That’s not quite it.

Let’s use oil as an example because it’s easy to understand in the following terms.

Every day the world consumes 100m barrels of oil, this is ~ 36.5 bn barrels a year (approx 1 cubic mile of crude oil).

Let’s assume Scenario A where the market is perfectly supplied and the price of oil is thus $80, and the value of the cube is $2.92 trillion.

Now in Scenario B the industry produces 2% surplus oil (102m barrels per day), that’s 37.23 bn barrels a year and in this scenario the price of oil is low settles at $40. Now the suppliers are producing 2% and the value of this 2% larger cube is $1.489 trillion.

Now I’m Scenario C the industry produces a 2% deficit of oil (98m barrels per day). That’s 35.77 bn barrels a year. In this scenario the price of oil is $120. So the value of the smallest cube of the 3 is actually $4.29 trillion.

The abundant (oversupply) scenario is the worst scenario for suppliers.

These are REAL examples based on real data, and you get the same result in any monetary system.

It works the same if demand varies by +/- 2%

If AI causes aggregate demand to fall by 2% yoy then the market will be oversupplied and each marginal additional unit of production has NEGATIVE REALISED VALUE for the suppliers.

Every surplus unit destroys the value of ALL previously produced units.

Prices are vastly more sensitive to supply / demand imbalances than they are to the money supply. Diverging commodity prices prove this.