Losing Interest

Give them money, and they will spend.
If you make it, they will buy.

If lower prices mean more sales,
then lower interest rates mean more borrowing.

   Maybe. But fear prevents action. If  consumers, investors and producers are pessimistic, then they are less likely to spend, and more likely to stash their cash for a rainy day.

   More money (supply) means lower interest rates (cost of borrowing). So if supply increases and price goes down, demand should rise.
   Since demand for money means more firms invest in production, that should result in a more active economy and recovery from an economic downturn. And as more product becomes available at lower prices, this results in increased sales.
   Or so goes the theory, leaning heavily on supply side economics. In the case of money supply, that means quantitative easing, which is what the Federal Reserve now calls increasing the money supply in an effort to keep interest rates down and thus encourage more investment and in turn economic recovery.

   It's one thing to make money more available, but it's quite another to actually spend it. And that's where consumers come in, since 80 percent of GDP is related to consumption.
   So to reboot a faltering economy, consumers must be enticed to increase spending. If they don't, government can step up, and through fiscal policy (government spending) it can put people to work so they have income to spend and the economy recovers. Then, when it does, government and the Federal Reserve, in its role as the nation's central bank that controls the supply of money, can step back as the economy rolls along on its own.

   However, there are those who insist that government has no role in a nation's economic health; that government should not intervene in any way, ever. And if government is involved, as is true in America today, then government should pull out entirely, reducing its involvement, cutting its deficit and paying off debt.
   Clearly, however, this only worsens an already dire problem.
   Money fuels the economic engine. By not sustaining the fuel flow, the engine stalls. And if people -- consumers, investors and producers -- fear a stalled engine, they are less likely to buy tickets or get on the train.