Hacker News Reader

Comment by Animats | Hacker News Reader

What worries me is that a shortage economy could become the new normal. If you're selling 100% of production and can't fill all the orders, profits are great. What kept companies from running in that mode was fear of competition. If the "free market" no longer generates new entrants, why expand and risk overcapacity and losses?

View on HN

Basic supply and demand economics. Low supply means high prices but it also means low unit sales, and this is rarely the most profitable state. Once supply recovers, and it will recover, supply will increase.

Hey, this "supply and demand" curve picture on Wikipedia is tiny, anyone got a freely licensed higher resolution one they can upload?

https://en.wikipedia.org/wiki/File:Fig5_Supply_and_demand_cu...

Free money throws a wrench in that because you’ll have parties willing to spend drastically more than a product is worth (be it due to some combination of one or more of free government money, lack of common sense, or obscene wealth) giving suppliers an opportunity to raise prices beyond what they normally could to compensate for the lost profit margins due to low unit sales.

It’s a wacky world out there right now.

Like in the real estate market right now in a lot of places in the US

Why wouldn't companies raise their prices to match demand in the long term?

More motivation for another company to swoop in and completely crush your business by offering stable supply.

If China goes hard on chip manufacturing, they could economically crush Taiwan.

It means that inflation is going to continue. You raise prices to abate demand

The word your looking for is “inflation.”

Reply on news.ycombinator.com