$this->bbcode_second_pass_quote('ralfy', '')$this->bbcode_second_pass_quote('Outcast_Searcher', '
')Wrong. Supply and demand predicts how buyers will react when prices shift. No one credible ever said this magically ensured all the supplies of every form anyone wanted. No one credible ever implied this altered the laws of physics.
PeakOil is You
Economics vs. ETP
Re: Economics vs. ETP
by Outcast_Searcher » Wed 19 Oct 2016, 19:14:22
$this->bbcode_second_pass_quote('', '
')From what I know, the supply curve shifts to the right to maintain equilibrium, but for that to happen, quantity has to shift to the right as well. Given limits to growth, which includes peak oil, as well as diminishing returns, will quantity increase indefinitely?
With respect, I think we're failing to communicate, based on your response above. (If demand for something increases, then for the price to remain the same, then yes, the supply has to increase for that to happen. That's basic microeconomics.)
Again, supply and demand curves only predict how rational people will react to changes in (drum roll please): supply and demand. Whether we're talking about oil, apples, or dancing girls, they don't say anything about guaranteeing there will be adequate supplies of whatever you want.
This has nothing to do with how much oil there is and people will demand, whether electric cars will solve that problem, etc. I think you have a beef with BAU and endless growth (and so do I). But that's not a failure of economics (again, supply and demand works for various different economic systems, the free market being only one).
You wouldn't blame "math" because you need 7 apples, but you only have 2 piles of 2, would you? Surely the mismatch of apples would have to do with the consumers or the producers or the transport, not the math.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Economics vs. ETP
by ralfy » Fri 21 Oct 2016, 13:11:45
$this->bbcode_second_pass_quote('radon1', '
')
Why, WHY does it have to be rising? It does not. No increased sales=> no share price growth=>no returns=> no investment. Full stop. There is no need for the consumption to be rising out of nowhere.
')
Why, WHY does it have to be rising? It does not. No increased sales=> no share price growth=>no returns=> no investment. Full stop. There is no need for the consumption to be rising out of nowhere.
Increased sales can only take place if there is increased consumption.
Also, increased consumption does not "rise out of nowhere." It comes from groups of people in emerging markets who are now earning more money and spending them:
http://www.bbc.com/news/business-22956470
not to mention banks extending credit by offering credit cards, home and car loans, etc. This is expected as banks have to lend more in order to earn more.
$this->bbcode_second_pass_quote('', '
')What is the objective force that makes the consumption rising, can you explain this please, instead of continuing these general declarations that "it has to be rising"? What is the specific mechanism?
It's competition coupled with growing numbers of people entering the work force, innovation which allows for new products to be made and sold not only to existing but also to new markets, and investors with lots of credit eager to invest in various businesses worldwide. This explains not only the articles which I shared earlier (and which you should read) plus credit extended to consumers through credit cards, home loans, car loans, etc. In fact, banks and other businesses are even marketing investment opportunities to consumers through instruments involving mutual funds with insurance riders, etc.
$this->bbcode_second_pass_quote('', '
')
This is delusion. Investors don't fund anything. To the contrary, they draw consumer money from the consumers. This is the only reason they turn up out there in the third world countries.
Money invested is used to build dams, rail systems, factories, etc., as well as buy mining equipment, chemicals for agricultural production, etc. These are used for operations which involve generating power, various goods, and services, which in turn are purchased by consumers and even other businesses. The revenues earned are used to pay for expenses (including paying part of loans plus interest), with the remaining income used to pay taxes and for further expansion, if not shared as dividends to investors.
That's where the returns on investment come from. Of course, investors can also speculate, e.g., bet that the value of a business will go up or down and bet on that with other investors, but the value of such is ultimately based on profitability, which in turn is based on the operations, etc., mentioned above.
The irony, then, is that as more investors draw more money from consumers through increased consumption, they re-invest even more money, for which they can get returns if there is even more consumption.
Of course, this can only stop if investors stop investing. Which is not likely.
$this->bbcode_second_pass_quote('', 'T')hese conditions did not ignore anything. These are the only conditions which may attract money (dollars) into a country, which in turn attract investors into the country.
Again, the resource base to be exploited doesn't lead to manufactured goods immediately. Roads, dams, factories, etc., have to be built, and people have to be hired. The goods have to be sold in order to earn, which is the source of returns on investment. But as markets to which goods are sold become saturated, then businesses turn to other markets, especially when they have large numbers of young people eager to work and spend using what they earn. Add to that the same investors eager to lend to the same people through credit cards, all sorts of loans, etc., and we end up with
http://www.bbc.com/news/business-22956470
And that has been taking place for many years, as seen in multiple articles I have shared so far.
But since you insisting that all of these are part of "delusion," then I can only conclude that you are referring to another planet. With that, I'm afraid I'll have to add you to my ignore list, as you seem to know very little about how investing, businesses, or economics works.
