this post was submitted on 05 Apr 2024
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Think longer term. Let’s go with that Fruit analogy. If you have a fruit tree in ideal conditions and begin growing more, eventually you will hit conditions that are not ideal. You can make them more ideal, you can buy more land that is ideal with the fruit proceeds. But eventually you will run out of land where it is possible to grow fruit trees. The supply is now limited. But before that, you will hit a point where people no longer demand the fruit, and your fruit is not worth the upkeep of your orchards.
So you increase the price to try and reach parity before you farm all the land, and you keep a store back for droughts and other problem periods. (Companies like DeBeers store back diamonds to hit this point artificially without risking a drop in demand)
Now imagine every person is trying to grow as many fruit trees as possible. That land runs out a lot faster and the saturation point is reached faster. The point where it makes sense to grow more trees is hit a lot sooner.
Advertising is another form of artificially raising demand. If you think you are hitting an equilibrium you have to start trying to convince people that your product is special and better than the other guy’s product.
Ultimately, the system is finite because land is finite, demand is finite, and people are finite. You can’t expect eternal growth in a finite system.