Name Brand BluRay/DVD Player Breaks sub-$100 Barrier
By Barry Ritholtz - January 29th, 2010, 5:52PM
Hey look, I know we are in a *deflationary environment, but this is getting pretty ridiculous:
The Sylvania Blu-ray Disc Player (NB530SLX) in full 1080p, originally listed at $199.99 is now $89.99 at Amazon.
I know nothing about this machine, other than the reviews I read (which are pretty good), or who makes it for Sylvania. I am sure there are better, more expensive machines.
But $90? Jeez, that is practically free.
_________________________
*that’s DEflationary, not INflationary
>
UPDATE:
BN points out that this Magnavox Blu-ray Disc Player, NB500MG1F is at Wal-Mart for $68.
http://www.walmart.com/catalog/product.do?product_id=11319406
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January 29th, 2010 at 5:57 pm
Mish is smiling.
January 29th, 2010 at 6:31 pm
Great starter BluRay player
January 29th, 2010 at 6:32 pm
Its in their best interest to make the player’s cheap so they can encourage faster adoption of Blu-rays which are doing “ok” but could be better.
January 29th, 2010 at 6:34 pm
Excellent point:
January 29th, 2010 at 6:35 pm
No demand for toys? What’s next, saving money?
January 29th, 2010 at 6:35 pm
OMG….. Why do I need this? My DVD/VHS Combo from Panasonic is working just great! Why do I need Blue Ray…anyone have great experience with Blue Ray who can tell me why I need to buy this?
BTW…we are huge Netflix users and watch both on our computer screen and rent to watch on our Panasonic. Plus we have a huge amount of VHS that we own from old PBS Specials to VHS we bought of Mini-Series that we re-watch from time to time. We still VHS stuff on our Cable that we like to save and watch later….and we are fine with all of that.
So…I don’t get what the advantages of Blue Ray are. ?????
Anyone have any input?
If anyone can tell me why I need to upgrade, I’d love to read.
January 29th, 2010 at 6:35 pm
This player does all the important stuff very well. I was able to have it entirely set up in about 5 minutes. The picture quality is great, and I’m especially pleased with the upconversion of my DVD library. It does not have a remarkable number of outputs, but it has the HDMI and Coax outs that I need. The downsides are the cheap-feeling remote, the time it takes initially to load Blu Ray disks, and the fact that higher-end players have higher-end features.
Pros:
-cheap (especially since I got it free with the Amazon deal!)
-has the necessary features (mute HDMI audio, picture settings)
-great picture.
-Really easy to set up and use.
Cons:
-The remote is rather sad and pathetic.
-Long load times of Blu Ray disks (does not appy to regular DVD)
-Lack of high-end features.
January 29th, 2010 at 6:42 pm
BTW…I’m a Time Warner Cable customer…(the middle tier kind) and I never use their “rent movie” feature. I guess if I upgraded to their top tier I might do it.
As for now…we have such an incredible backlog of VHS stuff we’ve taped through the years…we could live for decades and not have to give it up. :D
The new stuff we can still tape what we like…and if we travel we can use HULU or NETFLIX to download.. Don’t have to pay the Hotel Fee’s that are pushing the porn or movies we didn’t want to go out to theater to watch the FIRST TIME.
Hey…different strokes for different folks.
January 29th, 2010 at 7:02 pm
@TakBak04
Obviously the biggest improvement is just picture quality. If you have the right home theatre support like 1080p tv that’s at the right distance (i.e. 50 inch and less than 10-15 ft away), there is a big improvement in quality. May want to check that you do use the right connectors (i.e. a lot of PS3 owners don’t realize the included tv connector cables can’t be used to watch HD content)
But a lot of people don’t really notice a big difference and picture quality isn’t always all that important so your mileage may vary. I don’t personally see the point of upgrading to a BD player + HDTV when I can just use my computer to get HD services (i.e. Netflix/etc) anyway.
January 29th, 2010 at 7:14 pm
The deflationary environment explains the reduced number of scandals: aggre-gate demand has dwindled.
January 29th, 2010 at 7:16 pm
It’s only ‘practically free’ when you are wealthy. Come back down to earth,
In the real world, it’s merely inexpensive.
January 29th, 2010 at 7:19 pm
MF
These things were $799 two years ago, and $399 last year. By “practically free” I am referencing the price drop.
But I see your point.
