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Ducks, rabbits, foxes, wombats and all other small and medium sized creatures demanded for an investigation into Goose's affairs. Why did he sell the homes for 16,000 seeds and let them drop to half of their original value? They demanded to be compensated for their losses. Goose again rushed to Scales and asked what he was to do. "What nonsense," the snake commented. "The houses were not overvalued. Anyway, if they were, no one would have bought them at those prices. The size, colour, number fonts and even plots of each one of them were exactly as your brochures described them to be, so how could the buyers have accused you of cheating them?" Goose persisted, "They do have a point. I mean, the houses did drop to only half their original value in less than a year." Scales rolled his eyes. "My dear Goose. No one was forced at gunpoint to buy your houses at 16,000 seeds. If the value of those houses were actually 8,000, the market would have waited until they drop to that level before buying any one of them. But buyers snapped them up at top speed and kept jacking up the prices. It has nothing to do with you. The market over-speculated and when the prices began to fall, the owners panicked and began undercutting each other." "All the way down to only half value?" "In this kind of situation, it is possible. Inexperience speculators will make a mess of the market. They are so afraid of not winning that they drive up prices, then they become so afraid of losing that they undercut each other." "Surely there must be a way to control this." Scales leaned his chin on the tip of his upright tail for a moment before answering. "No, I don't think there is. We live in a capitalistic society, where buyers and sellers negotiate for prices that they are willing to buy or sell at. After you sell off those houses, every which way the prices go are no longer in your control because they had gone under market forces." "But isn't there a way to tell whether something is over-valued?" "No, there is not. If the prices of everything goes up then we can say that we have an inflation and the banks can manipulate the circulation of currency by increasing interest rates, but if only the price of one item goes up, then we call it a shortage. Anytime demand becomes more than supply, prices will go up. That is just the way the market works." "Then there is no way to tell!" "Of course not, because it is the market that decides value. For example if you have 2 wooden doors made exactly to the same size and design but you paint one black and the other white, I can almost guarantee you that the black door will fetch a higher price because it is the trendier color. Does that mean it is over-valued? Certainly not, because the higher demand means that you have the upper hand in the negotiation of its price. Business is about selling a product at the highest possible price, or else it will not be worth your time. If you are lucky enough to spot a trend then you should capitalize on it, and no one has any right to accuse you of fraud. Even if, for example, you were to sell the black door at the same price as the white door, someone else will resell it at the higher price the market is willing to pay at." Goose sat on his haunches as he mentally chewed the arguments that Scales had put forward. The snake was right he finally conceded and went home with a clear conscience, as well as a way to persuade Judge Racoon that he had no control over market forces. Still he needed to find a way to avoid similar problems in the future because he had another big project in the making.
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