Like many boys growing up in 1980’s America, I was a voracious purchaser of baseball cards.
Before the days of Major League Baseball on ESPN, it was very rare that I would ever be able to see live games on television. Collecting and trading baseball cards was a way to know about some of my favorite players like Mike Greenwell and Ellis Burks of the Boston Red Sox. I knew everyone’s statistics and hometown, along with the goofy trivia questions or other noteworthy pieces of information about the players.
Around 1986, I had begun working at KFC and had spending money of my own, meaning I had to blow it on something. I began purchasing boxes of baseball cards, what else? Topps had been the blue chip IBM of the baseball card world but upstarts at Donruss and Fleer had entered the market place, amongst others. Unopened boxes of 1984 Donruss could be had for 40 bucks. I snapped up boxes and packs in 1986 and 1987 and into 1988 of recent vintage baseball cards. I distinctly remember in the late 1980s that a 1984 Don Mattingly Donruss rookie card soared to $50! Boxes I purchased for $40 had cards in them I could resell for $200 but I soon tired of this as I went to LSU for college.
At some point I noticed an advertisement in the newspaper to purchase a table for $25 in order to sell cards and decided to attend my first show at the old Holiday Inn on Airline Highway in Baton Rouge. I had a stack of 20+ Donruss rookie Ken Griffey cards and sold every one for $5 each, which I thought was insane until I learned the next month in a Beckett Monthly price guide they were worth $8.
After discussing this with my father, agitated at my “loss,” he asked me how much I had paid for them. “Three dollars,” I said, and he said, “Well, you almost doubled your money in six months, who knows what will happen to that guy who bought them for $8?”
I have countless other similar examples too numerous to mention here and even made so much money on a show dumping most of my surplus card collection that I was able to purchase my wife’s engagement ring. By 1992, I had noticed such a proliferation of new cards and sets that I stuck to collecting older cards. Even then, it was clear that pre-1988 cards were holding their values, but anything after was almost worthless.
Thankfully, I have not purchased a card after my fire sale in 1992. The market literally crashed in the aftermath of the 1994 baseball strike and has never recovered, the 1952 Topps Mickey Mantle rookie card notwithstanding.
What does my baseball card history have to do with the current fiscal situation of the United States?
When you increase the supply of something to the point that it outstrips the demand it causes the price of the said entity to decline in value. Is there any more simple law of economics than this one?
While the Federal Reserve does not publish all of its data for public consumption, it is clear the US is increasing the money supply dramatically since 2008; much like the supply of baseball cards in the late 1980s.
It might seem a little silly to compare the baseball card system to our capital markets, but there are certain rules of economics that can be brutal in their indiscriminant behavior. The US is printing money and increasing its debt obligations at rates never before in peacetime. At some point does the value of the US currency take a long-term nose dive like baseball cards?
Markets are not partisan but they adhere to certain ideological economic principles. A 1989 Donruss Ken Griffey, Jr. rookie card, depending on the condition, is worth about $5 in 2010 dollars. How much will the dollar be worth in 10 years at this rate?