Some thoughts on the $660k copy of Super Mario Bros
famicomblog.blogspot.com
famicomblog.blogspot.com
Blame the Fed for creating asset price inflation including stocks, housing, collectibles, etc. This is why income inequality has exploded, because everyone with assets like stocks have seen a huge increase in their wealth, and people without any assets which are the lower income people get left behind.
In the past 2 years some games went up some 100% or more in price. I bought a game 6 months ago for $90 I see listings for it on ebay for $150. Its pretty insane.
The real market value of games is seen in the auctions and Facebook retro groups (literally the only reason I have a Facebook account is for collecting retro computer parts and games. If you find the right group you can get some pretty good deals).
There's nothing wrong with quoting ebay, I use it all the time myself. Just don't pay any attention items listed with a Buy It Now price because they're often full of chancers. Just because it's listed at a price it doesn't mean anyone will pay it.
What you did is a common trap that new reporters do when they talk about how expensive collecting is. They run headlines like "your old junk could be a gold mine" but pad their articles out with hugely speculative Buy It Now prices that no sane person would actually pay.
> The games I want aren't available on facebook
Which games? I collect for basically every platform across basically every genre and I've never had an issue getting obscure games from Facebook. I might be able to help you out here.
What we really mean is that Fed policy is dictated by the Core PCE rate, which specifically excludes food and energy prices. So sure, the CPI measures energy and food prices and other volatiles prices, but *FED POLICY is dictated by the CORE rates*, which specifically exclude those volatile components.
So de facto, no one (ie. the Fed) doesn't care about energy or food price inflation.
food and beverages: 15.157%
housing: 42.385%
apparel: 2.663%
transportation: 15.738%
medical care: 8.87%
recreation: 5.797%
education & communication: 6.81%
other goods and services: 3.159%
Un-
adjusted
12-mos.
Sep. Oct. Nov. Dec. Jan. Feb. Mar. ended
2020 2020 2020 2020 2021 2021 2021 Mar.
2021
All items.................. .2 .1 .2 .2 .3 .4 .6 2.6
Food...................... .1 .2 .0 .3 .1 .2 .1 3.5
Food at home............. -.3 .1 -.2 .3 -.1 .3 .1 3.3
Food away from home (1).. .6 .3 .1 .4 .3 .1 .1 3.7
Energy.................... 1.4 .6 .7 2.6 3.5 3.9 5.0 13.2
Energy commodities....... 1.4 .7 .5 5.1 7.3 6.6 8.9 22.0
Gasoline (all types).... 1.7 .7 .5 5.2 7.4 6.4 9.1 22.5
Fuel oil (1)............ -3.0 .7 3.3 10.2 5.4 9.9 3.2 20.2
Energy services.......... 1.3 .5 .9 .2 -.3 .9 .6 4.1
Electricity............. .8 .6 .3 .4 -.2 .7 .0 2.5
Utility (piped) gas
service.............. 3.1 .4 3.0 -.4 -.4 1.6 2.5 9.8
All items less food and
energy................. .2 .1 .2 .0 .0 .1 .3 1.6
Commodities less food and
energy commodities.... .5 .0 .0 .1 .1 -.2 .1 1.7
New vehicles............ .3 .3 .0 .4 -.5 .0 .0 1.5
Used cars and trucks.... 5.3 .9 -1.4 -.9 -.9 -.9 .5 9.4
Apparel................. -.4 -.9 .7 .9 2.2 -.7 -.3 -2.5
Medical care
commodities (1)...... -.6 -.7 -.4 -.2 -.1 -.7 .1 -2.4
Services less energy
services.............. .1 .1 .2 .0 .0 .2 .4 1.6
Shelter................. .1 .1 .1 .1 .1 .2 .3 1.7
Transportation services -.3 .2 1.3 -.6 -.3 -.1 1.8 -1.6
Medical care services... .0 -.3 -.1 -.1 .5 .5 .1 2.7
https://www.advisorperspectives.com/dshort/updates/2021/04/1...
https://www.bls.gov/cpi/questions-and-answers.htm#Question_1...
