From what I understand about Keynesian theory, when we're facing deflation, lowering interest rates or increasing government spending/lending (when consumers are cutting back) helps stimulate economic growth through consumption (GDP = C + I +
G + NE). While a few loud voices (Schiff, the ZH guy, Martin Armstrong, etc) have been screaming about hyperinflation, Krugman has been right that we haven't seen it, even with the Federal Reserve's QEs. It does seem like QE has helped move the economy along, even though I know this depends on a person's point of view; ie: Austrian economists won't agree.
What happens in the case of a major drought causing food prices to rise, as in double, triple or quadruple (See this post by Bill McBride. and now this post)? Is the Keynesian solution here to raise interest rates => wouldn't that be a double whammy on the poor in that it would be more difficult to get a job and food prices would be rising? What is the Keynesian solution to supply shock problems, like a major drought, impacting basic necessities, such as food prices?
To be more specific because of the comment, I am looking for the Keynesian solution to a supply shock, or major crises that involve a supply shock - such as a drought that causes food prices to rise?