Say's Law

Video: http://www.youtube.com/watch?v=LaqRIn_C4F0&feature=g-high-u&app=desktop

There are some errors in his understanding of Say's Law. He assembles the equation for Walras's Law and then claims it can only be true if buyers and sellers always get the same prices, followed by him pointing out this isn't the case in the real world, therefore making Say's Law and Walras's Law incorrect. This assumption is not part of Say's Law, in fact, it can't be part of Say's Law. All that Say's Law says is that goods are exchanged for other goods, and that money is simply the medium of exchange, money is not the source of these trades (which is explained rather well in the video ironically). Prices must fluctuate in order to facilitate these trades, as they give information about the supply and demand of goods in the market, Say and Walras understood this. Without prices going up and down, the key mechanism of Say's Law cannot function.

The video also misunderstand's market gluts, and gives an example that contradicts his earlier assumptions. When proposing a consumer buying oranges, apples, or saving (called hoarding money) the options given after an orange purchase where there is excess money assumes the very thing that supposedly made Say and Walras's Laws incorrect, namely, that prices stay the same. So what is it, do prices change or do they stay the same? If they stay the same, then this video's misunderstanding of Say's Law holds fine (making his earlier claim that Say's Law doesn't hold false), and if prices do change, then this video's explanation of market supply gluts is incorrect (because as demands fall short of supply, prices will come down to clear the market, or as Say might explain, apples will now exchange for a fewer supply of goods). You can't have prices always stay the same or always change at the same time.

Additionally, saving money just changes how markets allocate resources, it doesn't create a 'glut'. When people produce goods and release them into the market to create supply, and then go back into the market as consumers to demand those goods, but they do not consume them all, this creates an environment where this excess supply can be invested in longer term projects to create higher valued goods in the future (therefore lower interest rates, opportunities for entrepreneurs and higher value job creation), or they can be consumed now to satisfy lower valued ends (therefore lower consumer goods prices, sending a signal to produce less of this good or a signal to find less costly ways of producing this good to maintain profits).