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> Seems to me I can still have demand for more dollars. Only to the maximum capacity of your ability to fulfill the wishes of other people. A dollar is, after

> Seems to me I can still have demand for more dollars. Only to the maximum capacity of your ability to fulfill the wishes of other people. A dollar is, after all, an IOU. For someone to willingly give you an IOU, you have to give them something first. While a single dollar may not satisfy you, there is an eventual limit to how much you can meaningfully give. Of course, as IOUs can be traded, the value is also subject to the properties of supply and demand. > The difference matters when it comes to determining prices. That's fine. The law of supply and demand isn't some kind of enacting force. It is not a law in the legal sense, if that is where you confusion lies? It is an observational law. The observation does not concern itself with the exact mechanics of how the price is determined, it merely notices the relationship of price as a function of supply and demand. > the government typically sets commodity prices regardless of the supply or demand conditions. And you will notice that the law of supply and demand still holds.

Rury 2y ago
> For someone to willingly give you an IOU, you have to give them something first Not necessarily, someone can just hand me a dollar for nothing in return. > While a single dollar may not satisfy you, there is an eventual limit to how much you can meaningfully give Agreed, that limit is what total supply is. > It is an observational law... it merely notices the relationship between price as a function of supply and demand Agreed. > But you will notice that the law of supply and demand still holds. This idea that supply and demand only applies in a competitive free market is completely unfounded Yes, it still holds from the perspective of what's actually being traded. But notice it's possible to withhold something from being traded. The stuff withheld is not priced according to the law. However, the price of stuff which is still being traded, still is.
- randomdata 2y ago
  > Not necessarily, someone can just hand me a dollar for nothing in return. Value is certainly subjective. While it is possible you might find someone seeing a dollar as being worthless, just as they might give you a house for nothing in return, I don't expect you will find that to be scalable. If you have a thirst for all the dollars you can get your hands on, you are bound to go thirsty relying on this. > Agreed, that limit is what total supply is. There is a limit on supply, but also a limit on demand. That's why we call it "supply and demand", not just "supply". In a "normally functioning" market, demand actors start to drop out of the market as price rises. In fact, you can see this happening in the housing market. A lot of people can't afford a house, so they are no longer participants in the housing market. They may still wish to own a house, but that's not demand, that's dreaming (or what you might call latent demand). Hence why a shortage occurs when price is unable to rise. When price is unable to rise, there is no price-based mechanism to see that people leave the market, creating a situation where "demand exceeds supply". Which is why you will typically see alternate mechanisms step in instead, such as a lottery, or offering on the basis of first-come, first-served, to force people out some other way. A medical doctor with an ethical, and often legal, obligation to not allow price to rise is apt to use a needs-based mechanism, serving the patients in most need of care ahead of the richest patients with the common cold. That's certainly not the case in the housing market, though. Price is most definitely able to rise – demonstrably so. > But notice it's possible to withhold something from being traded. Of course – at which point it ceases to be supply. Just like, as above, it is possible to withhold on the other side of the transaction, at which point that ceases to be demand. This is exactly what the law of supply and demand describes.
  - Rury 2y ago
    > They may still wish to own a house, but that's not demand, that's dreaming (or what you might call latent demand) Again this is a matter of where you draw your boundaries. Latent demand is still demand which exists just demand withheld from the market (ie priced out). >Of course – at which point it ceases to be supply But it is still supply which exists, just supply which is withheld from the market (ie not supply for sale). This is why I made the point of "supply" and "supply for sale". You're never going to help home prices by building more houses, if what you build is withheld from the market, because, if we use your definition of supply: >it ceases to be supply. Do you disagree?
    - randomdata 2y ago
      > Again this is a matter of where you draw your boundaries. Just as with the boundaries of what shape the earth is. If you want to consider it flat, good on you. But if you want to talk about the law of universal gravitation, you'd better be prepared to accept that the earth is approximately a sphere (at very least, toroidal). Otherwise you are contradicting yourself. > Latent demand is still demand which exists just demand withheld from the market (ie priced out). It exists in the world where the price is lower. It does not exist in the world where the price is higher. That divide is what supply and demand observes. The law of supply and demand says: When the price of a good or service falls, there tends be less willingness to sell said thing (decrease in supply) and when the price of a good or service rises, there tends to be less willingness to buy said thing (decrease in demand). Likewise, when the price of a good or service rises, there tends to be more willingness to sell said thing (increase in supply) and when the price of a good or service falls, there tends to be more willingness to buy said thing (increase in demand). That's it. Not exactly groundbreaking. If you've ever stepped outside, even if only in Soviet-era Russia, you probably already reached the same independent observation. Why you think you need a "competitive free market" for that to stand is a head scratcher. > But it is still supply which exists, just supply which is withheld from the market It is something that still exists, but it is not supply as the law of supply and demand considers it. If "supply" was all things out there in the world, and equally "demand" every last wish someone has for something, we couldn't talk about supply and demand. It fundamentally could not be a concept. So what is it that you do think we are talking about?

