As the presidential election begins to take shape it's becoming clear that the economy is the dominant issue.
What does that mean?
Hard to say.
After all, it's been said that if all the economists in the world were laid end to end they would never reach a conclusion. When partisan politics is added that problem expands exponentially
So let's try to get down to the basics. Simply put, economics is the law of supply and demand. If there is less of something that people demand, the more "that" something costs.
That's the economic law. And on the other hand, if there are more supplies of "something" than the amount people want, the less that something costs.
And, equalibrium exists when what people want equals what can be supplied.
Imagine a teeter-totter. On one side sits demand. On the other sits supply. The two sides balance on a center point of equilibrium.
This is somewhat of an oversimplification, but it illustrates the principle.
Actually though, economics is more cyclical than linear. Think of a coiled spring.
The top would be supply, the bottom demand, and the sides equilibrium.
The economy spirals upward around cycles shifting from supply to demand.
As long as the spring can absorb shocks, bouncing from heavy supplies and pushing against lots of demands, we have a healthy, resilient economy.
If there is too much demand-not enough of what people want- the result is inflation.
That's because people are willing to pay more for something if they want it or need it bad enough.
If there's too much supply -- more things on the shelves than people want -- the general result is deflation and unemployment.
Okay, enough about the basics.
Inflation and unemployment are issues we ask our government -- and the Federal Reserve -- to try and keep in check. The Fed, which is an association of the nations’ banks, primarily use interest rates to try and control the demand for money.
Money is much like any other product.
Interest is the price we pay to use it.
When we say "It's the economy," we are saying it affects us all, and we want to know what the dickens the president, or his Republican challengers, will do about it.
Republicans frequently hold up Ronald Reagan as an example of a good leader, by nearly all accounts. But his was a different time.
Thirty years ago, raging inflation was the national problem.
Enter Reagan's "supply side economics."
The idea behind supply side economics -- to cut tax rates to give the wealthy incentives to invest in business and for business owners to expand -- provided supplies to meet demand.
This, coupled with a recession and policies that slowed wage growth, as well as changing the formula for figuring inflation, began to turn things around.
By the mid-80s inflation, as it was figured, was half of what it was in 1979.
No matter how you figure it, that's not the case today.
Prolonged under-employment and weak demand are greater threats than inflation.
So why try using "supply side" policies to cure a different problem?
That's like trying to cure heart disease with chemotherapy.
Reid Rodgers lives in North Platte and studies economics and finance in his spare time. He recently performed on the national televised Jeapordy quiz show.