January 29th, 2010 at 7:20 pm
http://www.tech-no-media.com/2009/05/5-reasons-blu-ray-is-failure-in.html
I think HD-DVD will end up winning out as the preferred format
January 29th, 2010 at 7:26 pm
not 100% on this, but Im pretty sure blu ray is just another failed format. But agreed with changango, make it cheap as hell and hope to raise sales of blu ray dvds
January 29th, 2010 at 7:38 pm
1080p or 1080i or 720p simply does not matter. Go for the cheapest.
For example: A full bitstream of 720p would be
(8 bits per color) * (3 colors [RGB]) * 1280 (pixels wide) * 720 (pixels high) * 60 (frames per second) * 8 (bits per byte)
= 1.3 gigabits per second of data.
The source material on the blu ray disc is less than 3-4% of that (typically 20 Mbps). And that’s for 720, it’s an even smaller fraction for 1080p. So anybody that tells you they can see the difference is suffering from the placebo effect.
January 29th, 2010 at 7:46 pm
Technology, economies of scale, competition and overseas outsourcing will do that. Can we get those same people working on the financial and healthcare industry?
January 29th, 2010 at 7:50 pm
@jpm
What are you talking about? All you did there is demonstrate that its currently unfeasible to do uncompressed video playing. All formats nowadays do some form of compression such as mpeg4 or h.264 etc.
Blu-rays are often encoded in h.264 to reduce the stream requirements.
1080i is really not worth buying nowadays, esp since all tv’s nowadays support minimum 720p. 720p vs 1080p is very dependent on 1) how big your tv is, 2) how far you sit away, 3) how picky you are about video quality
January 29th, 2010 at 7:52 pm
Answer to: jpm Says:
January 29th, 2010 at 7:38 pm
1080p or 1080i or 720p simply does not matter. Go for the cheapest.
For example: A full bitstream of 720p would be
(8 bits per color) * (3 colors [RGB]) * 1280 (pixels wide) * 720 (pixels high) * 60 (frames per second) * 8 (bits per byte)
= 1.3 gigabits per second of data.
—–
Answer:
But, what if there aren’t MILLIONS wanting to switch to what your match computed stuff about picture quality and resolution that are waiting to jump on the Latest Upgrade?
What if folks just don’t care or don’t feel they “need …or even can afford” to have the Latest Thing? IOWD’s…
WHAT IF…some folks have found their “Comfort Level” with the technology they use and they just don’t NEED to push it forward?
I always think of my friend the “Tech Junkie” who comes running to me about the “LATEST THING YOU NEED TO HAVE…or YOUR FRIENDS WILL GIVE YOU UP!) …forgive Cap’s lock …but that’s how they talk to us…as if we are clueless idiots who don’t get that the Latest THING might not be the most PRUDENT thing for us to buy or use.
So…..just saying. Those who want to be on the “cutting edge of everything new” will be onto the latest in the blink of an eye. But, if one is comfortable with what they have in perilous economic times….shouldn’t they have equal weight? Or are they the equivalent to “LUDDITES” in some folks minds?
Cautiion and Prudence. As opposed to LUDDITE mentality. Well…there really is a difference here.
Stretching it further…”Caution” kept some from Over Mortgaging..buying beyond their means through the Mid-2000′s Housing Bubble. Now, some of us are feeling better than those who buy the “Hype.”
Blue-Ray…if you don’t “need it” and it doesn’t do anything better for you …except incrementally in picture quality ….would not seem a good purchase …unless one has $99.00 to just throw away for a GADGET?
See where I’m coming from?
If you don’t need it …RIGHT NOW…why buy it…just because it’s CHEAP and On SALE?
Conundrum…..
January 29th, 2010 at 7:58 pm
Edit: Barry’s price was around $90.00 for Blue Ray special…not the $99.00…that I posted. That $10.00 might make a difference. Sorry for the mis-quote.
January 29th, 2010 at 8:04 pm
All you did there is demonstrate that its currently unfeasible to do uncompressed video playing.
No. (In fact, it is possible to do uncompressed video playout if you wish.)
What I demonstrated was that the blu ray information content is a small fraction of the total information displayed. In that limit, it does not matter whether you display the frame as 1280×720 or 1920×1080.
So don’t bother with larger pixel counts if it costs extra, because blu ray isn’t going to supply the video information to make it worthwhile.
January 29th, 2010 at 8:24 pm
So far…Netflix offers less in Blue Ray than traditional. Who knows how long that will last. I assume they monitor their market as to what folks are requesting and what they send back having mis-ordered.
