-care costs). But choosing austerity rather than stimulus right now, in the face of a deep, near-deflationary recession and a strong dollar, would be unnecessary, economically hazardous, and could exacerbate deficits.

Matt Koppenheffer, Fool contributor
To accumulate debt or not to accumulate debt -- that is the question.

I don't disagree with the folks saying that the U.S. needs to get its fiscal house in order, and I certainly don't see a bright future if we continue to unceasingly pile debts on top of debts, leaving our economy looking like a massive game of financial Jenga.

However, after years of failing to take such austere measures when the economy was in better shape, now seems like a pretty odd time to decide to clean up the government's balance sheet. It's like letting your kids spend hours chowing down on candy, and then thinking that quiet time at the library would be a good plan. Taking your kids to the library is laudable in general, but that timing is idiotic.

Positive earnings releases from companies like IBM (NYSE: IBM) and EMC (NYSE: EMC) -- not to mention the recent GDP report -- suggest that businesses are beginning to spend again. Meanwhile, we've seen credit quality begin to improve at banks like Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM). If debt reduction tops the agenda, don't expect to see more of the same.

We need to take all of this debt-reduction excitement and bottle it up -- it'll come in very handy a few years down the line, when the economy can better handle such measures. But for now, release the Kraken! ... um, I mean, the stimulus.

Morgan Housel, Fool contributor
New York Times columnist David Brooks put it best:

… all our problems would be mitigated if we had a political system that would reach a grand compromise -- short-term spending for long-term spending restraint. That's a deal we could all live with. Unfortunately, we don't have a political system capable of that kind of maturity. 

I like that. Acknowledging that economists will never, ever reach consensus on the spending vs. austerity debate, compromise is the sane answer. And I don't think Brooks' proposal is kicking the can down the road. There are things we could do today that would dramatically rein in spending commitments 10, 20, and 30 years hence, when debt accumulation really gets apocalyptic. Raising the Social Security eligibility age and overhauling Medicare from a fee-for-service giveaway to a more evidence-based program are great examples. If those were done, Krugman could keep the short-term stimulus he loves, while the bond vigilantes Ferguson fears would, I think, be deeply soothed. That's the practical way out.

Got your own take? Sound off in the comment section below.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Ford Motor is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.