Monetary vs Keynsian Economics

Thinking back to my university days I remember being touched by the monetarist argument more so than the Keynesian school.

In a nutshell I cannot see how a Central Body (government) intervention can ensure optimal allocation of capital. Therefore in the short term, yes, fiscal spending will produce jobs, and yes it will stimulate spending and kick start the economy but my question is at what cost?

In order for the government to spend it needs to finance this expenditure either by using money from taxes or alternatively by borrowing money. I have no problem with either on the assumption that the government concerned knows how to spend the money. My experience, and the experience of the ages is that any beaurecratic process usually leads to inefficient allocation of capital. To be blunt governments typically WASTE money.

A great example is what is currently taking place in China right now, and what happened in the Asian crisis in 1997. The government financed massive infrastructure development, the problem now is alot of the money spent was unnecessary.

So in the end you will pay in the long term for short term gains. The question Keynesians need to ask is whether it is worth it.

The monetarists take a somewhat more distant approach and only try to influence the economy via interest rates which in turn influence money supply which in turn influences supply and demand.

For now I am in the monetarist camp as I was in university.