I was slow to adopt the “wide screen/letterbox” but that’s because we still own old TV’s and didn’t upgrade to “Wide Screen” so it’s a much more annoying format…(cutting off bottom halves of actors to give the Wide Screen effect.” The trade off wasn’t acceptible to us…but our perspective might be jaded..I will admit.
Our friends who adopted HDTV/WIDE SCREEN (they claimed so they could watch Football) and have their friends over to watch in “real action” …plus those who upgraded their “extra room” to the MEDIA ROOM complete with Studio Seats and Effects …seem to be in Housing foreclosure.
But, then…I’m just “Middle Class” and don’t live in Greewich, CT. The under 1% who did the Media Room and Wide Screen everything’s houses just aren’t selling in my upscale neighborhood. Prices are TOO HIGH…the buyers say.
But back to Blue Ray…. It seems cool but my friends who have the “Big Wide Screens” seem to show the “pores of the Faux News Babes” and while the Sports are great in the view…the format seems to “stretch out” the movies and stuff we like to watch and we are always wondering why BIG PEOPLE intruding into our SPACE..tops that old 32 inch that seemed to do the job?
It’s amazing the perspective and the differences in what folks can tolerate in Picture View and challenges. For us, it’s SOUND QUALITY. We do have BOSE speakers for our old 32 inch…so watching Concerts and Such are really good…so far.
Ho Hum…on Blue Ray and the rest….for now..at least.
January 29th, 2010 at 8:58 pm
google: who makes magnavox bluray player?
Amazon Verified Purchase(What’s this?)….
Like the Magnavox, and Insignia brands, the Sylvania NB500SL9 is made by Funai, who incidently makes 50% of the DVD players sold in North America.
Funai.. Japanese company.. makes a lot of tvs sold under magnavox, phillips, other names too
January 29th, 2010 at 9:01 pm
FOR SALE: Lightly used SONY BETA MAX. No HDMI input or output, No 1080p, no 802.11.n/g/b. Too big for a paper weight. Can be mounted to your garage floor so you can scrape the mud off your boots. Call 555-Beta-Max for details.
January 29th, 2010 at 9:30 pm
Blu-Ray is DOA. The NetFlix numbers tell you everything you need to know about the format. While the BR numbers are trending up some, the number of users who are streaming inferior quality movies (Std Def, no Dolby Digital sound, etc) show that users are fine without Blu-Ray. Even if the players are less inexpensive, other problems will dog the format for the rest of its life:
1. Can’t play the movies in cars, most computers, most of your friend’s houses. Like bigal alludes to above, it is the beta format in a VHS world.
2. The confusion generated over varying profile formats and firmware updates you don’t know that you need until the movie you just bought or rented won’t play has left a bad taste in early- (and mid-) adopters’ mouths. People want to push “play,” not search for and download an upgrade on a thumb drive, etc, just to watch a movie.
3. Upscaling DVD players obviate the need for new hardware, more expensive discs, etc, for most people. Upscaled DVD is not just “good enough” but “plenty” for most.
4. Just as has been shown with music, streaming is the way of the future.
That said, not a bad deal for $89…
January 29th, 2010 at 9:56 pm
$89.99 is *way* too expensive.
I bought my parents a DVD player last week, for $24.99 — and I’m sure I’d have found a cheaper one by digging a bit further. It’s arguably not Blu-Ray, but they couldn’t care less and nor did I — it was merely to replace the old one, which broke. I’d only ever use VOD myself, and I can easily picture them doing the same in only a handful of years.
Plus, USB Drives have already replaced floppies, CDs and DVDs for most purposes.
Blu-Ray is just sooo dead. At $25, I might buy. Though, even then, I’ve doubts…
January 29th, 2010 at 10:53 pm
Damn, I was robbed. I paid 109.99 at Costco for a Sony just last week. I thought it was a deal since I bought the same one for my sister for Christmas for 129.99.
Deflation is happening. Good thing since my salary seems to be falling just as fast.
January 29th, 2010 at 10:57 pm
The fact that smart people like you, Barry, will call this ‘DEflation’ is an indicator of why we are so f****d financially in our generation.
Here’s how it works:
1. a new product is engineered at a large cost.
2. production lines are built and brought online, at a large cost.
3. The products start selling at some price, say $750/each, while the incremental cost to manufacture them is only about, maybe $200.
