Economics for the Layman by a Layman

“ECONOMICS FOR THE LAYMAN BY A LAYMAN”

This is being written because it has come to my attention that the majority of people I have met and spoken to do not understand how the economics of the world works. To often we have academics use fancy rhetoric to explain what is happening in the world. This rhetoric often leads to such exclamations as “What the hell are they talking about?” I know because I often hear them using terms like macro and micro economics, Keynesian Theory, government intervention, stock market fluctuations, over valuation and on and on and on.
Economics is not hard to understand! It all relates to what companies want to sell and what the public decides to buy. It is supply and demand in its' simplest form.
If John and Betty want to buy a house and have the funds or the credit to buy a house they will buy it. We now have demand. If John and Betty want to buy a house but don't have the funds or credit they will not buy the house. In one instance they have created demand in the other they have taken it away.
When economic times are good and people are working for a fair wage and have a disposable income they are more apt to buy items that are considered luxurious, a boat, a second home, a new computer, that car they have always wanted. When people are unsure of their financial income or whether they will have a job in the near future they are more prone to put off these expenditures until a further date when times are better. When this happens companies will reduce their inventories and retrench which often leads to lay offs and business closures. And the economy spirals downwards.
In a nutshell the economy depends on the buying will of the populace, it is an emotional matter. It is how the public views their financial stability for the future. It is a psychological mindset.
The governments role in this is to create an atmosphere of euphoria to convince people that all is OK. They do this by government intervention. They can do this by using very dubious numbers and statistics, unemployment numbers, inventory growth, monetary policy, government subsidies, and the list goes on. What they are trying to do is stimulate the public that does have disposable income into believing that all is right in the playground so they go out and buy that new house or car which in turn will will stimulate a growth in inventory and possibly ignite business to expand and start hiring again. Because a working and happy public is a buying public.
And the circle continues.