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 was a short-term solution to the problem and could only do so much for the economy before inflation caught up

Throughout this period monetary policy, implemented by the independent Federal Reserve Board, commonly known as the Fed, was used to try to fine tune the short term economic situation by manipulating the interest rate, and the money supply, through it’s control over the banking system. With the Keynesian system, the Fed would want to increase the money supply by lowering interest rates and reserve requirements to increase the buying power of the people and increasing demand. The problem with this is that it causes inflation. It was not seen in the seventies that an excess of money caused inflation, because it was blamed on the oil crisis of that time period. With the success of the Reagan administration, it was seen that monetary policy must only be used to maintain the value of our currency and not as another instrument to fine-tune the economy.

Another factor that has helped the economy in the recent past is the increased in international trade, and international trade regulations such as the General Agreement on Tariffs and Trade (GATT). With the economic idea of gains from trade, a nation should choose to import products that other nations can produce more efficiently, and export those things that they can produce more efficiently. After World War II, the United States had the most powerful economy in the world, and they looked to increase their trade with other countries, so as to become more efficient at production of certain goods, and to promote a true world economy with globalized trading. GATT was formed to try to reduce tariffs and relax quotas, and especially to open the American market to foreign goods. Since it’s inception U.S. tariffs have dropped from over 30% in 1947 to less than 3% today.

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

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