If you were to ask me what the meaning of supply side economics in the age of Reagan, I would have to hunch my shoulders and say I don't know. The sad fact of the matter I slept through that whole era, the great communicator put me in a hypnotic trance.
Now let me write my version of supply side economics.
As every school boy and girl in the sixties will tell you the definition of inflation is too much money chasing to few goods. Well for some reason we lost the idea that this was an equation, those of us who have responsibility to keep inflation in check seem to stop at the words too much money seemingly to forget the second part of the sentence too few goods.
In my craziness ( I must be crazy I never hear this by anyone else) the tax code should encourage the making of excess goods that are needed for life. Things like food, clothing and shelter.
Suppose there are problems in counties that supply us with clothing, the price of clothing will go through the roof. Inflation.
Suppose we don't help the farmers in time of need (like now with the drought) and many of them go out of business what happens next, lack of supply of food bringing about food inflation.
America is in a good position right now as far as for shelter inflation (supply and demand, and we have an excess of supply, unfortunately too many of my fellow Americans don't have the resources to buy and in some cases even rent these shelters).
* During the great housing bubble we had shelter inflation offset by borrowing deflation (unfortunately some of this was do to balloon mortgages)
** There were other reasons for the bubble, which I may write about another day.
If the goods and services aren't there aren't there you can bet your bippy that inflation will raise it's ugly head.
You can't in all honestly say that about too much money in circulation.
Question.....can austerity cause inflation?
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