Theoretical economic
reasoning starting with the flawed framework most economists operate under: The equilibrium mathematics of supply and demand.
This model doesn't come out of on actual science. It was invented in the 1870s to look like the real science of equilibrium thermodynamics.
Under this flawed reasoning, markets magically balance supply and demand through market pricing.
This works well until it doesn't.
Think about the Dust Bowl and the Great Depression. It took government intervention to dig out of those crises and it took continued regulation and subsidies to avoid a repeat.
But Sharpe goes further and claims that 🔥equilibrium is rare and deviations are normal🔥.
Equilibrium implies all is well and no intervention is needed. But real economies are dynamic.
This is not a bug, but a feature that offers great opportunity.-
https://books.google.com/books/about/Five_Times_Faster.html?id=A96iEAAAQBAJ
@cdarwin
No idea how you came up with that fallacy, but it's a fallacy. Supply/demand equillibrium doesn't mean what you think it means.
The only thing supply/demand determine is pricing, fer cryin' out loud. Under an equillibrium, all it says is that the price is right.
Sheesh.
@ClaraListensprechen4 @cdarwin I would say that is true for a special meaning of the word "right."
Consider some extremes of monopolies and their prices, particularly for essential goods (water, food, medicine).
Because the demand is intense (people wanting to live) and the supply is tightly controlled by one monopolist, the prices can be arbitrarily high. Which, as you say, is "right," but only for a special sense of "right." And we do see this — e.g., Martin Shkreli. Sheesh, as you say.
@Leisureguy @cdarwin
You've introduced a specialization in commodities that wasn't in your original post. Sheesh indeed.
@ClaraListensprechen4 @cdarwin I am not the original poster. I was just commenting on your answer, to indicate that I don't see it quite as simple as do you.
The original poster is another person.