4. Largescale adoption occurs and suppliers of parts start competing and dropping prices.
5. The cost of incremental production drops to $50
6. The price keeps dropping as competition dictates that you either lower your price or go out of business.
7. The government, and the financial schlubs declare deflation and use it as an excuse to tell the banks to print money and pass out bonuses like there’s no tomorrow because ‘deflation is bad’
8. Bubbles are created and the banks pass off the losses to us, the taxpayers.
9. Bankers and government schlubs smoke a cigar.
10. We get poorer
Deflation is not just a drop in price of some selected good or service, dumb ass.
January 29th, 2010 at 11:00 pm
Is it your position that because technology tends to drive prices down, there can NEVER be deflation in that space — EVER? That’s a silly, unwarranted assumption.
I have addressed the Technology adoption lifecycle and why (in general) all industrialized products manufactured in scale should see price decreases over time, and why this is NOT generally speaking deflation.
See this from 2 years ago:
But that does not mean technology cannot EVER suffer the effects of deflation.
Its been an enormously deflationary recession due to the collapse of consumer credit, increased unemployment, and the decrease in buying power. Learn to distinguish between the two
There’s more here:
Hackonomics
http://www.ritholtz.com/blog/2008/02/hackonomics/
Hackononics, Part Deux
http://www.ritholtz.com/blog/2008/07/hackononics-part-ii/
January 29th, 2010 at 11:08 pm
$90 MORE THAN A MONTHS SALARY!
In about 2/3s of the world.
SS
January 29th, 2010 at 11:25 pm
Stephen @10:57 PM…
Your argument was going really well until you put in the last two words.
Then, I suspect, you lost most of your audience.
Another case of reasonable content destroyed by childish presentation.
~~~
BR: Its worse than childishness — its outright wrong.
Just because economies of scale drive prices down over time doesn’t mean that deflation cannot accellerate that. You can have both Scale AND deflation during a massive recession !
January 29th, 2010 at 11:37 pm
Mr. Rith0ltz
Thank you for patiently explaining this to those of us who are interested in learning. Know-it-alls like Stephen are too arrogant too ever admit they are wrong, but your responses are a service for the rest of us.
I don’t know where you get the patience to respond to these dumb comments.
Why do you even tolerate rude jerks?
~~~
BR: Well, some of the more annoying/ignorant/arrogant comments do a service for me also. They show me where my discussions/arguments have weak spots that need shoring up, or where I am not communicating effectively, or allowing jargon to muddle the message.
The patience is never directed to the dumb commenters — its ALWAYS directed to the rest of the readers.
January 30th, 2010 at 12:45 am
Re:Stephen:
So what you wrote is: prices of all goods going down due to the “system” of competition and scale production… is NOT deflation.
Did you get that BR? Hmm… Stephen, maybe went to school with TranzorZ?
January 30th, 2010 at 2:04 am
3D viewing home-technology should attract a lot more attention than blu ray. Unless the blu ray platform is needed to implement the 3D parametrics, blu ray DV3D …
January 30th, 2010 at 2:52 am
No demand for toys? What’s next, saving money?
What? Saving scraps of paper? Where? In a scrapbook? I think I’d rather collect stamps. At least those scraps of paper have a better chance of having value in 100 years even if I don’t have any
January 30th, 2010 at 3:58 am
I have to agree with a few of the comments above – $90.00 is not free when two billion people live on less than two dollars a day. The price of this blue-ray player would feed a family of 4 for a month in many places around the world. Mr. Ritholtz it is nice to be wealthy, no doubt you deserve and have earned your position in our society. Let us all try to remember that we are the lucky ones.
I only download my media. Films, TV shows, News, Music, Books Magazine, Newspapers. Everything. It is so convenient, easy and takes up no shelf space. Once you start your digital library you will never go back to the old school hard hardware world.
Sony is having a rough time of it. They finally win the the high def war and feel good about erasing some of the shame from the decades old betamax/VHS defeat and poof the market moves to a place where they are not.
In Japan (I watch a lot of NHK TV in English, streaming video) there is a national pastime called Kingyo Sukui. It is a festival game that mixes gambling and pet shopping with a little bit of fishing too. You have a bowl and small scoop which is made of very thin paper. The object is to scoop the goldfish out of the tub and into a bowl without breaking the paper. There are masters of this ‘sport’ who can scoop up a tiny goldfish in seconds. The secret is to place the thin delicate rice paper in front of the fish and let it swim onto it and at that moment gently pick up the little creature. Most people logically chase the fish from behind which makes the fish scurry away and then it becomes very difficult to catch. To succeed at this one must anticipate where the fish is going to go and be there at the moment it does.
I think Sony has been chasing the market since their Walkman days.
