1. Well, I'm not sure Keynes actually said we shouldn't produce bombs.
Not that I disagree with Thom about this (better to invest in something like education, which will pay dividends, as opposed to bombs). But Keynes said build roads or build pyramids, but build you must.
True that we knew that the Soviet Union was an economic failure but no one knew how long they could hold on. Did Reagan defeat them, pushing them over the brink by outspending them militarily? I tend to think this is more PR than reality, but I can't say it's not true. I mean they did push themselves with their invasion of Afghanistan and then you have give credit to Lech Walesa and to Gorbichev. They probably could have continued the bluff. For what reason?
All you have to do to see that Keynes was right is to understand a little supply and demand, and to look at the empirical evidence in an objective way. There's no question that you can stimulate demand with government spending. And, yes, there is a price to be paid for doing that but we never seem to get anything from "conservatives" trying to weigh the benefits against the costs.