what I tried to do was explain more of a microeconomics level of understanding of how you drive an economy with repeatable growable businesses rather than economic policy.
I don’t believe pure monetary policy by itself can produce a great economy.
John the TIB
72

Demand drives growth, not increasing capacity, unless capacity is a bottleneck. Increase demand, IE purchasing power and business will always follow up with expanded capacity to match demand.

Upper income individuals do not spend all the money they make. That money is reduced/pulled from circulation when it is tied to investments, especially when you consider all the off shore investing that has been going on from the US.

Lower incomes spend all they make and more. Why more? Because they borrow when they have enough cash flow to do so. Hence giving money to the lower incomes *increases* money velocity, and conversely giving money to the upper incomes “reduces” money velocity.

The inflation problem was exacerbated through the “whip inflation now” program which was a series of pricing controls which dammed up normal inflation. Also remember that we went off the gold standard to fiat currency by Nixon in 1972, I think. I am not sure but I think that this might have contributed to the inflation problem you mention. Neither Carter nor Reagan nor any other President had control over these policies, though if memory serves me correct Reagan did replace Volker in 1987 with Greenspan. You could argue that in that way he did influence the Fed.

I really would advise that you try to conceptualize the process of creating money in our US economy.

The more you understand it the more you’ll realize that Dem or Repub, they affect very little of the overall economy and most of what they do gets in the way of the economy rather than helping the economy. Politicians don’t seem to know how money works either and they perform huge favors for the power brokers they represent.

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