Quote:
Originally Posted by DonQuigleone
I would say prices would rise, mostly because the supply of goods will be constricted, and you'll get disaster profiteering.
I don't know what liquidity has to do with it, but my guess is that if money starts flowing into a region, it'll only make prices higher(more money chasing the same amount of goods).
The way to counter this would be to pour free supplies into the region ("disaster relief") which should bring down prices.
|
Should have added the phrase "no textbook assaults please". My bad.
Liquidity increases trading volatility, increases fear in the market, hurt market confidence, and causes things to end low then go sideways. From the non-domestic consumption POV, it will go down. From domestic consumption POV, it might not register because money is worthless during a disaster.
In real life scenarios, textbook economics rarely make any sense. The real problem now is I can't chart any fucking scenario because textbook economics doesn't take into account logistics management due to area accessibility and cultural psychology.
The amount of trade into a certain area determines price of necessities, discounting the theory of Giffen and Veblen goods. But the lack of necessities and trade will mean that the area becomes underdeveloped during reconstruction, resulting in lowered accessiblity and driving up the cost of goods due to reduced rate of supply. This will result in a diaspora, thus driving the price of goods AND liquidity down.
In the case of developed countries, will this mean that the cost of doing business in that area stay stagnant due to a mentality of holding a property vs taking a loss? Or will the owners liquidate assets in that area causing the price of freehold to drop too?