[nhaehnle]

Probably not, actually, but to recognize that you have to go into the details of how inflation works.

Briefly, the only possible reason why there would be inflation is that the people given money for digging and filling holes now have more income that they can spend, so they increase demand for products. If this raises the price of products (and yes, that's an if), it will also mean that companies will have more money and an incentive to hire new people so that they can meet the increased demand. Some of those people will come from the digging-and-filling-holes program. It's a self-stabilizing feedback loop.

Obviously there are more subtleties, e.g. when a lot of domestic consumption is from imports. But even then, you wouldn't get runaway inflation. In the extreme case, currency markets would adjust up to the point where it becomes profitable to increase domestic production, and you'd get self-stabilization in that way. And increased domestic production in itself would be seen as a good thing by many people.

[vivekd]

There is no such thing as "more money than you can spend" basic human nature. The issue is "more money in the system than the system is producing". And that's exactly what the digging holes and filling it system is about. . . it's actually an example that Keynes himself thought up to describe his theory of how to get out of the depression. And as great a man as Keynes was, unfortunately he was wrong because he didn't have the benefit of research into monetary policy. It'll be the same thing as if you printed a whole wackload of money and set it loose in the system.

[nhaehnle]

I think you misread my comment. I wrote "more income that they can spend", not "more income than they can spend".

As for the whole Keynes being wrong thing, you didn't actually address what I wrote about inflation and how giving people a fixed amount of money for work (even if it's "make work") is self-stabilizing.

Also, to your "more money in the system than the system is producing": Keep in mind that the amount that the system is producing is not a fixed quantity. It's variable and part of the whole dynamics.