You're confusing core CPI, which excludes them so analysts can see the difference, and the CPI values as reported generally in the media, which do include housing, food, and energy.
The most reported CPI is CPI-U (and is called CPI in the press), which is the CPI for urban consumers, which includes housing, food, and energy, and most comparable to historical and inflation values from other countries.
But BLS tracks many forms. If you want to learn about this read https://www.bls.gov/cpi/
What we really mean is that Fed policy is dictated by the Core PCE rate, which specifically excludes food and energy prices. So sure, the PCE and CPI measures energy and food prices and other volatiles prices, but *FED POLICY is dictated by the CORE rates*, which specifically exclude those volatile components.
So de facto, no one (ie. the Fed) doesn't care about energy or food price inflation.
Who knows what will actually happen. It's interesting to see collectible companies cashing in by manufacturing more "rare" collectibles out of thin air at a rapid pace.
A few Rolex models are being sold 2x their MSRP. I believe Rolex, like Nike, are throttling down machines in order to keep the charade going? Giving middle class, and wealthy people a check, when most didn't need it didn't help much either. I heard a few guys mention, now I will get that Sub with my check.
Rolex is a nonprofit entity. They stopped selling parts, or technical manuals, to Independant Watchrepair Shops.
So if you ever buy a new Rolex, the minute the warranty goes, you are essentially forced to send it back to the factory at outrageous prices.
I still repair Rolexes, but it takes longer because I have to hunt down parts.
Yep. I'd been wanting to get a used Submariner for years now. Looked up prices the other day and they are literally double this time last year.
Which? The base model Nautilus retails for $30k and the prices only skyrocketed because it was discontinued.
Grown men fighting each other in the aisles of Walmart trying to clear the shelves of NBA cards. The Michael Jordan PSA 10 went from $100k, to $370k to over $700k very rapidly, and has since declined back to around 300k or so. People are buying retail boxes from scalpers for like 5x, just purely on hype and FOMO.
As someone whose been into cards before the covid meltdown, this has all been wild.
Construction is inflated because the cost of materials have gone way up due to ongoing shipping reductions and factory closures due to Covid. Housing prices are inflated (in places where people want to live) because of long-term bad housing policy and NIMBYism causing slow and the wrong kind of new construction. WFH and eviction bans are likely causing a shift in housing demand.
I wouldn't be surprised if the Fed has some blame. I think there's been a belated reckoning since 2008. But it's a pandemic that has lasted over a year now and there are a bunch of second-order effects out there.
More institutions are buying homes and competing with the homeowners, because bonds are very-low yield and the stock market overpriced in terms of P/E.
If you're not exposed to the stock market or housing market, then you're fucked.
Factually false. Its not very hard to search for that information. Just type "CPI Food" or "CPI Fuel".
US Food prices: https://fred.stlouisfed.org/series/CPIFABSL
US Fuel prices: https://www.bls.gov/cpi/factsheets/motor-fuel.htm
CPI is the consumer price index, which tracks a variety of prices as an estimate of inflation. The sub-categories are tracked individually, and then averaged together into the overall CPI number.
Even if you distrust the Fed entirely, we can use CBOE futures (the futures market), which has historical performance on a variety of food commodities (pork bellies, orange juice) and fuel (sweet light crude oil). CBOE is literally the free market and non-government.
---------
Fuel prices are down over the past decade due to the uptick in US oil production. Remember $4+ / gallon US averages? (and $6+ in high cost places like Hawaii?)
COVID19 has also decimated oil prices. Other goods have gone up in price, but fuel prices are really, really low right now, pulling inflation lower.
Core PCE includes food (split between line 9 and line 19), and fuel (line 11).
These are things you can easily google. The composition of the PCE, CPI, and other metrics is public information and publicly documented.
> The Fed only sees no inflation regardless of the inflation we see all around us.
Both CPI and PCE are both up slightly in the past year. Both are measures of inflation and clearly indicate slightly higher prices.
