When did the USA last face a Supply Side crisis and how did we solve it?

There are two elements necessary to a modern economy in the developed world, a supply side, which means the creation and distribution of goods and services, or supplies; and a demand side, which means consumer demand to buy, use and replace those supplies. When those two elements are in good ballance, the economy hums. There are plenty of jobs making and distriuting goods and services, and the suppliers find plenty of demand for their goods and services because everybody has jobs and is earning plenty of money so that they can buy those goods and services.

If either the supply side or the demand side gets deflated, the whole economy slows down just like a bicycle does if it has one flat tire.

To carry the bicycle analogy further, let’s call our bicycle “The Economy” and name its front wheel Demand and its back wheel Supply. If Supply goes flat—there are not enough goods and services to meet the current Demand—you fix it by patching the leak and pumping up Supply. If Demand goes flat, you fix it by patching and pumping up Demand.

So before trying to fix an Economy that’;s got a flat, it is vital to figure out which tire is flat. Putting a patch on Supply and pumping air into it when Demand is really the flat tire will only make things worse. It will over inflate the one side of the Economy still in working order, and blow it up. Now you have an Economy with not one flat tire, where a simple patch and some air would fix it. It now has a tire needing a patch and another tire completely ruined by overinflation to the point it blew out.

So are we facing a supply side that’s flat now or a demand side that’s flat? When was the last supply side crisis the US faced? How did it get fixed? Shouldn’t the fix for our current economic woes focus on the side of the economy that’s gone flat?