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The Water Cooler
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The shortages are starting
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<blockquote data-quote="JR777" data-source="post: 3567596" data-attributes="member: 45725"><p>It's undercapitalization throughout the entire supply chain. Companies don't have enough cash, so they're all living month to month. Nobody wants to produce/manufacture/hold in inventory one more pound of raw or one more widget than they're guaranteed to sell that month. They're afraid of getting stuck with a bill they can't pay if sales aren't good enough.</p><p></p><p>The problem is that every node backwards in the supply chain takes longer and longer to fill orders and adjust to changes in demand. By the time you get back to drillers and miners, a shortage could take years to adjust for.</p><p></p><p>This causes prices to go up, because you get shortages and a loss of economy of scale, which pulls even more capital from the supply chain, making the problem all that much worse.</p><p></p><p>What we're seeing right now is the end stage of what happens when the government sucks the economy dry, and capital is replaced with debt.</p></blockquote><p></p>
[QUOTE="JR777, post: 3567596, member: 45725"] It's undercapitalization throughout the entire supply chain. Companies don't have enough cash, so they're all living month to month. Nobody wants to produce/manufacture/hold in inventory one more pound of raw or one more widget than they're guaranteed to sell that month. They're afraid of getting stuck with a bill they can't pay if sales aren't good enough. The problem is that every node backwards in the supply chain takes longer and longer to fill orders and adjust to changes in demand. By the time you get back to drillers and miners, a shortage could take years to adjust for. This causes prices to go up, because you get shortages and a loss of economy of scale, which pulls even more capital from the supply chain, making the problem all that much worse. What we're seeing right now is the end stage of what happens when the government sucks the economy dry, and capital is replaced with debt. [/QUOTE]
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