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Fender Price increase overnight
- Thread starter sleddogn
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I guess it's finally time to sell some guitars I don't use anymore. 
I'm not an economist and this is very recent history, so I have no particular expertise. What the chart shows, starting in 2014, is a jump in the Dollar Index, which is the US $'s value relative to a basket of other world currencies. That seems to me to show the opposite of what was being claimed, that your money lost value after 12/2013. It actually gained.
From what I understand a high dollar means Americans have an advantage buying from abroad (or traveling, for that matter) because the money we spend goes further in other countries' currencies. It also means the global community has a high confidence in the US and want to invest their money in dollars (supply and demand, the more people want dollars, the higher the dollar's value). However, it can also create problems for the US economy because it affects balance of trade - people abroad want to buy less US-made goods because they're more expensive.
From what I see, there's not a whole lot significant here. The DXY is set to an index where 100 = the dollar's value against the basket in 1973, when it was first calculated. Right now it's at about 96, just a little under that. The climb in 2014 was getting out of a slump the dollar had been in since the early 2000s (Iraq War, maybe) when it was down in the 80s. During the 1980s it was way up, peaking around 160 or something. Instead of setting the chart to show ten years, select "all." Then 2014 doesn't look nearly as significant. To me, this is a nothingburger.
Current high inflation is concerning, but the real question is if it's a blip due to pandemic recovery or a new normal. I strongly suspect it's a blip, albeit disrupting in the short term.
https://www.investopedia.com/terms/u/usdx.asp
Seem cryptic at best right? I think if somebody knows something its not that hard to just spell it out for the rest of us. Technically (and by that I mean mathematically) money is worth less that it was a day ago, as long as there is any inflation in the economy and there are not sufficient real increases in wages to negate it.
All businesses have ongoing debt service, regardless of how many employees do or don't show up on a given day with COVID running in waves over the last two years.
Whether it's the crew of the container ship or the longshoremen who tie it up, load/unload it, the guys who unload them in port, the truck drivers for every commodity in your home from furniture to bacon, the shortages, the shot-to-hell delivery schedules, and on and on and on, Fender or General Motors or Kroger or any other business, just like you and me, have bills that got to be paid on time . . . . and just like me in the bad old days when I was broke as a convict, if you can't get steel or wood or paint or magnets or nails or anything you need to make or sell a product . . . . . you're going to raise prices to cover your ass on smaller numbers.
Having said that, I'm going to start eating NY strips for breakfast, they're cheaper than bacon !
Whether it's the crew of the container ship or the longshoremen who tie it up, load/unload it, the guys who unload them in port, the truck drivers for every commodity in your home from furniture to bacon, the shortages, the shot-to-hell delivery schedules, and on and on and on, Fender or General Motors or Kroger or any other business, just like you and me, have bills that got to be paid on time . . . . and just like me in the bad old days when I was broke as a convict, if you can't get steel or wood or paint or magnets or nails or anything you need to make or sell a product . . . . . you're going to raise prices to cover your ass on smaller numbers.
Having said that, I'm going to start eating NY strips for breakfast, they're cheaper than bacon !
I live in a bad neighborhood. Not 'bad' as in 70's slang ("That's a bad Camero you have, dude!"), but bad as in I've long ago stopped counting the times when the police helicopter has circled overhead and warned us not to leave our houses. Just the other day, the house down the street went up for sale for nearly $470,000. And it only took about a week to sell. Somebody out there paid almost a half a mill. to live in South Sac Iraq (that's literally what it's called around here). And used basses....Craigslist is averaging about $400 for used Squires. I went from shocked, to incredulous, to I don't even pay attention anymore. Unless I make some extra cash giving Gene Simmons bass lessons I think I will sit out on getting any new gear this year.
I know what you mean. Somehow we manged to buy a house for 40k under appraisal value and its gone up since then in the 9 months we've owned it. But inflation is eating into that as well. This is what happens when the money supply is inflated by over 40% with no real increased economic output to support it.
Current inflation is high but unless it really continues we're nowhere near the "stagflation" of the 70s, when it STAYED in double digits for years between 1974-75 and again 1979-1981. Historical Inflation Rates: 1914-2021 | US Inflation Calculator
Actually, despite what may be going on at your company, nationwide data shows that wage growth is strong as labor markets are tight. Is it keeping up with current inflation? Nope. But it's definitely up.
US wages jump by the most in records dating back 20 years | AP News
This is good advice. I just called your mom and told her I loved her.
So, I do have a degree economics and an MBA. Not saying I'm an expert (I'm not), but you've made some, what I feel are, correct points and some not so much.
Really in this context the relative dollar value vs other currencies isn't what we should be looking at. What we should be thinking about is how much labor you have to sell to purchase goods vs last year, the year before, etc. The relative value applies to international trade for sure.
The issues boils down to the money supply being increased at a rate previously unheard of with no corresponding or equal economic output/growth, in real terms, to support that. The currency is essentially backed by productive economic output and men with guns (coercive power forcing you to use the currency). One of those, the former, is diminished.
So that's the main cause of inflation, along with demand outpacing supply, and the government continuing to monetize the deficit, rather than raising taxes, which is really what happened with what I wrote about in the previous paragraph. It's done all the time, we just did it a lot more to get through covid. "Inflation is a tax" is the old saying.
Seems like they go up about $200 at the start of every new year recently. It's pretty ridiculous at this point imo and I drew the line about 2 or 3 years ago. I really like Fender as a brand and its historical significance and all but, I've come to really embrace companies producing quality lower end/budget basses from Indonesia a whole lot more in recent years, and at more decent prices. Maybe if I win the lottery at some point before I die I'll go back to buying a Fender but for now... see ya later price gougers.
I don't really like the current Fender offerings. Saw a Custom Shop Jazz yesterday at Guitar Center for $4550 and the fingerboard was that awful dried out pallet board wood they're using now. And I like Fenders in general. On the plus side, the resale value for your used Fender also went up.
It's really hard to understand what's going on in the economic long-term with the ongoing pandemic surges, supply chain disruption, dependence on foreign exporters, contagion from the collapse of the Chinese property sector (Evergrande), etc. It's going to be bumpy for some time, I think. But in our favour, North America has a young, educated workforce, strong businesses with good fundamentals, and moderate governments that are keenly aware of the issues.
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1960 prices: multiply by ~9x for Q4 2021 dollars
At least a sunburst Jazz is still less than $2,500 2022 dollars...or $4,300 for a Vibrosonic.
I wonder what the secondhand prices were like in 1961...
Thanks for the clarification on that. I was just trying to make sense of @LetItGrowTone 's statement that something happened in December 2013 such that "your money is worth less" since then. The DXY chart was offered by @Bassinthemudd as an explanation so I was trying to figure from that what he was getting at. I can see an accelerating increase in the money supply (Federal Reserve Board - Currency in Circulation: Volume) especially in 2020, so I get what you're saying about monetizing the deficit. But I'm still not seeing anything that explains why 12/2013 would be a significant date. I'm not getting data that would indicate any meaningful change in money's value (in whatever sense) linked to it.
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