Post-Agian Thought

[Kevin Quinn <kquinn@xxxxxxxxxxxx>]

>From deep inside his Cone of Silence, Barkley sends the following
response to the "fundamentals-schmundementals" crowd that the postage
stamp thread drew. I agree and would only add that this nihilism about
fundamentals on the part of the pk's puts them in bed with the mainstream
finance crowd who went after Shiller with knives drawn after his
wonderful 1981 article. In fact the most telling attack--to hear the
mainstream
tell it--relied on a kind of non-ergodicity argument: what if dividends
follow a random walk, they said, then your damn excess volatility tests
are worthless, Shiller, and the real is rational, after all!

---------- Forwarded message ----------
     OK, so Keynes says the "value" of collectibles
includes a speculative component regarding expectations of
future price increases.  This formula is not a formula for
a "fundamental" and Keynes never says it is.  It is a formula
for current price, rather than some long-run "value" a la
Marx or even Walras or Marshall.  Of course current price of
anything will include any component of "speculation" about
expected future prices.  This is what a bubble is, a price
that includes such speculation.  The fundamental is everything
BUT that.  But, of course, except for closed-end funds, it is
very hard in the real world to definitively identify such a
component in any observed price movement.
Barkley Rosser