HOW IMPORTANT IS EQUILIBRIUM IN THE MARKET?
Equilibrium is only as important as it is to maintain balance. Unbalance is necessary to create movement. If we are always in balance, we would not be able to walk because in walking we must pick up one foot off the ground and move it. Then we are standing on only one foot, and we are off balance. That’s why somebody can trip you by stopping your foot, then you fall over. You are off balance all the time while you are walking. That’s how you can move. The economy is never in balance. Things keep changing, and if it stops it’s called stagnation. Nobody knows what equilibrium is. Equilibrium means the number of cars bought equals the number of cars made. But how can the car dealer know how many cars people will buy? That’s why some car dealers will tell you, sorry, we’re sold out of cars today. Other car dealers have too many cars and they can’t sell them all. People can only guess what the equilibrium point is, and often they guess wrong.