Rury 2y ago

> For someone to willingly give you an IOU, you have to give them something first Not necessarily, someone can just hand me a dollar for nothing in return. > While a single dollar may not satisfy you, there is an eventual limit to how much you can meaningfully give Agreed, that limit is what total supply is. > It is an observational law... it merely notices the relationship between price as a function of supply and demand Agreed. > But you will notice that the law of supply and demand still holds. This idea that supply and demand only applies in a competitive free market is completely unfounded Yes, it still holds from the perspective of what's actually being traded. But notice it's possible to withhold something from being traded. The stuff withheld is not priced according to the law. However, the price of stuff which is still being traded, still is.

randomdata 2y ago
> Not necessarily, someone can just hand me a dollar for nothing in return. Value is certainly subjective. While it is possible you might find someone seeing a dollar as being worthless, just as they might give you a house for nothing in return, I don't expect you will find that to be scalable. If you have a thirst for all the dollars you can get your hands on, you are bound to go thirsty relying on this. > Agreed, that limit is what total supply is. There is a limit on supply, but also a limit on demand. That's why we call it "supply and demand", not just "supply". In a "normally functioning" market, demand actors start to drop out of the market as price rises. In fact, you can see this happening in the housing market. A lot of people can't afford a house, so they are no longer participants in the housing market. They may still wish to own a house, but that's not demand, that's dreaming (or what you might call latent demand). Hence why a shortage occurs when price is unable to rise. When price is unable to rise, there is no price-based mechanism to see that people leave the market, creating a situation where "demand exceeds supply". Which is why you will typically see alternate mechanisms step in instead, such as a lottery, or offering on the basis of first-come, first-served, to force people out some other way. A medical doctor with an ethical, and often legal, obligation to not allow price to rise is apt to use a needs-based mechanism, serving the patients in most need of care ahead of the richest patients with the common cold. That's certainly not the case in the housing market, though. Price is most definitely able to rise – demonstrably so. > But notice it's possible to withhold something from being traded. Of course – at which point it ceases to be supply. Just like, as above, it is possible to withhold on the other side of the transaction, at which point that ceases to be demand. This is exactly what the law of supply and demand describes.
- Rury 2y ago
  > They may still wish to own a house, but that's not demand, that's dreaming (or what you might call latent demand) Again this is a matter of where you draw your boundaries. Latent demand is still demand which exists just demand withheld from the market (ie priced out). >Of course – at which point it ceases to be supply But it is still supply which exists, just supply which is withheld from the market (ie not supply for sale). This is why I made the point of "supply" and "supply for sale". You're never going to help home prices by building more houses, if what you build is withheld from the market, because, if we use your definition of supply: >it ceases to be supply. Do you disagree?
  - randomdata 2y ago
    > Again this is a matter of where you draw your boundaries. Just as with the boundaries of what shape the earth is. If you want to consider it flat, good on you. But if you want to talk about the law of universal gravitation, you'd better be prepared to accept that the earth is approximately a sphere (at very least, toroidal). Otherwise you are contradicting yourself. > Latent demand is still demand which exists just demand withheld from the market (ie priced out). It exists in the world where the price is lower. It does not exist in the world where the price is higher. That divide is what supply and demand observes. The law of supply and demand says: When the price of a good or service falls, there tends be less willingness to sell said thing (decrease in supply) and when the price of a good or service rises, there tends to be less willingness to buy said thing (decrease in demand). Likewise, when the price of a good or service rises, there tends to be more willingness to sell said thing (increase in supply) and when the price of a good or service falls, there tends to be more willingness to buy said thing (increase in demand). That's it. Not exactly groundbreaking. If you've ever stepped outside, even if only in Soviet-era Russia, you probably already reached the same independent observation. Why you think you need a "competitive free market" for that to stand is a head scratcher. > But it is still supply which exists, just supply which is withheld from the market It is something that still exists, but it is not supply as the law of supply and demand considers it. If "supply" was all things out there in the world, and equally "demand" every last wish someone has for something, we couldn't talk about supply and demand. It fundamentally could not be a concept. So what is it that you do think we are talking about?