Inflation and vintage instruments?

Hi forum minds! What will happen during the anticipated inflation? Money will loose its value, but what about collectable guitars, basses and other expensive vintage stuff? Any ideas?

 

Re: Inflation

There certainly has been some inflationary money spent on guitars the past few years.

The impact to the guitar market is about how much, what kind and what ratio is it to normal spending?

I don’t think any of us has this actual info, right?

Anecdotally, This past two years has been nothing like 2008, especially because there has been such low inventory. The last bubble was driven by a combination of easy debt + investment desire + high availability.

This is different. Historically low debt + available liquidity not tied to debt + high desire for tangible assets + low inventory.

Historically, collectables yield around 2-2.5%. No one is really investing in vintage guitars speculatively anymore, those days are mostly long gone due to the price of entry relative to the potential profits.

What some people have done is spend cash on guitars vs other things like real estate, vacations, cars, etc. This is expendable cash not tied to debt or other assets.

If cash becomes so useless we need to sell our guitars or cars or homes to eat, well - who cares about the value of collectables at that point. If a guitar is more valuable as firewood, you’ve got bigger fish to fry, so to speak.

 

I don’t think any of us has this actual info, right?

No we do not because all the data is anecdotal, however we can definitely see the obvious trend.

 

No we do not because all the data is anecdotal, however we can definitely see the obvious trend.

Yes, I guess this was stating the obvious - more of a rhetorical point.

 

Economics is not my strength. But this discussion is interesting. I just checked on the current resale price of my 2011 car. The current resale price ranges from $4K below what I paid to $10K more than I paid. The Mean is $2K more than I paid. Wow! Vintage guitar values behave differently than most products, I guess. My 1963 Epiphone Casino was appraised at $7K in 2009. The current value ranges from $6K USD to $9.2K USD. So it's safe to say my Casino's value is about what it was in 2009, and perhaps it'd fetch $7.5K today...? - Cheers, Doug in Atlanta, Georgia, USA

 

Hi forum minds! What will happen during the anticipated inflation? Money will loose its value, but what about collectable guitars, basses and other expensive vintage stuff? Any ideas?

inflation is why people don’t save cash but invest. These items count as investments. They go up in price with inflation

 

Anticipated inflation? Did you draft this over a year ago and forgot to hit post?

A year ago? Inflation has been a constant for a few thousand years, like for as long as currency has existed. The op's question is pretty weird though, lol

 

Vintage/antique instrument resale value is not determined by things like Reverb asking prices (in the majority of specific examples). "value'/'worth' is also not determined by insurance valuation. 'Supply and demand' even has very limited impact. It is solely determined by what someone is willing to pay. There is no benchmark. If one understands what "inflation" actually refers to, it has marginal impact. The currency value is what changes. The price of a given item is relative to the currency value, the actual dollar numbers aren't what is important, the relative value measure is. If your 1k purchase has a dollar value of 1.5k after 10 years due solely to inflation, you haven't made a profit, you have broken even.

 

The current resale price ranges from $4K below what I paid to $10K more than I paid. The Mean is $2K more than I paid. Wow! Vintage guitar values behave differently than most products, I guess.

The crunch in cars is mostly due to the scarcity of semi-conductors due to COVID disruptions. A modern car has on average 40 little processors… Rental companies have resorted to buy on the used market as they cannot get enough new vehicles, which put even more pressure on that market. People who bought new vehicles recently get calls from the dealer with offers to buy back the car for more that it sold…

 

No we do not because all the data is anecdotal, however we can definitely see the obvious trend.

bterry's comment was pretty self explanatory and 100% correct. As far as "anecdotal evidence" goes, I can easily supply you with first hand testimony ranging from the 1960's to today. Inflation doesn't care whether it is a vintage guitar, a jug of milk, or a loaf of bread. Nor does inflation alter the RELATIVE price of items within a specific currency, it affects the buying power of the specific currency.

 

bterry's comment was pretty self explanatory and 100% correct. As far as "anecdotal evidence" goes, I can easily supply you with first hand testimony ranging from the 1960's to today. Inflation doesn't care whether it is a vintage guitar, a jug of milk, or a loaf of bread. Nor does inflation alter the RELATIVE price of items within a specific currency, it affects the buying power of the specific currency.

?

 

Vintage/antique instrument resale value is not determined by things like Reverb asking prices (in the majority of specific examples). "value'/'worth' is also not determined by insurance valuation. 'Supply and demand' even has very limited impact. It is solely determined by what someone is willing to pay. There is no benchmark. If one understands what "inflation" actually refers to, it has marginal impact. The currency value is what changes. The price of a given item is relative to the currency value, the actual dollar numbers aren't what is important, the relative value measure is. If your 1k purchase has a dollar value of 1.5k after 10 years due solely to inflation, you haven't made a profit, you have broken even.

