This essay comes from Keynes pre-General Theory; he was groping toward an integrated framework for thinking about depressed economies, and not quite there yet. But its observations on the crisis at hand remain stunningly insightful, and fit current events all too well.
This is a nightmare, which will pass away with the morning. For the resources of nature and men’s devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life—high, I mean, compared with, say, twenty years ago—and will soon learn to afford a standard higher still. We were not previously deceived. But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time—perhaps for a long time.
Now read the full essay, The Great Slump of 1930.