January 30th, 2010 at 6:49 am
There wouldn’t be 2 billion people, (if you can call them people, the human beings who have the common sense, decency, humanity and self-discipline of rabbits) living on less than $2.00 a day if they would control their sexual relations even moderately. The brains of the people in these countries must be absent in the species.
We are unable to have any sympathy for things we do not comprehend. I cannot understand Haiti, Africa, and other countries whose people do little but reproduce themselves in such numbers as to create their own starvation, deprivation and tragedy.
January 30th, 2010 at 10:05 am
Electronics are always getting cheaper. This is not a sign of deflation. CD players, as well as DVD players were $1,000 when they first came out. Blu-ray players will be less than $50 in a couple of years.
January 30th, 2010 at 12:08 pm
I am old enough to remember envying my neighbors $1,200 suitcase-sized Sony Betamax. I suspect in the future, most of these units will go by the wayside and most media will be stored in the clouds so to speak. I just donated a couple hundred VCR tapes, including entire Disney Collection. The CDs & DVDs are next to go……
January 30th, 2010 at 2:06 pm
I did not notice that any comment that this $90 is actually expensive as in King Gillette 101.
Blu-Ray players from whatever manufacturer are but razors for blades (disks) that are meeting enormous indifference for whatever reason but Mr. market speaking. As they sit on the shelf and alternative movie distribution schemes proliferate like mushrooms after a cool month of rain, prices need to clear the growing supply.
Steve Jobs will face the same fate with his iPhone Gigante which is not a Tablet since it doesn’t let one write on it and have some Twitter symbol short-hand expansion technology , nor is a Pad for same reason. The iPad doesn’t make phone calls nor take a picture or video. It will display a stunning Internet in one’s hands as if a 5 yr old laptop with a decent video chip, and will make a terrific frame for a picture of Mr. Jobs as well.. …The second coming of a tragically named product, Newton?
January 30th, 2010 at 2:49 pm
“childish”, “wrong”, whatever … this forum hardly has a history of decorum. That includes the grand master.
Here’s another great example:
1. I pay several smart guys to develop a cool accounting program. They sit in a room for 12 months and chew up $1 million of my money.
2. I pay several other people to market and package the program
3. It’s a hit and I can sell it for $1000 and I do, to about 2500 people.
4. I’m made money, but ran out of customers at $1000
5. It costs me $5 to produce a ‘copy’ of my product, so I start lowering the price to attract new customers
6. see the end result of previous post.
If you want to measure the average global temperature of the earth, do you put one thermometer in a greenhouse in the desert, or do you look for distributed and controlled places to put it? Measuring inflation/deflation is the same. Technology is probably close to the worst way to measure inflation because changes in the price of technology due to these other economic effects completely swamp out any change due to inflation/deflation.
Good measure for average people: buy a candy bar in a convenience mart in the ’60′s for 10 cents, buy one today for over a dollar. Inflation over that period – at *least* a 10X multiplier. 45 years, 10X, average of 5.25% PER YEAR … CPI measure over that period … 214.5/31.5=6.8x or average of 4.4%.
Over that period the geniuses of Wall St. and government have howled that the CPI ‘overstates’ inflation. Bull %$@* (for the tender ears of some – %$@* = ‘stuff’)
We are being duped. Wealth increases when people find better ways to do stuff and build machines to help. All that progress is being stolen by liars and thieves who do things like print money and lend it to some guy with no job and hardly any income to buy a house he will never pay for. And when the loans and other shenanigans went bad, they printed another several TRILLION dollars, created out of thin air, and now pretend that all is great.
You’ve been duped as much as anybody, Barry. But I think you are a smart guy – just wrong a lot like most of the financial pundits.
January 30th, 2010 at 3:56 pm
Stephen – But most of the inflation you cite on CPI and the candy bar was 1965 to 1985. And your conclusion is that the CPI is then a good measure?
The CPI has been <4% basically every year since 1991. Average 2.5%.
I think it over-states inflation a bit and core PCE is a better measure, and avg <1.8% since 1993.
Both point to a strong, steady move to deflation.
January 30th, 2010 at 5:05 pm
The reasons for “ordinary folks” to upgrade to Blu-ray are as follows:
1) your existing DVD player begins to decay (ours will no longer play DVD’s that I burn to send to relatives that have difficulty managing YouTube, although it will still play stamped mass-manufactured DVDs — but I expect that eventually that will stop working as well).
