Printing More Money vs. High Card Prices

todeen · #1 02-23-2021, 02:09 AM

Quote:

Originally Posted by Fuddjcal

Because they "always liked Jackie" and they want to collect them all? Never a Bowman fan, but wanted this one in my collection. Not so much the trimmed leaf rookie or ugly 49.

I think many small business's, received gigantic PPP loans that you don't have to pay back. They were discharged pretty quickly and free $$$ to the wealthy, I hear.

I agree, Jackie Robinson has transcended the hobby. Someone wants an early card of Jackie, can't afford his late 40s cards, but can afford the 50 Bowman.

However, I understand what you meant, I just think you chose the wrong name. Maybe you meant Warren Spahn, or Gaylord Perry, or Bob Feller......

Sent from my SAMSUNG-SM-G930A using Tapatalk

sportscardpete · #2 02-23-2021, 06:17 AM

$600 Stimulus checks are not causing Jordan rookies to go from $20,000 to $700,000.

packs · #3 02-23-2021, 07:06 AM

I can only speak for myself but the two checks I got didn’t cover one months rent combined.

UKCardGuy · #4 02-23-2021, 01:03 PM

The short answer is that yes, in general "printing money" drives inflation. It's not related to the stimulus checks but to the money supply. Here's a very simple illustration.

Imagine an economy with just 2 people, a can of BBQ beans and $100. In this economy a person has to spend all their money every day. One person starts with $100 and the other person starts with the can of beans. Because there's only one product, the price of that can of beans is $100. Now if we print another $100 and leave just the one can of beans. So there's still one can of beans and $200 available to be spend each day. The price of the can of beans is now $200.

I know the illustration isn't perfect. It's a ridiculously simple example, to show the effect that printing money has on inflation. Most goods are replaceable (e.g. food, clothes, etc. etc.). More corn will grow and more clothes will be made. So long as there aren't major shortages, prices might rise with demand but nothing outrageous.

For assets that are in limited supply like real estate, art and vintage baseball cards things work differently. The supply of these assets is limited. When more money is slushing around the system, some people choose to save that money...but others choose to spend it. A small number of people jumping into a an asset can make a big difference. That's where printing money drives asset prices (e.g. bubbles). It's not the only way that an asset bubble can happen, but it is one way.

People assess the value of assets in relation to other assets. That also helps to increase demand. "John's house just sold for $500K but the house that I want to buy is bigger. I'm willing to pay $700K for it." or "Geez, that 2010 Trout Refractor just sold for $500K. A T206 Cobb should be worth more than that". This further increases the demand and creates a sense of normalcy in people's minds that the prices are justifiable.

Asset bubbles aren't new. Bubbles tend to pop when there's a shock that changes the economic balance. In 2009, it mortgage defaults started to increase and banks stopped lending. It was the plentiful, cheap loans that helped drive the bubble. When the banks stopped lending, the bubble burst.

What'll change this time around? Will the Fed stop printing money? Will interest rates start to rise? Will someone find a warehouse full of "one of a kind" Mike Trout Refractors? Will a new MLB doping scandal cause the bottom to fall out of the modern card market? Take your pick and make your bets.

conor912 · #5 02-23-2021, 01:07 PM

Quote:

Originally Posted by UKCardGuy

The short answer is that yes, in general "printing money" drives inflation. It's not related to the stimulus checks but to the money supply. Here's a very simple illustration.

Imagine an economy with just 2 people, a can of BBQ beans and $100. In this economy a person has to spend all their money every day. One person starts with $100 and the other person starts with the can of beans. Because there's only one product, the price of that can of beans is $100. Now if we print another $100 and leave just the one can of beans. So there's still one can of beans and $200 available to be spend each day. The price of the can of beans is now $200.

I know the illustration isn't perfect. It's a ridiculously simple example, to show the effect that printing money has on inflation. Most goods are replaceable (e.g. food, clothes, etc. etc.). More corn will grow and more clothes will be made. So long as there aren't major shortages, prices might rise with demand but nothing outrageous.

For assets that are in limited supply like real estate, art and vintage baseball cards things work differently. The supply of these assets is limited. When more money is slushing around the system, some people choose to save that money...but others choose to spend it. A small number of people jumping into a an asset can make a big difference. That's where printing money drives asset prices (e.g. bubbles). It's not the only way that an asset bubble can happen, but it is one way.

People assess the value of assets in relation to other assets. That also helps to increase demand. "John's house just sold for $500K but the house that I want to buy is bigger. I'm willing to pay $700K for it." or "Geez, that 2010 Trout Refractor just sold for $500K. A T206 Cobb should be worth more than that". This further increases the demand and creates a sense of normalcy in people's minds that the prices are justifiable.

