Supply

and finance Allah shmoop What Our supply side economics All

right people We all know that classic graph the most

famous of all economics crafts showing the upward sloping supply

curve there and the downward sloping demand curve there Yeah

we all know that where supply and demand crosses the

price there and the quantity where goods can be sold

on the market most efficiently well suppliers supply acts amount

of why goods at ze price and consumers by X

amount of why goods at ze price and yada yada

yada you get the picture There it is If it

takes two to tango and create economic growth both supply

and demand tingling there Why is their supply side economics

and then demand side economics Well it's kind of a

chicken and egg problem Demand siders The trickle up believers

think the economy is driven by consumer demand You know

at the bottom of the economic pyramid I eat you

can't make consumers buy stuff they don't want to buy

For instance way back in the seventeenth and eighteenth centuries

the Brits saw China as a huge market to tap

so they tried to come up with all this stuff

the Chinese people would want to buy But the Chinese

people didn't want any of their British stuff They were

only interested in the silver which they were getting in

heaps since Britain was importing a ton of porcelain tea

spices and silks from China into Europe and depleting themselves

of silver we'LL supply siders The trickle Down Believers believe

the economy is driven by producers who are at the

top of the economic pyramid like they're going to produce

and whatever they produce consumers will buy How will the

economy grow if the people with all the money at

the top aren't investing it into creating and growing a

new businesses The logic is that the head honchos of

the economy I either job creators the entrepreneurs the investors

the visionaries They have a lot of money which can

be either well held onto or invested well The supply

siders theory is that if taxes are high then high

income earners are incentivized to well just sit on their

hands leaving their money to collect dust when it could

be doing something more useful But if taxes are low

on the other hand well then the producers are incentivized

to invest that wealth in the economy or at least

more incentivised and that in theory would create more jobs

and lead more spending and boost economic growth That's the

money trickle down theory from the high income earners to

low income earners Supply siders have a similar theory when

it comes to regulations on all this stuff like higher

capital gains and income tax on high income earners Business

regulations are seen by supply siders to be a disincentive

for that group to invest in economy well Likewise Supply

Sider see monetary policy as reigning on their parade Monetary

policy happens when a central bank tinkers with interest rates

and the money supply and hoping to balance unemployment and

inflation for supply siders the central bank is sticking their

sticky fingers into the natural functioning of the markets where

they don't belong Well the reason we have a central

bank tinkering with things that happens because well the norm

in macro economics today is a bastardized version of Kane's

Ian Theory Kane's Ian's our demand siders So when they

see the economy going into a slump from consumers having

the blues while then those Keane's Ian's think the solution

is government intervention including monetary policy tinkering right But on

the other hand supply siders say Kane's Ian's well have

got it all wrong At the end of the day

the market will always be a mix of both supply

and demand We'LL just keep letting that Adam Smithy and 00:03:34.558 --> [endTime] invisible hand you know do its thing at no