One of the fundamental tenets of capitalism is supply and demand. But what happens when there is too much supply and not enough demand? You get Price Wars. This holiday season, big chains were packing their stores with ridiculous deals at minimal mark-up under the assumption that this would stimulate demand for their product. But what if consumers simply didn’t have the money to buy these heavily marked-down products?
The formula is a simple one: Too much product is flooding the global marketplace and there’s a chronic shortage of people with enough money to buy those products.
Price Wars will mark a new age of retail marketing. And even as commodity prices decline in many sectors, the cost of living will continue to escalate. Thus, despite deflation, for many it will feel like depression.