Coming Price Deflation (3 Viewers)

[Rutledge]

Sorry that was lazy of me I did not read the thread.
You have answered my question
Thank you

For further clarification:....defines deflation as “A sustained fall in the general price level.” Deflation represents the opposite of inflation, which is defined as an increase in the overall price level over a period of time. In contrast, disinflation, represents a period when the inflation rate is positive, but declining over time.

 

[Rutledge]

Gents,

Toy Soldiers are a super...double secret probation...exclusive...members only...card carrying...niche market. And in niche markets business is a usual my friends....
So, will Toy Soldier prices be affected to the end user/purchaser? Maybe, but I don't think so because when you are buying, selling or manufacturing in a niche market, prices go up...not down.

Or, as usual I could be wrong,

John from Texas

Perhaps. But any market can see prices decline. Its unusual in recent times, But entirely feasible.

In fact many niche markets have experienced devestating price decreases. Bought a beanie baby lately? Or other "collectible"? How about ornate antiques?

China will seek relief thru increased exports which will result in lower prices to entice overseas consumers/buyers. A devaluation of the Yuan would have the same effect -- assuming dealers and manufacturers choose to pass on the savings rather than keeping for themselves.

 

[jazzeum]

Are you saying that deflation will take place because the Chinese economy will have a global impact on consumer's ability to spend on luxury items and therefore manufacturers will need to reduce prices to move inventory.

Or are you instead saying, which I think is likely the case, that the fall in commodity pricing, will lead to lower costs of production, hypothetically leading to a lower price.

If the lattter, my experience is that manufacturers will keep the lower costs of production to themselves and not pass along any price savings to consumers.

At the very least, I hope that in a deflationary climate we don't see prices increase but I wasn't born yesterday :rolleyes2:

 

[Combat]

I remember one manufacturer famously citing high fuel costs as one reason for increased prices in the toy soldier market. LOL. I guess he hasn't realized they are now very low since there has been no corresponding price decreases. In fact, I don't recall any price decreases in this hobby dating back three decades. Would be shocked if it happens.

 

[Fraxinus]

My guess is no downward change in the initial offering prices, but a decrease in the "second sale" market pricing - i.e. the stuff so carefully stored in the closet is losing value.

 

[Rutledge]

Are you saying that deflation will take place because the Chinese economy will have a global impact on consumer's ability to spend on luxury items and therefore manufacturers will need to reduce prices to move inventory.

Or are you instead saying, which I think is likely the case, that the fall in commodity pricing, will lead to lower costs of production, hypothetically leading to a lower price.

If the lattter, my experience is that manufacturers will keep the lower costs of production to themselves and not pass along any price savings to consumers.

At the very least, I hope that in a deflationary climate we don't see prices increase but I wasn't born yesterday :rolleyes2:

Neither. Im saying that China is in near freefall because their plan to change into a consumer based domestic economy has failed, at least for now. To reboot their markets and economy they will turn again to exports as fuel for growth and economic expansion. This requires increasing sales in overseas markets of chinese made goods. China may well take advantage of low commodity prices, reducing their input costs, while also devaluing the Yuan to be more competitive vs the dollar, yen euro. If companies dont reduce end/consumer prices and instead "hog" the additional profits, that wont accomplish China's goals of higher overall sales. Thus could result in newly created Chinese competitors who do in fact intend to compete most fiercely on price so they can capture market share and sales.

Little bit of speculation here on my part. But China is not going to sit by while their economy implodes. They will take aggressive action including dumping cheap product and other strategies that gets their manufacturing base humming again. Toy soldiers require a relatively high skilled labor market. A cheaper Yuan could make their products highly competitive compared to Russia made, etc.

 

[Al Fisher]

Neither. Im saying that China is in near freefall because their plan to change into a consumer based domestic economy has failed, at least for now. To reboot their markets and economy they will turn again to exports as fuel for growth and economic expansion. This requires increasing sales in overseas markets of chinese made goods. China may well take advantage of low commodity prices, reducing their input costs, while also devaluing the Yuan to be more competitive vs the dollar, yen euro. If companies dont reduce end/consumer prices and instead "hog" the additional profits, that wont accomplish China's goals of higher overall sales. Thus could result in newly created Chinese competitors who do in fact intend to compete most fiercely on price so they can capture market share and sales.

