Reply #16: Supply Side economics is a total fraud. Here is why.

[AdHocSolver]

All economies are DEMAND driven. No economy is supply driven. If economies could be supply side driven, then General Motors, as an example, would be making lots of money.

Demand is based on two conditions: People having money to spend, and people wanting to spend money. Demand requires BOTH conditions to be met.

GM still has cars to sell and factories to build them in. The supply is there. If economies were supply driven, then GM would be selling lots of cars and making lots of money.

GM is not selling cars because there is NO demand. People either do not have money to buy cars, or they are not buying cars because they have fears of losing their jobs.

It is false to say that people are not buying because the stock market is down. The stock market does not drive the economy either. The stock market is a collection of corporate insider-controlled Ponzi schemes. Stock prices go up when lots of people buy the stock. When lots of people buy a stock, that is high demand, lots of dollars chasing a limited supply of stock shares, the price is bid up. It is the same as the real estate market. A lot of people bidding on the same house will try to outbid each other to make the sale. Keeping interest rates low, as the Fed did, encourages people to pay more for a house than it is "worth" (meaning what they could sell it for later on) because their payments will be low.

In the stock market, the aim of the insiders is to convince the stock buyers that their company's stock value will continue to increase, even when, as in the case of Enron, they were losing money. The insiders work hard (cook the books) to convince the public that the stock price will continue to increase, which it will so long as people keep throwing their money at it.

At some point, before the fraud is detected, the insiders sell their stock at a highly inflated price. This profit is termed capital gains and is taxed at a lower rate than what the employees who work for the company pay on their wages.

As long as demand is high, people will buy and prices will be bid up. When demand collapses, the prices will drop as sellers will drop the price to convince buyers to buy their goods. When people don't have the money to spend, prices can drop very quickly to a very low level, as sellers panic. This is why GM is not selling cars and the real estate prices collapsed.

Economies are demand driven. The only way to solve our economic problems is through "demand-side" economics. Bring jobs back to the U.S. At least 75 percent of what we buy should be produced by other Americans. Then money will circulate within the U.S. economy.

By all means, lets develop green jobs. Put people in the FDA, the EPA, OSHA, and other regulatory agencies who believe in protecting the health and welfare of the people and the planet. This will only work if a majority of the goods and services we buy come from Americans.

Moreover, Chinese labor will only progress when the Chinese companies understand that if they want to do business, they have to pay their workers enough money so that they can buy the goods that they produce.

The only trade that can occur profitably between countries is the marginal production, that is, the excess of what is produced to satisfy internal demand of that country.

This is simple economic fact. All the rest of what the pundits tell you is rubbish.