With Recession coming, everyone is a Demand Sider

"How's business?" means "What is the demand like?"

We've seen why over the past seven years. The consumer has kept the economy afloat. Business investment has been absent. This in spite of record low interest rates and huge Supply Side tax cuts.

Both consumer and government have financed their operations by borrowing. Both were abetted and encouraged by a Fed desperate for economic action. The federal funds rate dropped to the bottom and stayed their for four years.

Now debt financing is drying up for consumers and business, though the government for some reason is considered to be on firm financial footing and its bonds are becoming more valuable.

Where is the demand going to come from to pull us out of recession? More deficits? More credit cards? A magical returning business investment?

Concern about the health of the economy is well placed. One way out is to admit that the market driven consumer goods economy, guided only by greed on the part of both producers and sellers, has collapsed and to begin spending through fiscal policy.

Has the consumer society consumed itself along with the resources and environment of the world? Without debt, it is hard to see the way forward.

And we are without debt. While domestic demand for government bonds may be there, overseas investors cannot be happy with the declining dollar. They might as well buy banks as lend to the consumer. Consumer debt will be pinched by a financial sector seizing up under the recognition that $1.5 trillion is a lot of money. Mortgages? Who will lend with equity values going down?

Still, no matter how useful infrastructure, energy programs, or other government spending might be, it is not likely to happen. Thirty years of voodoo economics demonizing the state has left little political room for that.

The economy rotten from the inside -- corrupted by money, confused over what is important, constricted by sagging infrastructure and addled with no national identity other than "consumer."