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Old 12-16-2014, 05:21 PM
 
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Quote:
Originally Posted by Threerun View Post
Oh I certainly do understand economics, lol. I've been a C&I (commercial and industrial) lender for over 25 years. I think I'm spot on. The definition I provided is an industry standard, so not sure how you see otherwise.
The definition that you provided is a fine one, and it doesn't contradict anything that I've said.

However, you laughed at the idea that the equilibrium price could change. I would say that is prima facie evidence that you don't understand it.

Quote:
Fact:
I can buy a brick of 525 rounds for $24 bucks at Dicks, Wal-Mart etc. That's todays price reflective of the market. Federal Ammunition 22LR 36gr Copper Plated, 550ct - Walmart.com
You did notice that in your link it was out of stock, didn't you? Wal-Mart has advertised that price for several years. But it is rare to be able to walk into a Wal-Mart or any other retailer and find it in stock.

Quote:
If YOU choose to pay $50 for it, then YOU chose to pay a premium mark-up of 100%. The retail cost at national retailers is $24.
That is the price at SOME retailers, and as has been pointed out, it is rare to find it at that price.

Quote:
Equilibrium, by definition, has not been reached with regards to ammunition sales. You can't say $50 is normal or equal when the retail price is $24.
If one wants to purchase .22 ammo today, they can pretty much do it all day long, online and in person, at a price of $50. One has to be very lucky (with few isolated exceptions) to be able to buy it at $24. Which one is the real market price? $50, where there is available stock to buy, or $24, where it is very rare to find available stock?

Since you claim to understand the economics, why don't you point out in the following graph where the $24 price point is?




Is it at the intersection of S & D, above the intersection, or below the intersection?

 
Old 12-16-2014, 06:22 PM
Status: "Gone hunting until December!" (set 24 days ago)
 
Location: Lost in Montana *recalculating*...
10,945 posts, read 14,593,711 times
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The market price IS around $24. You can buy it at that price. That's not a sale price or discount price. I just bought a brick a few weeks ago at $26 from Wally World.

You are proposing theory that is normally applied in a stable market- average supply and demand. That get's thrown out the window in a speculative market. What the standard equilibrium graph does not account for is a 'speculative bubble', which is another dimension entirely, and not part of the algebraic formula in the standard 'X/Y' graph.

If we applied that graph during the RE boom then one could convince themselves that "Sure- this is the price and the market says so".. And those that did generally got burned.
 
Old 12-16-2014, 06:59 PM
 
7,282 posts, read 8,385,316 times
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Quote:
Originally Posted by Threerun View Post
It's really not at equalibrium.
The .22 Ammo Shortage Mystery -- Solved!



It's been panic buying. Panic buying totally distorts market prices, and panic buying usually does not result in a new price point trend. The NRA said it, the manufacturers said it- it's distorted.

The best thing to do is simply not buy ammo from 'scalpers', and don't hoarde.
Take that report with a grain of salt. The increase in gun sales doesn't have a lot to do with not being able to find 22 ammo.

We're supposed to believe that ammunition companies have for more than a year now (well over that) been unable to employ the American way to manufacture sufficient quantities of 22 ammo? Please, at the retail prices for 22 ammo, the capital investment for loading machines isn't justified?

A month or two, perhaps even a few months goes by with a shortage ok. After that, with rapidly rising retail prices any business with more than a pimple faced kid running it either ramps up production or finds a way to meet the demand.

If the shortage is supposedly linked to new gun purchases, then the reason is even stronger to add manufacturing capacity, the guns aren't being thrown into ditches.

The manufacturers are laughing all the way to the bank. Who really believes that ammunition manufacturers are any different than other manufacturers? Somehow they are part of a "we're in this together" club? Not a chance.

I've said it before, you have money? You can have all the ammo you want. Now, if you're the type to walk into the store with limited funds available to you and expect someone to sell you ammo at the price you want to pay and not what they can sell it to someone else for, good luck with that.
 
Old 12-16-2014, 08:18 PM
 
5,221 posts, read 2,378,942 times
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Quote:
Originally Posted by Threerun View Post
The market price IS around $24. You can buy it at that price. That's not a sale price or discount price. I just bought a brick a few weeks ago at $26 from Wally World.
That a small amount of ammo sells for that price doesn't make it an equilibrium price. There are discussion threads all over the internet where people are talking about the near impossibility of locating ammo at that price. That you bought a brick for $26 was pretty lucky on your part. Most people aren't able to buy ammo at that price. However, they ARE able to buy it at $50.