2) you get a new HDTV with 1080p support, and are antsy to get that last 1% of performance from it. If your TV does not display 1080p, there is no justification for purchasing a Blu-Ray player.
3) the distributors stop making DVDs and switch entirely to Blu-Ray discs, which have superior copy protection and larger profit margins. This WILL happen, it’s just a matter of time.
I can’t think of any other reason that anyone would go Blu-Ray at this point.
FWIW, I think that the declining cost of Blu-Ray is more a function of technological advances and increasing production volumes than deflation. You can see deflation in goods whose production is mature (with little/no technological advances in play), and demand (more-or-less) static, where the deflation occurs from persistent compression of the cost structure, due to increasing pressures on costs and borrowing throughout the production process. Deflation is occurring, just not as rapidly as people believe.
IMHO, the easiest way to see deflation is in the absence of inflation.
January 30th, 2010 at 5:33 pm
The price of Blu-Ray players is getting down there … I can see the possibility of NetFlix giving away “free” Blu-Ray players with a prepaid 2-year subscription at the higher levels, with the cost of the players subsidized by the studios. That would be an excellent way to spike interest in Blu-Ray. Kinda like free toasters with a new savings account. Perhaps free Blu-Ray players with the purchase of a 10K CD is a possibility for savers.
Not everyone finds the downloaded/streamed video experience satisfactory, especially in this backward land where the average connection to the internet is less than 4 Mbps, while the broadcast HDTV 720p bandwidth is running between 6 Mbps and 18 Mbps, depending on how the broadcasters slice up their channel bandwidth (the -1,-2, … monkey business) and the degree to which digital compression algorithms are utilized (not at all in over-the-air broadcasting, vs whatever the cable/satellite provider puts in their decoder boxes).
And with Blu-Ray content, there are precious few ways it can be delivered other than by disc (the Verizon FiOS and Comcast 100 Mbps cable support is about it).
January 30th, 2010 at 6:06 pm
@cognos – I don’t care when it happened as much as I care that a long average shows that there is about a 1%/yr understatement over the last 5 or so decades – and that is a rough calculation. But in all honesty, the price of those candy bars should have dropped over those years as we’ve improved mechanization and productivity immensely since then. Instead, they’ve gone up 10x+ … the true situation is probably a lot worse than just a 1%/yr understatement.
If ‘deflation’ is making the price of DVD players drop as Barry believes (I know, he believes other things push the price down too, but he believes that deflation is a measurable part of it) then why did the price of CD drives and DVD players in the 90′s drop so much? Or how did the hand held calculators that we’re proliferating in the 70′s (double digit inflation) drop from ~$400 to ‘cheap’? Prices in technology are just too volatile to be of *any* good in measuring inflation/deflation. We should be looking at things like skilled labor, gold, and yes – candy bars, cereal, etc.
We do long term averages to remove the noisy part of the measurements. Here’s one that ought to puzzle some – in 1965 you could walk into a Ford showroom and buy a cool, state of the art, Mustang for around $2500. An experienced engineer back then was pulling about $15-$16k/yr. That Mustang was about 17% of his salary. Today – the sticker starts at about $25k, (gee, 10x again) if you want it to actually have carpets and a radio you will spend $30k+ for that car. The engineer is pulling $75k on a good day – that car is at least 30% of his salary.
So what? Well, the so what is that progress has made our lives more comfortable, and it has made us more susceptible to being duped by clever financial clowns. Witness the last few years! Duh!? And it aint over yet.
If you want the CPI to measure cost of living so that COLA programs don’t get out of control while you’re inflating the hell out of the currency (stealth taxation, that’s why it’s so popular among the den of thieves in Washington) then keep toying with ‘replacement’, and ‘hedonics’, etc. But, if you want to put some currency under your mattress and pull it out in 45 years and then see what it will buy – that’s quite a bit different in our culture because, thank heavens, we aren’t living in the dark ages. Technological improvements and productivity gains are supposed to improve all of our lives, not just bankers and government crooks.
January 30th, 2010 at 6:23 pm
PS to all,
At least there was some actual discussion going on here. It’s quite telling (Barry, et. al.) that I make a bold, and arrogant (but correct) statement and am then attacked ad hominem by both your fans and you (Barry) in precisely the same bold, rude, and arrogant way you claim was bad for me to have done. I don’t really care, just pointing out that you smell just as bad as I.
I do appreciate the discussion – but would like to have my actual point refuted instead of dwelling on economy of scale. The point was that drops in the price of DVD players tells as much about deflation as the temperature in my freezer tells about the weather outside.