Wrong.
"The "core" PCE price index is defined as personal consumption expenditures (PCE) prices excluding food and energy prices."
https://www.bea.gov/help/faq/518
> Both CPI and PCE are both up slightly in the past year. Both are measures of inflation and clearly indicate slightly higher prices.
Sure, if you consider 1.5% PCE and indication of inflation. By your definition, 0.1% PCE would indicate inflation. But in reality, the target PCE is 2.0%. The numbers that the Fed are using to dictate policy indicate that inflation is not high enough, and yet the evidence of asset inflation is irrefutable.
https://www.bea.gov/data/personal-consumption-expenditures-p...
Why are you trying to spread misinformation? What's in it for you?
I can say the same thing with you. Why are you spreading false claims about inflation? But such discussions go nowhere pretty fast. As such, I'll take my leave with you. If you have no faith in my discussion points, there's no point continuing.
My final words: the suggestion that the Fed ignores energy prices / food prices is ridiculous at face value. Its listed right there in the statistics and well categorized in the statistics they watch.
Except everywhere it states clearly they exclude it.
Yes they do. The Producer Price Index (https://www.bls.gov/ppi/) tracks price levels of goods used for production; the PCE index (https://www.bea.gov/data/personal-consumption-expenditures-p...) avoids basket effects by re-weighting using current expenditures rather than baskets that might drift out of date; the GDP Deflator (https://fred.stlouisfed.org/series/GDPDEF) uses all goods produced rather than just a producer/consumer basket.
All such indices show the same broad inflation trends, usually shifted by a small amount. These trends are also consistent with private replication efforts such as the Billion Prices Project (http://www.thebillionpricesproject.com/), which uses directly-sampled retail-price data.
> They conveniently don't track things like fuel prices or food because they are too "volatile".
They do in fact track these things. They are excluded from core price indices because of their volatility; setting monetary policy based on gas or food prices would result in wild swings from month to month. Core CPI changes show the same broad trends as the full CPI (https://fred.stlouisfed.org/graph/?g=Dtzv), without a persistent level difference.
> But the reality is that upper income people have 401ks with stocks in them and lower income people live paycheck to paycheck.
... and your policy prescription would hurt just this category of people the most. The only lever the Fed has on inflation is to raise interest rates, which also acts to reduce demand in the economy. All other things equal, that throws people out of work and risks causing a recession.
Your concern for ordinary people is admirable, but focus on so-called "asset price inflation" would exactly put the interests of capital-owners (seeking larger risk-free return) over people without existing assets. In fact, unexpected inflation is better for those without financial wealth than those with it.
Isn’t the FED just following government orders and isn’t the government elected by the people?
They purchase assets to prevent those assets from declining, and encourage consumer behavior that exposes citizens to economic risk. Remember Greenspan extolling the virtues of tapping into your home equity? Or more recently, Bernanke describing QE as a permanent tool? Last year, Yellen even suggested that Congress should revisit the rules around Fed purchases of equities.
The Fed also encourages fiscal policy that reinforces a widening wealth gap and perpetuates moral hazards. We live in a society where the "experts" repeatedly push the notion that governments should stay out of growing sectors and inject life into collapsing sectors. Contrast this with what China does, where they back new enterprises in growing sectors while allowing deadwood firms to go under in lethargic sectors. [0] We in the USA have bailed out automakers that can't keep up with their foreign competition. We have bailed out banks that were too stupid to avoid buying billions of dollars of junk. We have even bailed out airlines during a period when business and international travel are at a deep nadir. Yet we find it difficult to spur new growth in the digital economy, whether by enabling competition against Big Tech or by investing in the infrastructure that supports semiconductor fabrication.
Don't look to the Fed for a solution.
[0] https://www.bloomberg.com/news/articles/2021-01-04/china-tel...
Up here in Canada we chose to pretty much just throw money at the working and middle class, especially with children, through the creation and then expansion of refundable low-income tax credits and a refundable credit for those with children.
