What you need to know
All other things being equal, the more of anything that you create…the less valuable it will be.
This applies to many areas of our life.
Although ‘Supply or Demand’ can become distorted for extended period of time, there is a constant natural force to find equilibrium.
There is a famous saying that sums this up; ‘The Cure for Low Prices is Low Prices…The Cure for High Prices is High Prices’.
Examples
- If Picasso’s painting were mass produced they would be worth less than they are now.
- If a company over issues stock it will lower the value of the stock, diluting the current share holders.
- If a currency is over printed it loses it loses more of it’s value, each additional currency created further dilutes those already created.
- If everyone has a Masters Degree they are less valuable.
- If farmers plant too much corn prices will go lower and be dis-incentivized to plant corn.
- If there is a shortage of corn and prices rise, farmers will be incentivized to plant more corn.
Eventually there comes a point where so much currency has been created that it can longer even support all those that profit from merely creating it out of thin air.