January 30th, 2010 at 7:06 pm
Stephen — There is no OTHER cause of deflation. If productivity, technology, population or slack demand are causing prices to go DOWN — that is deflation. Its that simple. The opposite is inflation. (There are no “excuses” for prices going up either, right?).
Your theory seems to be – “prices are supposed to go down, so if they are flat then inflation is huge”. This is just rubbish. Down or flat = deflation. Rising steadily = inflation. Its just a money suppy vs goods supply thing.
Oil prices averaged $38/bbl in 1980. Average oil prices were prob <$70/bbl in 2009. That is ~2% inflation. Lots more oil than candy bars. Picking out any single thing is silly… inflation/deflation is always a broad average (and includes DVD players… and hand-held, internet connected computers with 32GB storage and 1GB processors and hi-res color touch screens which incidentally have come down from $1B in 1997 to about $1000 today. That's deflation! Even if the price of steak is up slightly.
Housing prices for purchase or rent, are down. Its hard to have inflation when housing prices are down big, right? Housing is about 1/3 of the consumption basket.
January 30th, 2010 at 9:35 pm
@cognos – just like Barry, you are putting words in my mouth and then running on about what I didn’t say.
Inflation is ‘too much money chasing too few goods’ – that is the textbook definition. Inflation and deflation are not supposed to be measures of price levels. They are supposed to be measures of the intrinsic value of the money. A free economy is like an auction. If there are ten apples for sale and ten dollars in an economy then the price level is a dollar per apple. If the next day there are ten apples in the economy and twenty dollars, that’s inflation because what changed was the quantity of money not the quantity of apples that now cost $2. If there are 20 apples then the price stays at $1/apple, but it isn’t the smart farmer that gets the extra buying power of production increase, it’s the people that were spending the newly created $10. The farmer now has $20, but that is still the value of the whole economy so he has the same amount of buying power he had the day before when he sold 10 apples for $10.
If I bake bread and become more efficient at it then prices should go down. Our 250+ year experiment has proven that these market theories are correct. There’s lots of noise in the system, that’s why if you are trying to estimate the quantity of money relative to the goods produced you have to pick measurements with as little noise as possible or average over very long times. It’s not an easy task and the humongous efforts of the bls over the years demonstrate how hard it is.
Oil is another *very* noisy measurement. How about going back to 1913 and looking at what it costs to have a British tailor hand make you a fine suit? That’s a pretty long time and a not-too-noisy measurement. Or tell me what a loaf of bread cost back in 1913? The CPI between now and then is 214/9.9=21.6. So, if a loaf of bread in 1913 cost a nickle, it’s now about $1.10. Bread in 1913 was about 6 cents a loaf, so today it should be about $1.30 – according to the CPI. Been to the store lately? We’re not talking about the cheapest, crummiest loaf you can find. Well, my estimate is that it’s about $2.50, at least (even at WalMart!) for OK bread. On sale, $2, maybe. How do the sultans of “print money cause it’s fun” account for the discrepancy? They tell us that our TVs and VCRs are so cool compared to not having them in 1913 that we should shut up and continue to allow them to print money and steal stuff.
My whole point here is that there is a LOT of misconception about what the CPI is and what it is supposed to measure, and what the heck inflation and deflation are. As I said, if you want to measure price levels – carry on. If you want to measure the intrinsic value of the currency, that *is* a *lot* different.
PS – if you’ve been to a bread ‘factory’ or seen a good documentary on the mechanization of those factories and can’t see that the price of bread should have dropped *a lot* since 1913 – then I can’t convince you of what is patently obvious.
January 31st, 2010 at 8:06 am
Absent countervailing factors, multi-Trillions being recorded as debt with a vacant US manufacturing base, and a secular trend castrating the practice of financial engineering and syndication compromised by obscure bank holdings ( once up to 40% of recorded profits?), we are short multi-Trillions of USD to the FED and China. “This land is my land, this land is your land, from California (speaking)….to the New York Island”….thank you, Woody Guthrie.
My take is that Deflation rules when net short Cash vs astronomical Debt, and has been trumping every rally in USTs since July 2008.
