☕ John Tamny takes on the New York Times in his latest for Real Clear Markets:
But the main truth is that we can only demand goods and services insofar as we supply them first. Glut theorists presume that goods and services just exist for us to demand. Adding to their confusion, glut theorists presume that producers create goods and services without any desire to attain goods and services in return. No, they create so that they can get; the more value they create, the more they can demand. And that’s why prices balance. There are never local, national or global gluts simply because the production equals demand.
So while prices of steel and oil as the 20th century ended mock the odd notion promoted by the New York Times that either commodity is presently oversupplied, the greater truth is that the Times’ proud “discovery” of a perceived economic ill was nothing of the sort. The very notion of a global glut is an impossiblity given the basic truth driving all economic activity: we export so that we can import. The latter, by its very description, speaks to balance.