Little bit of speculation here on my part. But China is not going to sit by while their economy implodes. They will take aggressive action including dumping cheap product and other strategies that gets their manufacturing base humming again. Toy soldiers require a relatively high skilled labor market. A cheaper Yuan could make their products highly competitive compared to Russia made, etc.

Exactly the reason we should buy for fun and not for profit . . .

Bosun Al

 

[hotel3alpha]

All,

It has begun...

There is a report on CNN Money about a missing billionaire in China:

http://money.cnn.com/2016/01/08/investing/china-metersbonwe-missing-billionaire/index.html

...told you businessmen/women would take the brunt for the economy woes in Communist China. They are Communists...remember?

Anyway, I like Bosun Al statement: "Exactly the reason we should buy for fun and not for profit . . ."

John from Texas

 

[nmrocks]

I think you guys are forgetting the main culprit in the rising costs of TS, the cost of labor, you really think the cost of labor will go down that signifigantly? I'm sorry, the cheap labor market in China boat has long ago sailed. When people reach a certain standard of living and a taste for even the most modest luxuries, running water, heated homes, TV's and phones there not going back to slave labor wages.
The only way I see prices going down is technology, if they can automate the painting process with the same level of quality or better, the mfg. costs go down , they still make there money and they can pass the savings on to the consumer.
Ray

 

[Rutledge]

I think you guys are forgetting the main culprit in the rising costs of TS, the cost of labor, you really think the cost of labor will go down that signifigantly? I'm sorry, the cheap labor market in China boat has long ago sailed. When people reach a certain standard of living and a taste for even the most modest luxuries, running water, heated homes, TV's and phones there not going back to slave labor wages.
The only way I see prices going down is technology, if they can automate the painting process with the same level of quality or better, the mfg. costs go down , they still make there money and they can pass the savings on to the consumer.
Ray

Absolutely true that no one LIKES wage deflation. But that doesnt mean it cant occur. Especially if the choice is absence of wages altogether.

The Chinese need a higher level of exports to boost their domestic economy.

Toy soldiers are admittedly a tiny niche and maybe they wont be subject to the same economic forces as the rest of the economy. But they might be.

 

[Rutledge]

Sobering info, with hard numbers.

"U.S. import prices fell -1.2% last month according to the Labor Department adding increased pressure on U.S. large global product makers such as Apple, General Electric, and Caterpillar. The price decline wasn’t as steep as expected, but it was the 6th straight monthly decline. Year over year, import prices are down -8.2%. Import prices for Chinese goods declined -1.7%, and -3.4% for non-petroleum goods—the strongest yearly declines since 2009. The stronger dollar continues to get most of the blame (or credit) for falling import prices, but also gets the blame for weakening exports."

"China has a major balance-of-payment criss...A balance-of-payment crisis ends with a recession. China’s currency is heading south. The only way to prop it up is to restrict capital flows, but that would create another bubble inside China, leading to even bigger problems. China eventually will let the currency fall in value."

During its three best years of economic growth, China consumed as much cement as the U.S. in the past 100 years. It’s mind-boggling. If the yuan falls by 20%, it will have a tremendously deflationary effect on the world.... You can’t escape the bust after the biggest boom mankind has seen."

 

[hotel3alpha]

Hey Rut,

Did you watch 60 Minutes last night after the Bronco game? They had a great story on China's cyber thieving. I wrote a paper on that years ago for grad school. Anyway, it was a great piece check it out and to me it add to their woes on a much bigger scale in regards to the way they think about advancing their country.

John from Texas

 

[Desertkiwi]

Sobering info, with hard numbers.

"U.S. import prices fell -1.2% last month according to the Labor Department adding increased pressure on U.S. large global product makers such as Apple, General Electric, and Caterpillar. The price decline wasn’t as steep as expected, but it was the 6th straight monthly decline. Year over year, import prices are down -8.2%. Import prices for Chinese goods declined -1.7%, and -3.4% for non-petroleum goods—the strongest yearly declines since 2009. The stronger dollar continues to get most of the blame (or credit) for falling import prices, but also gets the blame for weakening exports."

