Have you even noticed how some things just seem to oscillate back and forth endlessly. Trying to decide between two options, the way people have their ups and downs, the way supply and demand never seems to settle out are examples of just this.

This situation is characteristic of two balancing loops with delays which provide the desired state for each other. Because of the delays in the structure by the time one value reaches the point it's headed for, its destination has moved, so it begins changing again. This is very much like shooting at a moving target, while you're moving.

Consider the following description of how supply and demand operate through price.

Demand and supply interact to establish the price. If demand rises, after some delay, it will add more to price. This increase in price will have a short term effect on demand, subtracting from it, and after some time it will add to the supply. If the product is worth more then there is a tendency to produce more. As supply increases it subtracts more from price, just at the time demand is made it through the delay to add less to the price. As such supply is more than appropriate for the demand and price decreases.

The decrease in price subtracts less from demand, increasing it, and after some time will produce a reduction in supply. So, by the time the increased demand reaches price supply has been reduced and they're out of sync one more time. This induces price to go back up.

Because of the delays in this structure supply and demand never seem to be what is appropriate for each other and price oscillates up and down, endlessly.

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