The Predictable Trap Of Market Cycles

Markets sometimes enter a chaotic loop because farmers decide how much to grow based on last year's prices. This lag often triggers a cycle of gluts and shortages that creates a repeating pattern of price swings.

This model explains why supply and demand don't always reach a perfect balance instantly. When everyone reacts to yesterday's prices, they inadvertently flood the market at the same time, causing prices to crash. Then, seeing the low prices, they cut production, which inevitably leads to a supply shortage and price spikes. It turns the simple act of selling goods into a rhythmic, repeating dance of economic instability.