Thursday, December 23, 2010


From Wikipedia :

In economics, demand is the desire to own anything, the ability to pay for it, and the willingness to pay. The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time [my emphasis].

The ability to pay is our current problem with demand. Prices generally are increasing due to inflation and increased energy prices, which are a de facto tax as a result of direct and indirect government intrusion in the market. We have a two-year extension of our current tax rates, which will be increased if the current administration has its way. We have an official unemployment rate which has been hovering just under ten percent for the past year and a half, despite the "best" efforts of the statists. Banks do not want to make loans. In other words, the financial future is clouded and uncertain in the best of best-case scenarios. What, then, happens to demand?

Negative expectations about future income may discourage present consumption.


No comments: