Re: Pegasus Island: Thought experiements on the nature of money and economies.
In modern society, very often majority of the demand is fulfilled, each producer are dumping excessive goods in an attempt to get most liquid assets (usually money) from the other, then it does not benefit anyone
Even in a modern society, imagine Alice produces Californian sparkling wine, and sells them for $10/bottle to Bob. Bob buys 100 bottles, pays a $10 dollar shipping fee and sells them for $12 dollars/bottle in Japan. Then 100 people buys Bob's wine.
Alice made money, Bob made money, and the 100 people made money because otherwise they would have to pay $20 dollars to get that bottle of sparkling wine shipped to them. So in effect, they each saved 8 dollars.
The scenario you described is not low demand, there are still demand for those sparkling wines
In reality, it is very likely that Alice is producing sparkling Californian wines and Bob is producing is sparkling Canadian wines and Keiko is producing sparking Hokkaido wines and they all compete on the international wine market and there will be a price war to drop their price even below the production cost. And there is a race to drop the production cost and shipping cost further by using robots and drone delivery, and fire more workers, just because the winner could sell a bit more wine and get some fiat money
Worse than that, since both Alice and Bob and Keiko could get loan from their bank, the ability to defeat their competitors will depends on how long they could sustain the operation at a loss (the loss is coverd by a long term loan). After 5 years of price war, eventually Alice and Bob are out of business because the Japanese central bank gave Keiko 1 billion dollar loan, helping her to occupy 90% of the international wine market, so that future human would mostly drink wine from Japan
