3 ms·

I dont't think so, because supply can't keep up with demand. So lowering demand even significantly would have no impact on supply, i.e. the economic output.

• legutierr 4y ago
  Surely the problem is that the supply of various goods is hitting physical limits. A reduction in demand wouldn't reduce supply; instead it would cause demand to be more in line with a fixed supply level.
  • aeternum 4y ago
    Which goods are hitting physical limits? This generally doesn't happen with capitalism.
    • wafriedemann 4y ago
      There definitely is a limit, but most certainly there are a ton of temporary limits. You need more workers, which are limited (the US is basically at full employment), you need new factories (which take time to build), you need to factor in if the increased demand is sustainable (otherwise you wouldn't build it).
• adam_arthur 4y ago
  Supply of pretty much everything is above pre-pandemic levels. Just that demand is even higher. A balanced outcome is always a function of both supply and demand
  • wafriedemann 4y ago
    That is what I am saying.
    • adam_arthur 4y ago
      My bad then, I read your comment differently. I see a lot of people saying Fed shouldn't raise because it's a supply side issue, but blunting demand in these situations is exactly what the Fed is meant to do, since supply is fixed in the short/medium term