The price of splitters

[salecker]

I remember 18% interest rates here.Wasn't on a mortgage.
But peoples were not living paycheck to paycheck back then.
Those were the days were you actually saved money to buy things.
18% interest brings a different lens to the borrowing table.

 

[bigealta]

My neighbor in Utah got a crazy good deal on a new Craftsman (22? ton i think) splitter. Big box store sale sold it to him for $560. This was early September 2023.

Got to keep your eye out for those good deals.

 

[Ashful]

18% interest brings a different lens to the borrowing table.

It should, but recent history and data has shown it actually does not, at least anymore. Consumer spending is linked to the availability of money, much more than the cost of that money, in terms of rates.

 

[ABMax24]

Other factor is the scarcity of goods, some issues are still lingering from Covid supply chain issues. Some goods have a very inflexible demand curve, housing being one of those. Most places people need a roof over their head, and they are going to pay what ever it takes to fulfill that need. Unfortunately some countries (Canada) are trying to fix these supply issues with changes to monetary policy, and are left wondering why the intended results didn't come to fruition.

 

[bigealta]

Some goods have a very inflexible demand curve, housing being one of those. Most places people need a roof over their head, and they are going to pay what ever it takes to fulfill that need.

Ahh only true till it's not true anymore. In 2009 i bought a house for 1/3 of what the bank lent on it. No one else bought anything in that town that year. Demand was destroyed by economic conditions.

I also bought a house in 1989 at the top of the housing market. Sold it for about 1/2 of what i had into it 3 years later. Took 15 years for that house to get back to the value of what i had into it.

When i bought that house in 1989 the banker told me "Real estate is Gold". That's what everyone thought at the time.
In 1989 it was "fools gold".
Timing is everything

 

[old greybeard]

I remember 18% interest rates here.Wasn't on a mortgage.
But peoples were not living paycheck to paycheck back then.
Those were the days were you actually saved money to buy things.
18% interest brings a different lens to the borrowing table.

I can assure you with 2 small kids, 12% mtg, working class jobs, we lived paycheck to paycheck for a decade. Didn’t whine, didn’t borrow for junk, didn’t eat out often.

 

[blades]

first house i bought back in 77 and yep both working, pay to pay check. i do not remember % rate about 9 maybe but rates went ballistc shortly after. job i had hired on had a bunch of guaranties as to pay scale after 6 mo. whatever went down, upstairs, none of those items were met. when I inquired i was met with can't find anything about that responses. took 2 years to sell that home at $2000 more than i paid for it so lost money on after various fees ( bought at 20k sold at 22k) got a job 75 miles away at about 33 % more , soon as home sold moved wife up to where i was working and we bought a small ( 850 sqft both floors combined) home at %18 ( 40k). 6 years later rates at 22% trying to sell that home so we could move to a better school system for first born. plenty offers at our price 44k but people just could not qualify. made a deal with a bank on a repro property they had using the home as down payment. 50k for the new place but i had to do all the rehab work. interest rates still floating in the 20%+area , creative financing re did the loan about 3 times mostly to get better rates. that place went to her in divorce in 2001. worked my backside raw and in 2011 paid cash for a ranch home in good area, did rehab on it, sold it 6 years later and paid cash for my current place. would have been nice not to do a cash deal, rates lowest most of us have ever seen, but banks around here don't like self-employed people. so many people walking away from those previous high rate loans - banks real shy on lending to some of us. On the other hand no mortgage on home or shop, and no other loans either.

 

[old greybeard]

Yeah anyone saying us boomers had it good economically are crazy. Growing up with a constant nuke threat, race riots, 50k of our friends killed in Vietnam, gas lines, riots with military shooting college kids, no jobs, high interest and unemployment, years of economic collapse. And expensive. Had to rent your phone every month for years, a 19” tv in 1980 cost $500, thats $1800 today. The last 40 years have been a breeze in comparison, but unfortunately they have been based on borrowing. Our Grandkids will have it much worse than any of us.

 

[salecker]

The good times of the 90's and 00's will be something to tell the grandkids about.
At least they were rolling good times here,lots of jobs low interest rates,good times have resulted in soft people.