Now comes to almost $1500 per household average if I recall, and that has barely held the line on the natural rapid trend towards wealth inequality after the 2008 crash. And even then, still not equally or very well. It has probably not sucked to be in the bottom 10% of poor people in Canada this much, since before the war. The price of housing and food being most of that.
It's been a funny year for hobbies!
https://www.reddit.com/r/patches765/comments/5isji2/intellig...
BTW his blogs are really of top quality and I can't help reading through to deep night.
No matter how low interest rates get, the local gas station and drive-thru window isn't going to pay much better.
The actual problem is that despite all this money washing around, real wages for many people have not went up at all.
Greed, really. Corporations are unwilling to admit the new reality of the labor market yet. Every Taco Bell near me has been closing early or completely unable to operate due to lack of workers. Meanwhile Chick Fil A is thriving, and I've never seen them so heavily staffed. Turns out if you pay your employees, it's actually a competitive advantage.
In the first instance, unemployment benefits do not typically replace "half to 3/4 of your salary," and under ordinary circumstances US benefits are greatly limited in duration. Those for whom the "half to 3/4 of salary" replacement is more correct are also those who started on the low end of the salary scale, and I daresay the working poor should not be the subject of your ire.
On the second point, your assumption -- while common enough -- has not been replicated in modern-day UBI trials. On the balance, those have shown somewhere between no change and small positive changes to work intention over the existing set of social benefits, which on one hand tend to require demonstrating job-search effort but on the other hand tend to be withdrawn beginning with a low earned salary level.
In particular, I have seen no modern-day research demonstrating that providing a fixed benefit creates an indolent class.
Airlines are still working at skeleton staff. Most of the country has little/no indoor restaurant seating. Sporting events are highly limited. Concerts and Conferences aren't happening - or even scheduled to happen in most cases.
The current federal Unemployment extension is thru Sept 6. Which might be a bit pessimistic, but IMO better to leave some margin for safety.
This is very important, because otherwise UBI would have the bad incentives of our current unemployment program. Avoiding those bad incentives is the entire point of the "U" in "UBI."
Asset inflation due to decreasing interest only happens once when interest rates fall, and is followed by asset deflation when interest rates rise.
But interest is paid to rich people year after year.
Low interest rates are great for people without money.
> Only nine of the 73 funds studied had an assumed rate below 7.5 percent in 2014, but about half had adopted rates below that percentage by the end of fiscal year 2017.
https://www.pewtrusts.org/en/research-and-analysis/articles/...
The only possible way to come even close to 7.5% is to buy equities or exotic assets like VC funds farther out the risk curve.
The easy money is everywhere, and fixed income is taking it on the chin.
And for people without money, everything good in life - high quality education, housing, food, healthcare, etc. - is only going up.
The best possible move for poor people is to get into as much debt as possible, as the amount they owe will decrease as inflation helps them. But I don't really like the idea of an even larger debtor society than we have now.
Up to now: 1. only a fraction of a minority of the population have gained wealth from Bitcoin, and 2. those people had wealth enough to buy sufficient Bitcoin in the first place.
Bitcoin cannot be created out of thin air. You can't arbitrarily decide to inject more of it into the system. When you own Bitcoin, your holdings cannot be debased. Since poor people's wealth is mostly cash, debasement of currency hurts them the most.
There is a tragic irony, in where if a poor person throws their savings into Bitcoin, they are chastised as being foolish and preyed upon, and they need to be protected. If they keep their savings in fiat, they get debased (USD debased by 20% in 2020, 320% in last 20 years) as inflation eventually catches up. The Feds took away the ability to save. A Bank of America savings accounts offer 0.01% APY, 0.05% if you have more money. No one believes in a future where saving is worth anything.
A reasonable definition of 'poor' is holding no net wealth, or less - which applies to 30-40% of households in Scotland (for example):
https://www.gov.scot/publications/wealth-assets-scotland-200...
So your arguments here don't apply for my understanding of 'poor'. You have to be approaching median wealth before those arguments start to apply, if they do at all.
