someone asked john maynard keynes if he could think of anything similar to this depression. , it was called the dark ages." what was so different about keynes' view of the economy? to realize what a revolutionary idea keynes had, we have to recall again the classical view which said supply creates its own demand. if consumers don't want to consume all their incomes they can lend their savings to businesses who will invest it. the idea is that if consumption goes down, investment demand will go up. if investment demand goes down, consumption demand will go up. in either case total demand remains high. keynes said if you had a fall in investment spending, this might lead to a fall in consumption spending. total demand-- consumption demand plus investment demand-- might fall. it might be a multiplied fall once the process got started. let me stress this was a shocking idea. when demand falls, it may not repair itself a la says law. it may fall further. there may not be enough total demand to provide markets for the goods or the labor that produces them. the economics profession

the rationale was very much influenced by the ideas of john maynard keynes whose major work was published1936. keynes thought total private spending might be insufficient to sustain national income at the full employment level. the solution? increase government spending to fill the gap. we can illustrate this idea with a simple diagram. let's measure total spending by consumers, businessmen, and the government on this vertical axis, and national income, gnp along this horizontal axis. in 1946, full employment gnp when everybody who wanted jobs was able to find them, was probably around here at $300 billion in terms of 1946 dollars. this vertical line is equal to $300 billion. this line will tell us how much spending we'd need to sustain national income. keynes said private spending on consumers' goods, c and business investment, i might not be large enough to keep gnp at this level. he thought private spending would increase with income. the curve slopes up as gnp increases. it might end up here with this $50 billion gap between total private spending and full employment gnp. he said we c

but john maynard keynes he wrote to roosevelt and a number of times we're not the cartoon that we contend. and john maynard keynes of frequent the father of all modern stimulus. but in fact, he was very subtle and in this particular letter to roosevelt he said that business would be too tired. and with that oriented prosecution we had us superhero in this book. he says to roosevelt that i paraphrase that you long to sink their evil villains but businessmen are domestic animals. they are not your enemy. but we've looked up china and england at that time. these words were mostly written in a letter and printed in the times he can see the work he put into it to have jokes about drips of money. puns are an acquired taste for some of us but people respond. sometimes it is so laden joke. and the iconic image is. did you probably had to have a show about this. this was a great photographer and what i discovered in the research at this library is a had not realized she worked for the magazine that she worked for the government and had a rather specific assignment to capture poverty in photographs

and they are, number one, adam smith, number two, karl marx, number three, john maynard keynes and numberfour is -- john kenneth galbraith, 6'9" economist. you can't miss him. and, of course, the fifth one is milton friedman. sorry, george stigler, you didn't make the list. so now you all can become -- you can bluff your way in economics. you can walk out of this conference, this meeting. you don't even have to buy my book, and you can be a knowledgeable person in economics. isn't that great? all right. so then came out 1980, he did a video. he did a pbs program, 10 series program that several million people, some of you may have seen this called "free to choose." it was a wonderful program that energized both wilton and rose friedman. the producer took them all around the world. took them to hong kong and so on. and he began each program with a short little ten-minute speech and then he invited people in to disagree with him. and they had these wonderful debates in these panels, and this was a great program. he put it together in a book called "free to choose." free to choose. milton fri

and they are -- adam smith, karl marx, john maynard keynes, number four is -- john kenneth galbraith. the 6'9" economists, you cannot miss him. and the fifth one is milton friedman. sorry, george stigler, you did not make the list. now you all can bluff your way in economics. you can walk out of this meeting, you do not even have to buy my book, and you can be a knowledgeable person in economics. isn't that great? in 1980, he did a pbs program that several million people -- some of you may have seen this -- it was called "free to choose." it was a wonderful program and it in energized both milton and rose friedman. producer, took them all around the world. he began each program with a short 10 minute speech. and then he invited people into disagree with him. wonderful debates and these panels and this was a great program. he put it together in a book. milton friedman holding a pencil and rose friedman on the back. another wonderful book that has an index. "free to choose." i should tell you, if you came to my home in new york, i have a library. i have opposite title book. i will have