Price drop?

[Mark Daiute]

Just watched another non-molested 1898 go on Gunbroker for less the 6 bills. A trend?

[Dick Hosmer]

Hopefully not, but times are not good for toys.

[Mark Daiute]

The one I just picked up went for 450.00. Needed some very minor help and it is a wonderful shooter. I still have less than 500 in it including shipping.

[5MadFarmers]

Short version - "Yes, the big squeeze is on."

Longer version. Real long.

What is an economy? Economic transactions. Witness the game:

Throw 1:
Sit 10 people in a circle. Give the first guy $10 in ones. #2-#10 get nothing. Five rounds. #1 says "I'm rich." #2 asks for a buck. "No." Rinse and repeat for five circles. Total "income" for everybody is zero. Total taxes (30%) is zero. No economic activity.

Throw 2: Same rules. #2 says to #1 "I'll sing you a song for $1." "ok." #3 says to #1 "I'll shine your shoes for $1." "ok." Repeat through 4 rounds. On round five game it so #1 charges everyone for a joke. Fee is all they have. Total income is about $4 for #2 through #9. #1 has an income of $10. Economic activity took place. A "service" based economy as nothing was made.

It's not the amount of money in the system - it's the number of times it changes hands. That's economy. Lack of transactions is what caused the Great Depression. "Lack of liquidity." Not enough money in the system.

Fiscal policy: the government prints money and spends it on stupid crap. Keynes economics. Doesn't work as was seen in the late 1930s. WW2 solved the problem.
Monetary policy: give #1 $10. Print it and give it to him. Taxes will recover it. "Priming the pump."
Monetary policy being whored to fiscal policy: Print money and give it to people with no jobs. #1 ends up with all of it and puts it into the market. The crash destroys that wealth. "Too big to fail." The government burns the debt sheets but still owes for that printed money. This is where we're at. National Debt (that printed money) having no end of "growth." The game ends when there is no more money to print as it's worthless.

Export economy: there is no such thing as a "trade imbalance." It's a nonsense term. Build a car factory and the associated plants for parts. Make and sell cars. Pay wages and taxes. When the market is saturated you can't slow down as that puts people out of work. Less economic activity. So export them for worthless paper. Periodically burn that paper. Who wins? The exporter. Look at an economy that exports versus an economy that imports heavily and his their paper burned periodically. Import economies are basically monetary policy whored to fiscal policy.

That's it in a nutshell. The government has been whoring monetary policy to fiscal policy. Debt grows unimpeded. Who pays to service the debt? People with jobs. They then quit working for marginal dollars as they're worthless.

Then inflation starts. Discretionary spending slows. A death spiral ensues.

http://content.gallup.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/ily1g_4hmkcxp7qfguzgeg.png

Source page (http://www.gallup.com/poll/172532/consumers-spending-not-things.aspx)

Inflation takes over. Staples are pricey. Spending on hobbies slows. Guns for example.

Cart of groceries the other day cost me over $200.

War is the only solution. Take over Canada.

[Mark Daiute]

Thanks, 5. I think.

[5MadFarmers]

Thanks, 5. I think.

I'll annoy you with it another way.....

The government printed money like it was going out of style. Then gave it to people who don't pay taxes in the hopes that increased economic activity would get back in taxes. See the problem?

The government has two ways of getting that money back: taxes or inflation. Taxes won't work as rich people move their money off-shore (Burger King just fled to Canada) and poor people don't pay taxes.

Thus inflation. If I borrow $10,000 when $10,000 will buy a new car but pay it back when $10,000 buys a gallon of milk I've inflated my way out of debt. See Weimar Germany.

Increased inflation means people don't have money for guns as they need it to put a down payment on that Thanksgiving Turkey they've been eyeing up.

Thus gun values decrease as supply outstrips demand.

Some people, not anyone in particular...., retains guns as a hedge against haircuts. The market, for reasons of loose money, is hugely inflated. Gold was a traditional refuge but that's not possible any longer. Thus when the haircut comes, and I suspect it's going to be interesting, we're all going to find that is extreme. The market will take it in the shorts. Guns too will take it in the shorts but I suspect not as bad.