"China has a major balance-of-payment criss...A balance-of-payment crisis ends with a recession. China’s currency is heading south. The only way to prop it up is to restrict capital flows, but that would create another bubble inside China, leading to even bigger problems. China eventually will let the currency fall in value."

During its three best years of economic growth, China consumed as much cement as the U.S. in the past 100 years. It’s mind-boggling. If the yuan falls by 20%, it will have a tremendously deflationary effect on the world.... You can’t escape the bust after the biggest boom mankind has seen."

Just as a side issue, didn't 'China's Haier' company just buy 'General Electric's' appliance business for 5.4 Billion last Friday?

 

[Rutledge]

Just as a side issue, didn't 'China's Haier' company just buy 'General Electric's' appliance business for 5.4 Billion last Friday?

Yes they did. GE has been trying to exit the appliance business for years.

 

[Rutledge]

Hey Rut,

Did you watch 60 Minutes last night after the Bronco game? They had a great story on China's cyber thieving. I wrote a paper on that years ago for grad school. Anyway, it was a great piece check it out and to me it add to their woes on a much bigger scale in regards to the way they think about advancing their country.

John from Texas

I did see that. China is reaping what it sowed.

 

[BLReed]

It is going to take months for the Global markets to sort out. The stock market reacts quickly,
but any effect on consumers will be touch and go. I don't think toy soldiers will change much
anyway. Price is artificially set in dollars to begin with.

Just be glad you still have a job.

Anyway take a road trip. " The nationwide fall of gas prices fell to a back-to-the-60s low at one Michigan station over the holiday
weekend — to 77 cents a gallon.
Lucky motorists in Houghton Lake, Michigan were able to fuel up with the ultra-low price regular gas at Bacon and Bridge Market.
The cost, well below the $1.89-a-gallon national price, appeared to be part of a local gas war."

 

[Rutledge]

It is going to take months for the Global markets to sort out. The stock market reacts quickly,
but any effect on consumers will be touch and go. I don't think toy soldiers will change much
anyway. Price is artificially set in dollars to begin with.

Just be glad you still have a job.

Anyway take a road trip. " The nationwide fall of gas prices fell to a back-to-the-60s low at one Michigan station over the holiday
weekend — to 77 cents a gallon.
Lucky motorists in Houghton Lake, Michigan were able to fuel up with the ultra-low price regular gas at Bacon and Bridge Market.
The cost, well below the $1.89-a-gallon national price, appeared to be part of a local gas war."

I don't have a job. I have my own business. Big difference. And, please don't ever tell me what to do.

Toy soldiers don't exist in some magic world immune to economic forces. They are a purely discretionary item, and will behave accordingly. The folks who make them operate in the real world in real time.

As far as price being "artificially set in dollars", I don't even know what that is, other than utter nonsense. The US$ is the worlds leading reserve currency and free floats. If you have special knowledge to the contrary, please do share. If anything the Yuan is the artificial currency.

 

[BLReed]

I don't have a job. I have my own business. Big difference.

Only difference is to whom you answer. Tasks are still performed i.e. homogeneous tasks related by similarity of functions.

And, please don't ever tell me what to do.

That was an impersonal you or indefinite pronoun you , as opposed to you as a second person pronoun.

Toy soldiers don't exist in some magic world immune to economic forces. They are a purely discretionary item, and will behave accordingly. The folks who make them operate in the real world in real time.

As far as price being "artificially set in dollars", I don't even know what that is, other than utter nonsense. The US$ is the worlds leading reserve currency and free floats. If you have special knowledge to the contrary, please do share. If anything the Yuan is the artificial currency.

Most days I learn something new. However today is not one of them.

 

[Rutledge]

Only difference is to whom you answer. Tasks are still performed i.e. homogeneous tasks related by similarity of functions.


That was an impersonal you or indefinite pronoun you , as opposed to you as a second person pronoun.


Most days I learn something new. However today is not one of them.

No!! I can fire my clients. I cannot fire a boss. I have all the equity in my business, and can make unilateral decisions. People with jobs can do none of these things. Politicians, academics and labor union types often are confused about such matters.

I asked you to educate me on how prices are artificially set in dollars, and you did not/could not. So I learned something about you.

 

[Peter Reuss]

Gents, let's keep if from getting personal...