Iron Law in Economics — From Psychology of Money

“There is an iron law in economics: extremely good and extremely bad circumstances rarely stay that way for long because supply and demand adapt in hard-to-predict ways.”

The example in the book comes from a prediction by Lester Brown in 2008 who predicted oil would run out entirely by 2030 from China’s use alone.

Oil became so profitable that people figured out ways to produce oil because it was so lucrative. Oil production went from 5 million barrels per day in 2008 in the US to 13 million per day in 2009.

The lesson mainly is that where there is big demand, people get creative and things change in ways that almost no one would have imagined.