Quote:
You are proposing theory that is normally applied in a stable market- average supply and demand. That get's thrown out the window in a speculative market. What the standard equilibrium graph does not account for is a 'speculative bubble', which is another dimension entirely, and not part of the algebraic formula in the standard 'X/Y' graph.
The basic principles of supply and demand apply in ALL markets. Stable, speculative, or otherwise.

The $24 price exists at some point on that graph. Is your failure to address that issue due to the fact that you don't understand the graph, or because you realize that if you accurately identify where the $24 is, your argument goes out the window?

It's very simple - where on the graph is the $24 price point?
 
Old 12-16-2014, 10:02 PM
Status: "Gone hunting until December!" (set 24 days ago)
 
Location: Lost in Montana *recalculating*...
10,945 posts, read 14,593,711 times
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I know the chart very well- it's High School Econ....

The fact that if I can pay $24-$26 dollars at retail, the presumption that a standard $50 price equilibrium exists is arguable at least. In other words- if we were at the magical intersection you claim, then the largest retailers would not be selling it at $24-$26, they would be selling it at a price closer to $50. Period. End of story. I would suggest you look at speculative equilibria as a basis for understanding. There is an overabundance of fear and greed fueling this ammo speculative market. It's off the charts. You simply cannot remove that from the equation. Purchasing (or investing) in these periods are extremely risky, and corrections are typically fast, hard and hit bottoms as low as the highs.

In fact I just got back from a sporting goods store in Helena on a Christmas shopping trip and they had .22 ammo in stock. Granted most was all top shelf Aguilla- but it averaged $45 for a brick. That's top shelf. They had about 100 boxes of Remington plain jacketed HP .22lr selling for $3.50 a box of 50. That's $35.00 a brick, limited to 2 boxes of $50.

I would suggest not using Gunbroker or other gougers as a basis for determining your price. Of course fools always do rush in...
 
Old 12-16-2014, 10:32 PM
 
5,221 posts, read 2,378,942 times
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Quote:
Originally Posted by Threerun View Post
I know the chart very well- it's High School Econ....
Yep. And basic econ is all that is necessary to understand what's happening.

Quote:
The fact that if I can pay $24-$26 dollars at retail, the presumption that a standard $50 price equilibrium exists is arguable at least.
At a price of $24-$26, does the quantity supplied equal the quantity demanded? Clearly not. At that price, there are massive shortages.

Quote:
In other words- if we were at the magical intersection you claim, then the largest retailers would not be selling it at $24-$26, they would be selling it at a price closer to $50. Period. End of story.
The "magical intersection" ALWAYS exists. The only issue is what price corresponds to that intersection.

Quote:
I would suggest you look at speculative equilibria as a basis for understanding. There is an overabundance of fear and greed fueling this ammo speculative market. It's off the charts. You simply cannot remove that from the equation. Purchasing (or investing) in these periods are extremely risky, and corrections are typically fast, hard and hit bottoms as low as the highs.
I am familiar with speculative equilibria, and it doesn't change the underlying, very basic supply/demand principles that are at work here.

Quote:
In fact I just got back from a sporting goods store in Helena on a Christmas shopping trip and they had .22 ammo in stock. Granted most was all top shelf Aguilla- but it averaged $45 for a brick. That's top shelf. They had about 100 boxes of Remington plain jacketed HP .22lr selling for $3.50 a box of 50. That's $35.00 a brick, limited to 2 boxes of $50.
You are smart enough to know that goods sell at prices all along the supply curve. That some ammo sold at a price different from the equilibrium price does mean that it is now the new equilibrium price.

Quote:
I would suggest not using Gunbroker or other gougers as a basis for determining your price. Of course fools always do rush in...
It is pretty simple to determine (approximately) what the equilibrium price is. You provided it in your previous quote:

Quote:
The equilibrium price is where the supply of goods matches demand.
Do you really believe that price is in the range of $24-$26? Are market players (both buyer and seller) able to meet their requirements at that price? Clearly not. Ammo purchasers are lamenting the fact that they can't regularly buy ammo at that price. For most people it is a rare event. Clearly, the supply of ammo at that price point doesn't match the demand.

Are you still going to refuse to point out on the graph where your $24 price is? My guess is that you won't do it, as you know what the outcome will be.
 
Old 12-16-2014, 11:48 PM
Status: "Gone hunting until December!" (set 24 days ago)
 
Location: Lost in Montana *recalculating*...
10,945 posts, read 14,593,711 times
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There is no need to explain or give any credence to a basic supply/demand curve when the variables have been influenced heavily by fear and/or greed. It is a lot more complex than that, and I suspect you know that. With retail sales that reflect prices at least half of what is expected- It's a 'sticky price' driven largely by scalpers and hoarders.