Obviously. All you’re doing here is normalizing for inflation. What’s true here is that a lot of vintage gear has exceeded inflation in the past two years, sometimes by a wide margin.

 

View attachment 596777
Now, the controversial part: On average, is a 2022 Les Paul Standard, as it comes straight from the factory, a better or worse guitar than an average 1960 Les Paul Standard, as it was straight from the factory in 1960?

Queue heated arguments....

Why take the time to post this in the Vintage Forum?

 

You guys here, no one else, are creating the market value of the vintage guitars you desire. If prices on those start dropping, it's because so are your peers.
Cabinet Victrolas were hard to come by 15 years ago, but now the antique stores are full of them.

Face it, few of you are collecting 1920s banjos, dulcimers, and zithers, and no one in their 30s is buying I Love Lucy paraphernalia.

The modern formula for archtops was finalized in 1922.
The modern formula for flattops was finalized in 1928-32.
The modern formula for the solidbody electric was arguably finalized in the late ‘30’s, but by the 1950 Broadcaster, done for sure.

As discussed upthread, pre-Modern guitars have less value. Anything past those years and they are fully modern playing and sounding.

And guitar sales have never been higher. Interest in vintage/fully-Modern guitars will remain strong for the foreseeable few decades at least.

 

A year ago? Inflation has been a constant for a few thousand years, like for as long as currency has existed. The op's question is pretty weird though, lol

Bingo.

My old timer next door neighbor in the city had his house custom built by the same builder as mine for the price of $6500 for a gorgeous house with detached 2 car garage in 1950.

 

Tangible assets are always a hedge against inflation, whether it’s real estate, precious metals, or collectibles (a broad category that would include old guitars).

Whether or not it will be a wise bet against inflation is another debate but it’s historically likelier to fare better than leaving money in cash

Exactly. Can't afford a house? A car, motorcycle, collection of guitars, anything will do.
Hardware goes UP in value with inflation

 

Exactly. Can't afford a house? A car, motorcycle, collection of guitars, anything will do.
Hardware goes UP in value with inflation

It's more like money goes down in value with inflation.
The basic formula is a balance between:
cost = (money in street circulation) / total goods and..
cost = (money in existence) / total goods.

Let's say the world consists of $100 and 100 loaves of bread; bread is worth $1.
Let's say the world consists of $200 and 100 loaves of bread; bread is worth $2.

Let's say the world consists of $100 plus $1000 owned by a rich guy who doesn't eat bread and 100 loaves of bread; bread is worth $1. The rich guy may buy the bread factory, own a title and the ability to tax a profit stream, selling bread for $1.10, but he's still not personally consuming the bread.

If he chose to actually hoard bread however, bread would suddenly cost $11 and only he could afford it.

When there's an economy panic, people who had expendable money in non-circulated savings invest in actual goods and cause inflation. ..and we get what we have now, people buying up spare empty homes while others are forced on the streets.

 

This thread now officially belongs in the pub.

 

This thread now officially belongs in the pub.

Exactly, and I feel I lost a few brain cells.

 

So the custom shop composed of luthiers attempts to accurately recreate the work of factory workers who were not luthiers. And the time it takes for luthiers to recreate factory work leads to higher custom shop prices than the equivalent prices of the factory products that are being recreated. Got it.

It should be obvious, but there are two points here:
1. The factory products of today are made with modern, more efficient methods. Gibson USAs would cost a hell of a lot more if they were all made the way historic reissues are
2. The luthiers are adhering to higher quality standards than the factory workers were in 1960. It’s still possible to get a dud R0, but it’s almost certain that the defect rate on LP standards in 1960 was higher than R0s in 2022

 

I'm an economist. You can ignore anyone who discusses inflationary dynamics because we really don't have any complete understanding of it.
You can also ignore the quantity theory of money explanations as well because once again doesn't look at the dynamics and usually assumes the money supply is measurable and velocity is constant or changing depending who you talk to - which it clearly is not with so many near money alternatives / derivates available today.
Anything from when we had a gold standard you can ignore as well as before financial deregulation... and other innovations.
Ignore anyone referring to Weimar Republic type explanations as well to explain what's occurring today or what could occur - different times, different technologies... just not the same.

The less said about crude measurements like CPI and variants of it the better. Unless you buy that basket it's meaningless - and even if you do everyone else needs to buy it as well.

We don't understand what value means either and we certainly don't have a method from transforming values into prices in any meaningful / scientific way. Start thinking of economics or finance as a true science and you only end up disappointed.

The answer is this. get the guitar or guitars you want - play them often and enjoy doing it.
Life is too short to worry about money.