Postage stamps

[Paul Davidson <pdavidso@xxxxxxxxxxxxxxxxxx>]

I'm surprised no one out there got the humor of my using POSTAGE STAMPS
on the E-MAIL!!! See my great big -).
With email the means of communication, postage stamps are going to be
very rare and very valuable. Barkley you forgot that the e-mail is one of
the fundamentals underlying the spot market (resale) value of used postage
stamps.

I chose used postage stamps because I was talking about the "serious"
philatelist rather than one who collects stamp  [p for their visual beauty,
or merely as a form of recreation.

My colleague chose stamps rather than securities for several good
fundamental reasons Barkley -- one being that it was awful hard for the
IRS to tax the capital gains received on selling (liquidating) some of
your stamp collection in a market -- for their was no legal requirement
for the buyer, or dealer, to report the sales payment. So perhaps Barkley
would like to include the capital gains tax in the "real" fundamentals.
Really Barkley serious collectors look upon stamps as an "investment" in
which there are no dividends no interest payments no real marginal
productivity of capital, no real purchasing power parity Doug, no nothing
except the belief that you can pass it on to the next "serious" collector
at a price greater than you paid -- More like the Old Maid analogy except
there is a serious collector born every minute -- so the Ponzi game
apparently never runs out!

Kevin and Roger trapped by their classical upbringing and axiomatic
foundation -- correctly (in their view) perceive that there is no "real"
fundamental (e.g., Kevin) or that the enjoyment of having stamps set
its value (Roger) -- similar to couches (or OLD MASTERS?). But Roger should
that enjoyment be the
same for those who enjoy collecting shares of stock that appreciate over
time in nominal spot market valuation? If there is a fundamental for
these stocks -- e.g., the real marginal product of capital -- that sets
their value shouldn't this enjoyment by possession these stock pieces
of paper add additional value so
that stocks should always accumulate values faster than the value of
holding pieces of paper that we call postage stamps?

The most wonderful example of why postage stamps can have a value other
than to mail a letter, occurred when the US Postal Service issued a Dag
Hammershold (Spelling?) commerative stamp in honor of the late Secretary
of the UN. (The mold for commerative stamps are destroyed after the
Postal Service sells all it has printed. -- Commerative have therefore a
limited run, thereby enhancing their investment value to the holder and
enforcing one of the "essential properties" on this liquid asset.)

Some one
obtained a single new sheet of stamps where the colors
were reversed. This person foolishly called a news conference (while the
stamp was still being sold by the Postal Services) to announce that he
had this printing error (unused) sheet of stamps and was willing to sell
it to the highest bidder. when the Postal Service found out that someone
was trying to obtain a capital gain on the basis of their printing error,
the Postmaster General indicated that the Postal Service would print an
additional amount of reverse color stamps -- the amount equal to the
original limited run of correct ly printed stamps.  What happened to the
value of this collector's reverse printing sheet? Its value collapsed
immediately to the fundamental face value per stamp that the Postal Service
said would be sufficient to mail a letter!

So Barkley add to your fundamentals -- printing errors that remain
undiscovered until the mold has been destroyed!

As long as a market maker is willing to "make" a resale (spot) market in
any durable -- and especially those that can not be currently reproduced
-- then the durable will be a "liquid asset" -- but not a fully liquid
asset unless the maker guarantees the nominal prices and has the
wherewithal to assure holders they can "count" on his guarantee. (For the
distinction between Fully liquid, liquid, and illiquid assets see my PKMT
-- this distinction was developed in my conversations with John Hicks in
the 1970s.)

Jamie Galbraith correctly cites Keynes's formula which I earlier
reproduced as : q - c + l + a, to be the forces that "determine" the
value of durables in the marketplace. For most "collectibles q is
approximately zero, c is usually small and fairly constant, so everything
depends on l (the liquidity premium) and a (the expected nominal
appreciation or depreciation of the asset is spot market at a future date
vis-=a-vis todays spot market.  This is obviously the same relationship
underlying Keynes's speculative motive for holding liquid assets such as
bonds vis-a-vis money (For money -q and c are approximately zero, a, is
by definition zero, and people hold money for l.)

Thus th difference from "person to person" in in subjective utility or
preferences that Jamie mentions is what determines whose a bull and whose
a bear at any given price. Roger's invocation of the law of one price to
counter Jamie's argument, therefore, s not the counter that Roger
suggests. At the margin some people will be bullish on postage stamps and
other serious collectors will be bearish -- Only then will we have a
transaction and obtain an actual market price valuation!

Barkley's citation of the financial literature and investor phstchology
is a tribute to his diligent searches in the library but has nothing to
do with the question od "real" fundamentals of resalable existing
durables.  Foreign exchange rates are nothing more than the price of
one piece of paper (foreign currency or foreign bank debt) in terms of
another piece of paper that is the money of the place where contracts
will be enforced!
In a world of flexible exchange rates where the market maker does not
guarantee fixity but only a well-organized, orderly market, then foreign
currencies and foreign bank IOUs are as much objects of speculation as
domestic stocks and bonds. Since, as Barkley admits "no one knows for
sure what the future stream [of net returns from holding the paper] will
be" no one can know what the "fundamentals" for holding this speculative
asset is -- whether it is (1) expectations of greater returns, OR
(2)expectations of greater future spot price (the "a" variable in the
equation above) because others expect either expect either (1) or (2)
because even others expect either (1) or (2) ad infinitum. That Barkley
is exactly what I meant when I said the fundamentals that you talk about
is just Speculation about speculation.
	You want to call this a "misspecified" fundamental -- but I think
this fundamental is like looking for an imaginary black cat in a real
black box!

Gary Dymski comes closest to Jamie and my view -- but at the last
instant he hesitates? Why? Perhaps, like his mentor, he still thinks that
he can build a bridge of logical consistency between the mainstream
micro axiomatic theory and Keynes's macroeconomics of a transmutable
reality. (See Keynes, Collected Works vol. 14, p. 511). Keep trying Gary!

Paul D.