If you wish, or desire, to submit that $50 a brick is the equilibrium price, then by all means stand by it. I stand pat that a consumer can buy, at retail, .22lr for half of that. If fear is your driver, than you will pay a premium. Premiums do not reflect equilibrium price.

Furthermore- it does appear that the auction sites are beginning to trend lower- $40 per brick in two cases for auctions closing within hours.

It will be very fun to watch .22lr prices crash, which I believe will happen sooner than later. Given the strong dollar, I would suspect that foreign imports will cause the crash to occur fairly rapidly, undoing 5+ years of hoarding and gouging.

Last edited by Threerun; 12-17-2014 at 12:03 AM..
 
Old 12-17-2014, 01:16 AM
 
Location: Ohio
13,951 posts, read 10,315,266 times
Reputation: 7232
Quote:
Originally Posted by TaxPhd View Post
The problem with this analysis is that buyers aren't buying up everything they can find. There is (nearly) plenty of ammo available at the market price of $50/brick. If your analysis were correct, we would see ALL of that ammo being immediately bought up and then sold for $90/brick. But that clearly isn't happening. There is a VERY small amount of .22 ammo being sold at retail for $25/brick, because that price is so far below equilibrium. There is an even smaller portion of that ammo that was originally sold at retail for $25 that subsequently makes it way into the market at $50. MOST ammo is initially sold by retailers (not ammo "price gougers") at $50. That you believe that that very small amount of "flipped" ammo is what is making the current equilibrium price is pretty naive.

People get all hung up on whether or not the current supply/demand situation is normal or not. Does it matter? Whether it is normal or not, the market price is what it is. And it is pretty much in equilibrium at $50/brick.

I already addressed this earlier in this post, but it bears repeating. We don't have 1 or 2 large companies buying all the ammo, cornering the market, and re-selling at a higher price, as you contend. We have a large number of people buying a VERY small amount of ammo (the small portion of the total .22 ammo supply that is being sold at retail for $25), and a few of them re-selling it for $50. The vast majority of ammo being sold today is sold at retail for the equilibrium price of $50.

The sentence is red is rather telling, when it comes to your argument, and that of many others. If what you say in red is correct, why don't these evil ammo re-sellers sell their .22 ammo for $100/brick?
Look Tax, I have no intention of going down this rabbit hole with you once again. You're wrong, and that's all she wrote.. I may not be articulate enough in the art of economics to "show my work" to your standards, but it's pretty straightforward in "dumb-guy-speak"...... If there was no Sandy Hook, then there would have been no panic buying. If there was no panic buying, then there would be plenty of ammo available everywhere for anyone who wanted it at $20-25 dollars a brick today. The factors driving the price up today aren't ordinary factors, they are special circumstances, and are not reflective of ordinary market conditions which would ordinarily determine the market value of a product.
 
Old 12-17-2014, 05:02 PM
 
5,221 posts, read 2,378,942 times
Reputation: 5111
Quote:
Originally Posted by Threerun View Post
There is no need to explain or give any credence to a basic supply/demand curve when the variables have been influenced heavily by fear and/or greed. It is a lot more complex than that, and I suspect you know that. With retail sales that reflect prices at least half of what is expected- It's a 'sticky price' driven largely by scalpers and hoarders.

If you wish, or desire, to submit that $50 a brick is the equilibrium price, then by all means stand by it. I stand pat that a consumer can buy, at retail, .22lr for half of that. If fear is your driver, than you will pay a premium. Premiums do not reflect equilibrium price.

Furthermore- it does appear that the auction sites are beginning to trend lower- $40 per brick in two cases for auctions closing within hours.

It will be very fun to watch .22lr prices crash, which I believe will happen sooner than later. Given the strong dollar, I would suspect that foreign imports will cause the crash to occur fairly rapidly, undoing 5+ years of hoarding and gouging.
Let me see if I understand correctly, and please correct me if I'm wrong, as I have no desire to mischaracterize your position. It appears as if you are saying that even though the majority of .22 ammo is being sold today in the neighborhood of $50/brick, that isn't the market price, due to abnormalities and distortions in the market. However, if a small amount of .22 ammo is sold for around $24/brick, on occasion, in limited locations, that is in fact the market price. Have I got it right?
 
Old 12-17-2014, 05:04 PM
 
5,221 posts, read 2,378,942 times
Reputation: 5111
Quote:
Originally Posted by WhipperSnapper 88 View Post
Look Tax, I have no intention of going down this rabbit hole with you once again. You're wrong, and that's all she wrote..
That's quite the compelling argument.

Why don't you try addressing the question I asked you previously?

Quote:
Why don't these evil ammo re-sellers sell their .22 ammo for $100/brick?
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