Recession
Economists usually try to solve problems by tinkering with things, and making them more complicated. That is because it often works – until, suddenly, it doesn’t. The Nobel Prize winner Paul Krugman, who is a specialist in recessions, takes us through the history of why they happen. It is always because people devise an ingenious way to make what appears to be free money and nobody understands the consequences until it is too late. There is, it turns out, no such thing as a free lunch. The entire edifice of capitalism is based on capital – which is really just another word for confidence. If people believe your confidence to be authentic, the risk you take is likely to be small. But as soon as people think you are bluffing, they panic – and panic destroys wealth faster than confidence can ever increase it.