A President is measured by how well the economy did during his term in office. More specifically is whether unemployment went up or down, and did they help the economy to fight inflation. Two basic modes of thought on the subject have pervaded public policy since World War II: demand-side and supply-side economics. Demand-side economics is generally known as Keynesianism, named after the English economist John Maynard Keynes. He believed that governments should force interest rates down by printing money and lending it from the central bank at a discount. This would put more money in consumers' hands and encourage them to spend and consume more, thus creating an incentive for investment. This helped to solve some of the problems, but in the long run it is extremely inflationary, because with the increase of the money supply it becomes devalued. Keynesianism also calls for the government to spend more to try to help the economy grow. Keynesianism is a short-term solution to an economic problem and could only do so much for the economy before inflation caches up with it, and takes it into a recession. On the other hand we have supply side economics, which works on more of a long-term basis. It basically attempts to stimulate economic growth, which would reduce inflation, and raise the standard of living. Supply side proponents say that by reducing government regulations and taxation, this will stimulate more economic growth, and market equilibrium will be reached on its own, without government impositions.(pg 338 Mings, Marlin) Keynesianism was popular until the late 1970s during a period of stagflation, where both unemployment and inflation were rising together.(pg 339 Mings, Marlin) Policymakers realized that they could not solve this problem with Keynesian ways of thought. When Reagan came into his Presidency he was faced with an economy that was in recession; th...