A poor person is not greatly affected by debasement of their savings in currency, because they don't have any savings.
A poor person is not considering throwing their savings into Bitcoin, because they don't have any savings (beyond essential cash).
"The bottom half of the income distribution had a huge share of its wealth tied up in real estate while owning essentially no shares of corporate stock. The top 1 percent, by contrast, wasn't just rich — it was specifically rich in terms of owning companies, both stock in publicly traded ones ("corporate equities") and shares of closely held ones ("private businesses")...So the value of those specific assets — assets that people in the bottom half of the distribution never had a chance to own in the first place — soared.
NPR also reported in 2017 that the bottom 50% of U.S. households (by net worth) have little stock market exposure (neither directly nor indirectly through 401k plans), writing: "That means the stock market rally can only directly benefit around half of all Americans — and substantially fewer than it would have a decade ago, when nearly two-thirds of families owned stock."
A poor person is not greatly affected by debasement of their savings in currency, because they don't have any savings.
Debasement eventually shows up in the form of inflation of consumer goods prices. And inflated housing prices makes it nearly impossible for future generations to ever own a home, depending on the city.
Sure. But nominal price inflation doesn’t matter to the poor as a class, but to those on fixed nominal income (e.g., many retirees, or people dependent on benefit programs with fixed rather than indexed benefit levels.)
Real increases in prices of goods disproportionately in demand at lower income levels matters to the poor, but that’s a different issue than general inflation.
> And inflated housing prices makes it nearly impossible for future generations to ever own a home, depending on the city.
Real increase in housing prices (or, more to the point, increases in housing prices relstive to a particular poor persons income), which has nothing to do with currency debasement/devaluation or general inflation, makes homeownership less accessible.
Home price to income ratio: https://www.longtermtrends.net/home-price-median-annual-inco...
poor people tend to be net debtors considering dollar-denominated assets and liabilities, and to have most of their gross value of assets (even ignoring short-term consumables like perishable food) in physical goods, not cash or other dollar-denominated assets.
An argument has been made that "elites" were "brainwashed by the system" to believe that crypto would fail and thus they never bought in. Instead, "outsiders" bought crypto and may one day eclipse the old elites. However, crypto's "outsider" early adopters were mostly middle-class techies not working-class people. So yeah, Bitcoin is still not solving anything.
But meanwhile there have been several other crypto projects that have cropped up that have seen life-changing gains and are actually built on sustainable, value-adding platforms (Ethereum, Uniswap, Synthetix, Aave, etc).
lotteries are cancer and I'm in no way a supporter of them (except to acknowledge they may be the best answer to a problem that has no good solutions), but the model does work like a vice tax, in that a substantial fraction of ticket proceeds go toward various social and investment programs.
the prizes only consume 20-70% of the revenue (specific fraction depends on the game).
My original comment was just saying that I think Bitcoin is the best alternative we have, not that it would necessarily succeed.
Imagine if you were paid in BTC or saved money into BTC, you won't get diluted over a long enough time, that's the promise. When you get paid in BTC, someone gives you theirs, it's a zero-sum game.
Also, since nobody can print more of it, if someone goes ahead and plays around with high leverage and gets wiped out, their losses won't be socialized by bailouts.
On the other hand, I’ve heard from innumerable people that crypto’s volatility drives them away.
It won't be this volatile forever, as the market cap gets larger, the volatility goes down.
1: https://ftw.usatoday.com/lists/nfl-draft-trevor-lawrence-cry...
2: https://finance.yahoo.com/news/olaf-carlson-wee-first-coinba...
3: https://www.newsweek.com/miami-passes-resolution-allow-payin...
To reiterate my earlier points, none of them are doing this due to dilution concerns; rather the usual crypto speculation to cash out massive gains.
This neither fixes nor mitigates any sort of wealth inequality.
I don't care if it's cryptocurrency that we end up using. As long as we can pay people in some kind of security that cannot be inflated, then wages cannot be silently garnished via inflation.
