Nope, because historically in a generally free market - the scenario you talk about has never, ever happened.

The natural tendency of people is to "do", and in an environment where they are not forcibly prevented from "doing", work happens and goods are produced and services provided. These goods and services are traded, which happens most efficiently and reliably when an abstracted token of value we usually call currency is stable and sound.

The concept that a economy that was returned to sound fundamentals, where major idiotic distortions introduced by govt were removed, would somehow find itself in a permanent depression is completely alien to me.

Most of the money being spent that is at the heart of this discussion is the functional equivalent of paying people to dig holes and fill them back up. Its wasted productivity. If it wasnt wasted, the govt wouldn't have to subsidize it. Obbviously the military is an exception and falls under a different type of argument - in that case, its just as simple as if we stop occupying countries we dont need to maintain a huge force capable of occupying a country. I would keep Naval and Air Force and R&D spending for example, but how many standing divisions of Heavy Armor and Artillery do we really need if we arent going to be fighting the Soviets on a huge European battlefield?

Free markets have a much better track record than govt intervention at creating value, and long term growth. Created value is ultimately what drives economic growth. Eliminating non value-add activities, and economic distortions simply frees up those resources to start pursuing activities that actually add value.

For who could be free when every other man's humour might domineer over him? - John Locke (2nd Treatise, sect 57)