An Email From Nigeria

Nigeria's central bank

SP emails:

Dear Sir,

I came across your brilliantly succinct presentation on YouTube explaining Say’s law. I found it fascinating how you simplified a concept that many economists have found very difficult to really grasp.


The problem I have is how the Keynesian explanation and counter-argument to Say’s law is the predominant economic philosophy in many developing countries. In Nigeria for example, we recently had an economic recession during which government officials were publicly boasting of “spending our way out of recession”. Nigeria is a poor country with very little productive activity going on, yet people were somehow encouraging “stimulating demand”. Can you please explain what the proper policy response for a poor economy in recession should be?

Many thanks again for your YouTube channel.


Best regards,

RW response:

The best policy advice that I can give, and this goes for any country is to "create a miracle." That is to follow in the steps of the great economic policymaker Ludwig Erhard who, when faced with crushing price controls in post World War 2 West Germany, simply removed them all to the objections of nearly everyone.

The removal of the price controls brought the West German economy to life in what is known as the German economic miracle. 

Every country in dire straits should follow the lead of Erhard and ruthlessly remove government restrictions and interventions---Thus allowing the free markets to breathe and bring prosperity to the country.

Specifically, with regard to a recession, which is always caused by central bank money printing, the central bank should fully stop the money printing and freeze the money supply at its current level.

There is more on the German economic miracle here.