The coffee growers are thinking seriously about switching to other crops, especially those plants from which various hallucinogenic drugs are made. Why? Because there is a huge surplus of coffee being grown around the world, with new lands joining each year. It costs about $2.50 per pound to grow, and brings in $1.50. Viet Nam is now growing coffee, as well as a lot of South American nations. Africans are joining in, and in spite of all the coffee shops around the world, the supply of coffee simply exceeds the consumption. The market has taken effect, in other words, and driven the price of coffee down, because of over-supply.
Wal Marts have evidently reached saturation, as have McDonalds, and their stocks have done poorly as a result. The market has taken its toll. The market can lower prices of things for other reasons than over-supply, and it can raise them for lots of reasons as well. Autos have fallen by the wayside, when their reliability or design leaves much to be desired. What has become of the Nash, Studebaker, Packard, Hudson, Pierce Arrow, Marmon, Stutz, or the like? None were bad cars, but failed to meet the test of the marketplace in some way or other. The market killed them, because of sales so small, that they couldn’t be produced at a price that would allow them to sell. The model T Ford was mechanical simplicity, with two speeds, two wheel bad brakes, and not much else, but 15 million were sold, until the market decided that more was needed. The Model A came around, but Chevy did one better, forcing henry Ford to build a V-8. And so the auto industry goes controlled by the market.
When Ford built the Falcon, it was a moderately successful compact car. When, in 1964, they took the Falcon chasis and placed the Mustang body on it, sales took off like a rocket. Same car, with a different body. The marketplace loved the Mustang. Chevy would like to forget the Vega, because it was junk, and the marketplace fixed that.
Many times the marketplace is manipulated. When “payola” was uncovered a few years ago, it was found that record distributors were paying disc jockeys cash to play their records over and over again, till they became popular. In grocery stores, various food manufacturers pay grocers for shelf space, so their merchandise is displayed in prime locations. Major stock brokerages have been find millions for their part in pushing shoddy stocks, when their shoving them onto unsuspecting clients, caused financial ruin for the buyers. The brokers were given huge bonuses for selling the junk, raising the price, so that the insiders could sell at a profit. There have been dozens of scandals in the stock market, involving shady deals, bonuses for pushing junk, and after hours trading. This is market manipulation at its peak.
(If any of you out there are disgusted with your stock-broker, my Son David is an Edward Jones broker in his own shop. He’s a good, honest guy, since he’s my son of course, but Edward Jones has the best ratings in the entire industry. His phone number is 1-608-827-0870. He is in Madison, Wisconsin, but he has clients everywhere, like me.)
Advertising manipulates markets, as it is intended to do. Fancy store fronts, clever shop names, and promotions, also influence the market. These are the ways of a capitalistic society, and it weans out the weaklings. Cruel though it may seem, the marketplace gives us the best quality, and largest variety of merchandise. This is why the China made things command shop space and are ’cheap,’ in dollars. Chinese workers live in poverty, make slave wages, and their efforts are exported here. “Free trade,” is another subject entirely, and I won’t go into that here, except to note that it is the marketplace, which allows such to happen.
The simplest definition of the market and economics, was given by Ludwig von Mises, when he said it was “People Act.” People do indeed “act,” and that’s why builders stopped building grand Victorian homes with high ceilings. However, the markets do swing, and now it is all the rage for yuppies to buy wrecked classic homes, in sometimes bad neighborhoods, and restore them to their once magnificent appearances. Believe it or not, the Harlem section of New York, is coming up because of restoration, or as it is now called, “gentrification.” I love it! While coffee merchants are trying to increase consumption, growers are abandoning their crops. The two will indeed meet at the point at which the market will allow a profit on both sides. Not too much profit, but some. When there is a lot of profit, competition is automatically invited. The market is the greatest leveler of people, prices, merchandise, shopping, transport, housing, savings, and just about everything known to man. The prettiest gal gets the handsomest man, and an ugly but rich man or woman, can usually get whom they want. It’s the market again.
Bad movies lose money, because their producer miss-read the marketplace. Poorly advertised, designed, or located stores, go the way of all flesh, and especially if their prices are too high, parking is unavailable, or a host of other things. Most businesses go bust in the first year, because of the marketplace being such a severe leveler. Restaurants do the worst, because everyone at one time or other, it seems, thinks they could do a better restaurant and too often try it. Being a musician or author, is a terrible way to make a living, thanks to the market. Ask any author or musician!
The marketplace levels out the economic world as well, and does it with superb accuracy. “Bad money drives out good money,” is Gresham’s Law. “Bad money,” became non-silver dimes, quarters, and halves, which came on in 1965. The “good money” silver coins, immediately left the cash registers and pockets of Americans everywhere, and today are sold as “bags” of US silver coins. “Bags,” and silver in general, I think will do superbly this year, but the point now is that Gersham’s law prevails, and bad money has indeed driven out good money.
“Money,” in Webster’s New World Dictionary, to me is a bad definition. It says money is, “Stamped pieces of metal or any paper notes authorized by a government as a medium of exchange.” Definition two says it is: “Property; wealth.” I think both are wrong. Not that money can’t be used in trade, because it can, and always has been used in trade. But when the bad money drove out the good money, the good money didn’t disappear. It merely ceased to be used in trade, so to speak. Of the 15 million Model T Fords made, like good money was used for trade, they were used for transport. Today, no one uses a Model T Ford for transport. They are a hedge against inflation. They are collectible. The good money driven out of the marketplace by bad money, is no longer used for trade, any more than you go on a trip in a Model T. US silver coins, or “good money,” are an inflation hedge of the first magnitude.
Technically, to use a dictionary definition, paper currencies are “money.” Unfortunately, it is their status as legal tender, which gives them the title of “money,” because they have no value, other than by fiat. The good money, or gold and silver, need no fiat or government orders to give them value. They depend on nothing for their intrinsic worth and desirability. No government order or decree can rob gold and silver of their worth. They are totally independent of government law, decree, or prohibition. A share of stock, dollar bill, bond, note, or other piece of paper with ink on it, is totally dependent on its backing, reputation of issuer, profitability of the corporation, advertising, popularity, or any other noun in the English lexicon. The good money of gold and silver, stand alone with no props or assurances needed from nabobs or Pooh-Bahs in the world.
Like prohibition, if government ever denies ownership of the good money, or in some way attempts to do so, like drugs today, and whiskey during prohibition, they will go underground, and command maybe three times their worth before their prohibition occurred. Illicit or illegal sex, drugs, or other items, will always be available for a price. The need or desire for things government has foolishly declared to be illegal, regardless of the item, will always be filled in the so called “black market,” which in reality is the “free market.” Gold and silver, I don’t think, will ever have to go underground. If they did, it would be a bonanza for owners of such. After all, the worst government can say about gold and silver, is that they make their fiat paper ’money’ look silly. As gold and silver go higher in their currencies, their currencies look to be what they in reality are, and that is fraudulent. No one has been injured, and no disease has been transmitted, when sound minded citizens remove their dollars from banks and convert them into the good money. This is why I consider all the worries about confiscation to be silly. If government considers gold and silver to be a threat to their dollars, how about Model T’s, antiques of all types, first edition volumes, old radios, mahogany Chris Crafts, Piper J-3s, and any other desirable thing one can bring to mind. Do we think government will take everything? Hardly! Protect yourself.