As Gipper and Smiling Dave point out, this Keynesian needs to define his terms. He needs to explain what he means by “wealth” and all those other generic jargon phrases he uses. (Money vs. Wealth, for example)
But on the whole, it looks like he is saying nothing more than “the government can create wealth by acting as a bank, housing the savings of the economy and lending it out to borrowers at interest.” First and foremost, the government doesn’t do this. So that ends the discussion right there. (If you’d like resources helping to explain what the government does do, I could post them). But if he wants to make a simple argument of principle and claim the government could create wealth if it did do that, then we have to go a bit further.
We have to realize that the essence of government is force. Everything the government does is under the threat of physical coercion. You cannot create wealth through force. Wealth is created through the accumulation of capital, the division of labor, and free trade (i.e. voluntary exchange)…which cannot occur through the use of force. With force you can only take what has already been created. And as we observe, this is exactly what government does. Notice, if the government could create wealth, it wouldn’t need to tax the private sector. So we recognize, if the government actually created wealth, it would cease to be government. Or more accurately: for the government to create wealth, it would have to abolish its use of force…which would make it no longer a government.
So it is quite literally so: governments cannot create wealth. I would recommend this book to your friend for a very simple, easy to understand explanation of how an economy grows.