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Sunday, December 07, 2008

Another failure for supply side economics?

I haven’t seen this said, but when you take the big-picture view of the Paulson-Bernanke solutions to the banking crisis, aren’t they really just “supply-side economics” applied to the financial sector specifically? They seem to be all about giving the banks the wherewithal to resume lending, and I understand "supply side economics” to be in essence giving tax advantages to businesses to increase their production, rather than the Keynesian focus on stimulating demand for that increased production. So what does infusing capital or take the risk out the banks’ bad assets have to do with shoring up the consumer and business confidence to want to borrow again? The banks’ wanting to lend is only half the equation

Maybe those more schooled in economics can ponder this.

1 Comments:

Anonymous Anonymous said...

Supply Side, simple is a company produces crap, and tries to sell crap and makes crap for it because no one wants it. The banking issue today is nothing more than people finding out they were sold crap. Then a Company makes good stuff, people like good stuff so there is a demand for it. People know what they want, you have no ideal what people will purchase.

4:56 PM  

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