First Draft of September 8 Principles of Economics Lecture: Financial Markets and Depression Economics

3.0. What We Hope You Will Learn



3.1. Recapitulation

Last time we saw how recessions and depressions could come to be. We took Jean-Baptiste Say's circular flow principle of 1803--the idea that because everybody's spending is somebody else's income there can be no depressions, no recessions, no "general gluts" but only sectoral shifts and readjustments--and we broke it. We broke it by pointing out that the normal process of adjustment, by which workers smoothly move from industries and...