5 ms·

That’s good though. We generally want demand to stay strong. Inflation sucks but if it’s just prices going up because supply went down, well that’s just the bre

• brutuscat 4y ago
  Demand should fall. Because of the [1]bullwhip effect. - Someone wants a car and ask the car dealer - car dealer orders 3 just in case because shortage - distributor orders 6 for the same reason - factory makes 12 because parts are short in stock Result: cars in demand 1, cars in stock 12. No more just in time production and huge demand imbalance. [1]https://web.archive.org/web/20220627205956/https://www.washingtonpost.com/business/michael-burrys-bullwhip-tweet-deserves-serious-attention/2022/06/27/0acb7812-f651-11ec-81db-ac07a394a86b_story.html?utm_source=twitter&utm_medium=social&utm_campaign=wp_business https://web.archive.org/web/20220627205956/https://www.washi...
  • wbsss4412 4y ago
    In your example, demand doesn’t decrease, it stays stable while supply increases. If anything you don’t want demand destruction if we are anticipating such a drastic increase in supply.
    • brutuscat 4y ago
      right, it is relative in a way too right? because for the factory and parts suppliers the demand is what comes down the supply chain... So one day they will be producing and getting parts for 10 cars and the next time nothing at all. So the part suppliers will see the demand of its production to fall, even though there might still be 1 person buying one car.
• nightski 4y ago
  It's good news if demand stays strong at a certain price point. If we are in a highly inflation environment and demand does not drop however that is not so good.