 

[Ashful]

Yeah anyone saying us boomers had it good economically are crazy. Growing up with a constant nuke threat, race riots, 50k of our friends killed in Vietnam, gas lines, riots with military shooting college kids, no jobs, high interest and unemployment, years of economic collapse. And expensive. Had to rent your phone every month for years, a 19” tv in 1980 cost $500, thats $1800 today. The last 40 years have been a breeze in comparison, but unfortunately they have been based on borrowing. Our Grandkids will have it much worse than any of us.

... and you had to walk across 9 feet of shag carpet, just to change the TV channel... both ways!

Things got cheap in the 1990's because of outsourcing, not just borrowing. When you're paying some poor Chinese farmer's son $0.25 per day to make every last part in your Compaq or Zenith, prices go down! As with every example of outsourcing back to the beginning of the industrial revolution, things normalize after a decade or two, and prices correct themselves... until you find greener pastures.

 

[NHWS]

... and you had to walk across 9 feet of shag carpet, just to change the TV channel... both ways!

You really don't appreciate the pain of the time. That shag carpet was avocado green, and you had to choose between Dobie Gillis and Dennis the Menace on the TV.

 

[old greybeard]

... and you had to walk across 9 feet of shag carpet, just to change the TV channel... both ways!

Things got cheap in the 1990's because of outsourcing, not just borrowing. When you're paying some poor Chinese farmer's son $0.25 per day to make every last part in your Compaq or Zenith, prices go down! As with every example of outsourcing back to the beginning of the industrial revolution, things normalize after a decade or two, and prices correct themselves... until you find greener pastures.

Correct, and add the lack of epa regulations. Still wear lots of USA made clothes, gatt and nafta killed our lower middle class

 

[blades]

Never liked that shag carpet whatever color. showed heavy traffic patterns after a couple years no amount raking and fluffing would correct that matted down mess. I totally agree with Greybeard as well. More than 50% of my HS class mates were eliminated by the various SE Asia conflicts

 

[cahaak]

Wow, I have a 22 ton I bought at fleet farm about six years ago for $700. Other than a couple of enormous multi crotches, it splits everything I have fed it. Best part is now I just cut and when I get home from work, all the wood is magically split. I put a side table on it so very efficient now. Bunch of my relatives use it also, so it all works out great.

 

[blades]

Since the pandemic everything has morphed up by 50%.

 

[Ashful]

Since the pandemic everything has morphed up by 50%.

Has as much to do with tariffs we're holding against Chinese imports, as anything to do with the pandemic. Trump implemented them and Biden criticized them, but 3 years in I guess he's decided he likes them, as there's been no move to repeal.

 

[ericm979]

The tariff can't help for largely Chinese made goods like splitters. But as you point out its been in place for a number of years. We saw an immediate rise in prices of tractor implements from China but then prices leveled off. Then post-Covid inflation hit and prices climbed more.

A lot of economists think that inflation (which is down to 3% or so now) was primarily "seller's inflation". With covid and Ukraine, businesses felt a need to increase prices due to uncertainty. At the same time, they knew there would not be strong competition on price. Many markets in the US are dominated by just a few big companies who all watch each other for price signals. For example four companies have 80% of the US meat market. Those companies have a certain amount of "pricing power" to set prices in conjuction with their competition. Companies often signal pricing to each other for example in earnings calls and of course they all watch each others prices. Even in markets without that kind of virtual monopoly, when the media is constantly talking about inflation, that provides cover for raising prices since everyone is doing it. Consumers don't have an alternate when everyone is raising prices so they don't go elsewhere.

this paper's one of the more notable ones on this:

Sellers’ Inflation, Profits and Conflict: Why can Large Firms Hike Prices in an Emergency?

The dominant view of inflation holds that it is macroeconomic in origin and must always be tackled with macroeconomic tightening. In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with...

scholarworks.umass.edu

 

[Ashful]

I can say I've seen my own component costs rise, in my business. I've just been arbitrarily increasing my prices on established goods by 6% this year, reflecting average cost of living increase, but I see it more in costs I calculate on new products. As a business owner who manufacturers products, I'm not looking to **** anyone, just aiming to keep my profit from decreasing, as my own costs rise. I suspect more are in the same boat.

 

[blades]

yep, that is what I have to do also. I am mostly a service biz. I have consumables that I have adjust for, plus over head.

 

[qwee]

cahaak, how does your wood get magically split? Your wife (shame on you)? Your kids (double shame on you)? Or your relatives/friends who burrow your splitter?