No. of Recommendations: 5

As I become more and more convinced that "supply-side" is a cult, not economics, that substitutes creative accoounting for the law of supply in demand, I also become skeptical of the "strong dollar" policy that says it is fine to have a huge trade deficit, since that encourages overseas investment in the US. Return on investment has to come from profits, not pumping up stock prices, and profits come from selling stuff (i.e., demand). At best an oversupply of capital, assuming it actually becomes working capital and not just play money on the stock market, will be deflationary, since companies competiting to sell stuff of which they are making more than they can sell easily, thanks to their excess capital, drives down prices—this is really just Das Kapital 101.

On the domestic front, that poor student deep in debt, can only provide demand by getting deeper in debt, or landing a very well paying job that can get her out of debt, and I fail to see where enough well paying jobs can come from without demand. In fact, I fail to see where well paying jobs in the future will come from, anyway—no offense, but we only need so many lawyers, it doesn't take a whole lot of executives to manage stuff (company payrolls are already bloated by redundant management), and so on. At the university, there are a lot of cutbacks on "staff" going on: the fact is, with computerization, we no longer need secretaries and administrative assistants, which has been one way, especially for women, to become upwardly mobile. I simply see no well paying jobs in a "service economy": just a handful of filthy rich, and "wage slaves" at Walmart.
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