Houses? Turns out when you force people to stay home all day they suddenly decide apartment living sucks (more demand). It also turns out, people are resistant to the idea of having strangers tour their home during a pandemic (restricted supply).
Stocks? Crypto? Turns out when you give people lots of money with no strings attached and then remove their favorite options for spending it (restaurants, travel, entertainment), they will invest or gamble it instead.
Collectibles? Turns out, in scary times, bored people with money will start returning to childhood comforts like trading cards and nostalgia.
Etc. Etc.
This idea that the Federal Reserve is some all-powerful puppet master is a little overblown. Interest rates are insanely influential, but they pale in comparison to the forces created by the whims of the crowd.
At least for me, and apparently the author, the idea of a rare item being more valuable makes sense, especially if the rare thing is unusual or has attributes unlike other, commonly available things. Obscure computer hardware is like this for me. It's interesting because the experience of using/looking at it is unlike what you'll get from anything else. Even if it's a purely inferior experience, it's novel.
In this case, the only thing that makes this different from the 60 million other copies of SMB is it's the most cleanly preserved copy in retail packaging and shrink wrap.
Now, I understand for some collectors, whose only purpose for these is to put them in a display case or collection, that is how they'll experience this. But IMO there's nothing special about the game itself, nothing intrinsic to the item. If you so much as scuffed or opened the packaging, it'd lose all its value, whereas those other rare games and collectibles can be used for their original purpose (assuming you're careful and don't damage them) without destroying their value.
It's all subjective though, so more power to the collectors who will treasure shrink wrapped copies of things.
Yes, this is my point. The Wagner card, or Action Comics #1 or Atari 2600 Air Raid are all rare items on their own without their rarity having to be defined in an extraordinarily narrow way to establish that they are in fact rare.
With SMB on the other hand you have to define that copy as a "one of a kind copy of a thing there are millions of out there", which is different from the above examples.
The point that I was mainly going for in the post was that just a few years ago it didn't seem like the hobby was going to go down this route. Until recently everyone just assumed that a game like Air Raid (or the NES World Championship carts used in tournaments in the 1980s which are also extremely rare but also aren't well known outside collecting circles) would be the hobby's holy grail because that is what collectors were most fascinated by.
Then WHAMMO, copies of SMB started going berzerk and completely obliterating the records set a few years ago for those rarer games, which I think has caught everyone in the retro gaming collecting community off guard since it is such a common game. Which I thought was worth writing something about, using Air Raid and examples from other hobbies as comparisons.
On the other hand, when I see that picture of the pristine SMB cart, I can kind of understand the hype. I couldn't imagine myself ever being that hardcore of a Nintendo fan, but if I were as infatuated with Mario as I am in some of the things I actually collect myself, I think I would be extremely jealous of whoever owns that cart.
[1] https://fortune.com/2021/03/29/pokemon-cards-value-sale-coll...
Rarity depends on more factors than "total in print".
Of course, nobody wants a copy of SMB that has been dropped in my toilet, but my point wasn't that people are going to suddenly start collecting toilet copies of SMB, but rather that nobody was particularly interested in something as arbitrarily defined as the "highest graded, sealed, hangtab version" of SMB either until someone created a narrative that convinced them it was worth something.
Price is a function of rarity and desirability. SMB is a household name so the market of individuals who would assign value to it is broader than a game like Air Raid.
Author is deliberately obtuse. Or just obtuse.
Remember Terminator 2, where a prepper Sarah Connor had a shipping container of guns buried in the desert? A smattering of fancy houses in politically disparate jurisdictions stuffed with art and sealed copies of SMB might be the modern upper class equivalent.
There are cards from Alpha/Beta etc. that have an exact same number of printings as other cards worth 10-100x more
The value of short-print cards is to collectors who want the entire set of "Alpha" cards regardless of what the specific card might be.
In the same way, there are probably collectors who want to own the entire collection of NES games or Atari games who would highly value an obscure game with a short print-run.