January 31st, 2010 at 8:37 am
Stephen, please get your head out of your textbooks and look around you. What inflation are you seeing? My cash buys more of everything except gold since this crash began and even that took a nice haircut during the peak of the crash. I know you hyperinflation types are creaming your panties right now worried about those “printing presses” running full steam ahead but what we have is a relatively insignificant fiat system attached to a humongous debt-based ecocomy. This economy laughs at your printing presses as each new default cascades throughout the system severely dampening any money multiplier effect and forcing another round of margin calls. Will this change at some point? Sure, then your beloved inflation will return but deflation has a nasty habit of sticking around. Years in fact. In the meantime if you have a job or no debt enjoy it while it last. To use one of your examples buy yourself a nice suit. I just bought myself a nice one from Jos A Banks for 70% off.
http://www.josbank.com/webapp/wcs/stores/servlet/Home_11001_10050
btw, I have a friend who’s a hyperinflation nutjob. He recently had to sell his gold coins to raise cash so he could pay his mortgage. He still doesn’t see it despite his own main street margin call.
January 31st, 2010 at 2:03 pm
I swear this forum is like a scene from Lord of The Flies …
@wes … “I know you hyperinflation types” … I never used the term and don’t know what you read that makes you so defensive about it. Perhaps it’s that you actually care for your friend that is struggling to pay his mortgage – go help him out.
This whole discussion is about interpreting a drop in the price of a DVD player as indicative of deflation. When financial types think deflation is happening they print money. When money is printed, wealth is stolen from people who hold savings. It’s immoral. The data I’ve put forward is all evidence that since the inception of the Federal Reserve there’s been a whole lotta stealin’ going on.
The suit I spoke of was a hand tailored suit – hand tailored by a skilled tailor, not sewn up in a sweat shop. I lived in Australia for a while and rented an appartment from a tailor and would watch him fashion suits from time to time. It’s a highly skilled craft. The point was that looking at the price to have him perform that task is a good measure of the intrinsic value of the currency because he used long established technologies and methods to do it.
Between Barry, cognos, and now you – I’ve sure said a lot of stuff that I never said! You guys hearing voices?
January 31st, 2010 at 3:22 pm
Relax, Stephen. A lot of people can be on your side if you let them. Barry’s blog has been a valuable discussion starter for years and he is definately not a dumb-ss. Slow down on the caffeine for a moment and remember that butter works better than guns. After all, capitalism has been greasing us and having us bend over for years.
Having said that, keep posting but self-edit the posts to key points for those of us who haven’t had the third cup of coffee yet.
One of your points I totally agree with (and have been expressing the same or similar thing for years) but it might have gotten lost somewhere above in Chapter Four or Seven of your dissertion:
Why is it that it takes an engineer 30% of his salary now to buy a ‘Stang when it only took 17% before?
And let’s not talk about improved ergonomics, crash-testing and the like…
We’re going backwards, folks. We’re bending over and HANDING the butter to the capitalists. Why? Gotta have more, and bigger, and better all the time? So that we all become slaves to the paycheck to meet the mortgage, car payments and credit card payments for the new, bigger, better, bluray this and that? Why?
WWII: We blew up the world and no one could compete with us. Huge factories built for war time production. Millions of troops coming home. The wives go back into the home. Let’s see… wives with nothing to do… husbands in factories that used to make bombs… let’s sell them all REFRIGERATORS! Let’s make them think they all NEED them! And then after that… CENTRAL AIR! And 8-track tapes! Hey, how about cassettes now? And VHS! Hey… let’s have them toss their collections and spend their wage-slave $$$ on CD’s! Then DVD’s! Hey… maybe the suckers will NEVER learn and we can sell them BLU-RAYS! Do you think they’re all so stupid they’ll throw away their collections a FOURTH time?
You bet!
Tipping points… keeping up with the jonesies…
And it takes them more hours of work and makes them even MORE slavelike to us – their capitalist masters!
(PS: Hi Barry… haven’t posted for a year or so. Thanks for all the posts you let me rag on Palin…)
January 31st, 2010 at 7:22 pm
I have the conch now …
@Randini – positive on the caffeine. I’ll tone it down. (One thing I am not is a liar. I like my caffeine!) positive on the good forum, in general. I love a good debate. positive on the Barry not a (insert your poor impersonation of Red Foreman here) – I like his book quite a bit. My bad – mind you, Barry *loves* to call people similar names. I didn’t really think it was that bad in this forum.
Good comments. Some actual discussion and good points. Go back and note that Barry’s original response to my original post was a several page blather that said in advanced-intello-speak what I said in 6 concise lines of the original post. And that is where Barry started hearing voices as he put entire sentences and concepts in my mouth that I never said. Most lurkers in this forum will *amen* to Barry no matter what he says. I was just clearing the air – with the help of caffeine.