Asset bubbles aren't new. Bubbles tend to pop when there's a shock that changes the economic balance. In 2009, it mortgage defaults started to increase and banks stopped lending. It was the plentiful, cheap loans that helped drive the bubble. When the banks stopped lending, the bubble burst.

What'll change this time around? Will the Fed stop printing money? Will interest rates start to rise? Will someone find a warehouse full of "one of a kind" Mike Trout Refractors? Will a new MLB doping scandal cause the bottom to fall out of the modern card market? Take your pick and make your bets.

Something is broken when you go from one bubble a century to one per decade.

egri · #6 02-23-2021, 01:16 PM

Quote:

Originally Posted by conor912

Something is broken when you go from one bubble a century to one per decade.

I think that summary skipped a few; off the top of my head it missed the Crash of 1893, the Panic of 1907, and the Hunt brothers trying to corner the silver market.

UKCardGuy · #7 02-23-2021, 03:05 PM

The Hunt Brothers trying to corner the sliver market....ah the good ole days. I remember my older brother going to sell his books of Washington Quarters and his Kennedy Half Dollars when silver hit $45 p/oz.

The infographic from the Wall Street Journal was in no way complete. If anyone's interested in the topic of bubbles and maniacs, "Extraordinary Popular Delusions and the Madness of Crowds" by Charles Mackay is the definitive treatise on the subject.

Oscar_Stanage · #8 02-24-2021, 09:58 AM

people invested in crypto and/or high growth stocks have gotten rich.
paper profits make you feel rich.

those are the people pushing up prices because they are indifferent to paying an extra $10k for a card

TedWill1939 · #9 02-24-2021, 10:41 AM

Exhibitman, Spot on!

I would add that those 1980s kids are also interested in vintage. They either couldn't afford or find vintage cards back in the day, pre internet.

There is probably some artificial inflation on some cards that is driving some of this, Rickey H is a good example. I don't think there is much justification for this price.

Exhibitman · #10 02-24-2021, 02:01 PM

Let's also add rampant fraud and shilling. My rule of thumb in analyzing a card price is to throw out all PWCC and Probstein results.

bdk1976 · #11 02-23-2021, 02:57 PM

Quote:

Originally Posted by sportscardpete

$600 Stimulus checks are not causing Jordan rookies to go from $20,000 to $700,000.

Then what do you think is? It certainly isn't due to Jordan putting up 50 against the Knicks last night.

The rich have cash to burn so they are parking it in collectables - other hobbies - such as muscle car prices - have went insane during this time period as well. The poor are spending the cash as soon as they get it on necessities - but guess who own/sells the necessities? The rich guys!

Personally I suspect there may be tax 'benefits' to holding something small and easily/anonymously exchanged as sports cards in some of these situations as well.

packs · #12 02-23-2021, 03:14 PM

Quote:

Originally Posted by bdk1976

Then what do you think is? It certainly isn't due to Jordan putting up 50 against the Knicks last night.

The rich have cash to burn so they are parking it in collectables - other hobbies - such as muscle car prices - have went insane during this time period as well. The poor are spending the cash as soon as they get it on necessities - but guess who own/sells the necessities? The rich guys!

Personally I suspect there may be tax 'benefits' to holding something small and easily/anonymously exchanged as sports cards in some of these situations as well.

I think the reason the card spiked is because it's been fueled by faux sales, like a lot of cards have. Seller X doesn't actually sell the card, but it looks like it "sold" for a huge price tag. Someone on this board makes a post along the lines of "how did X get this much for this card?". I see that post and sell my similar card expecting that price as a benchmark. Other people see the faux sale and think that it's a real sale too, so if they get my card for the same or similar price they think they've gotten a deal and I'm happy with all the money I got.

But the card that raised the price point for mine didn't actually sell to anybody. Now seller X seems to have a never ending supply of the same card that all hit the block after the benchmark is set.

Johnny630 · #13 02-23-2021, 03:38 PM

Quote:

Originally Posted by packs

I think the reason the card spiked is because it's been fueled by faux sales, like a lot of cards have. Seller X doesn't actually sell the card, but it looks like it "sold" for a huge price tag. Someone on this board makes a post along the lines of "how did X get this much for this card?". I see that post and sell my similar card expecting that price as a benchmark. Other people see the faux sale and think that it's a real sale too, so if they get my card for the same or similar price they think they've gotten a deal and I'm happy with all the money I got.

But the card that raised the price point for mine didn't actually sell to anybody. Now seller X seems to have a never ending supply of the same card that all hit the block after the benchmark is set.

That�s exactly what is happening.

packs · #14 02-23-2021, 03:49 PM

Seller X can be defeated if everyone stops bidding. But doing that is going to be hard of course because people want stuff.

ejharrington · #15 02-23-2021, 08:22 PM

Yes believe me if anyone else says otherwise they are either just fooling themselves or being contrarian.

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