So gun prices will go down. Demand won't be there. That said they won't, I don't think, get the hit that mythical money (NYSE) will take.

Clear?

In the 1930s a grocier not terribly far from here accepted guns as payment for food as lots of people didn't have money. He assembled quite the Winchester collection.

Which brings us to that movie "It's a wonderful life." You know the one, Jimmy Stewart is the bad guy while one of the Barrymores (Lionel?, John?) is the good guy. "Potter isn't selling, Potter is buying." Good advice if you can afford it. The tide goes out and comes in with regularity. Buy low.

[Mark Daiute]

Damn! Guns and economics 101. It just doesn't get any better. I love this website. I've learned almost as much here as on the farm I worked on when I was in my teens and twenties. I hate to sound negative by I got a feeling the tide is going out and it's going way out.

[11mm]

While I generally agree with 5MF's assessment, the one aspect of guns that our currency does not have is that guns are tangible. Our currency is not, as it is not based upon anything. That will maintain firearms value to some degree. I suspect that the good values will be in the medium priced area (read 1903 rifles, Krags, Trapdoors) as the small "investment" players get out. The rarified price atmosphere of high value Colts and Winchesters. etc. will probably continue, based on rarity/scarcity. For most of us, a $10,000 Colt that drops to $8,000 because of the economics picture doesn't get much more appealing as a collector's item because it is down twenty percent. Of course, I have been wrong before.
During the Weimar era my family (I was told) sent a few $5 gold pieces to relatives living in Germany to help them out. The gold pieces were weighed down to the grain level for value on the other end. That's an endorsement of the tangible.
But you can always hunt with a Krag.

[madsenshooter]

"Mythical money", the people who see the truth of that are few and far between.

[5MadFarmers]

I hate to sound negative by I got a feeling the tide is going out and it's going way out.

You've heard the old saw about the two dudes and the bear right? The one starts lacing up his shoes with the other asking "do you really think you can outrun a bear?" "I don't need to outrun the bear, I just need to outrun you."

A rising tide lifts all boats. You'll hear that also. The two are related. A ebbing tide sinks all boats. The boats don't sink at the same rate. Like the dude with the sneakers you don't need to outrun the tide - just ensure you sink later than most and don't sink as low.

The government can't let all the boats sink. Thus the danger is limited. Just make sure you sink slowly. By the time you're about to take on serious water the tide will stabilize. Those that sink early drown.

So it's counter-intuitive but also a fact that running against the crowd instead of with it results in more progress. When everyone is selling you buy. When they're buying you sell. Always be on the right side of supply and demand.

How? Learn the difference between good and bad debt. That's the real key. There is good debt and bad debt just like there is good and bad money.

The second rule is hide. Hide as well as you can. "This is a gun board!" Yes it is. The government tracks income. The government tracks transactions over $10K. The government tracks gold coins now. The government tracks everything. Anything registered. Anything licensed. The government tracks everything.

Well, almost everything. They don't really track guns if you do it right. If I left $100,000 in market funds to my kids the government would move to the head of the line and claim to be first among them. If I leave a house the government is there. If I leave guns the government is strangely absent.

The kids can then sell the guns. One at a time. Quietly. Legally. For cash. Perhaps barter one for roofing labor.

A barter economy is an untaxed economy.

So run against the crowd. The crowd is in the market and bonds building their nest egg. The government will be in that nest. People will tell you to sell your guns before you die. "You don't want to leave a poor widow to have to dispose of those!"

Yes you do. It's easily transferred wealth. Untaxed. "You don't need to know your jewels but you'd darned well know your jeweller." That. Advice on value is easy to find.

Buy guns cheap. Pass them on. They're easily transported wealth. So why do guns go cheap in a tough economy? Because everybody runs in the same direction. Use it. Run the other way.

[Mark Daiute]

That was good. Hurry up and get that book out!