Doug Henwood wrote,
>Who ever said they reach equilibrium? I said oscillate around.
Who ever?, indeed. Doug didn't and I didn't say, or imply, he did.
>(See RobertShiller's wonderful chart of stock prices in Market Volatility
>for an example of just what I mean.)
Or see N. Kondratieff's wonderful chart of wholesale prices.
>The prices of stocks are, over the long term,
>constrained by underlying corporate profits. There can be long periods
>during which actual prices move far away from their warranted value, but,
>over the long sweep of capitalist history, those periods have always come
>to an end.
I agree that a movement away from "fundamental values" can't go on
indefinitely. What those fundamental values are is another question. And
whether those fundamental values refer to the same phenomena at the
beginning and end of a long period is yet another question.
Doug says that over the long term, the prices of stocks are constrained by
underlying corporate profits. "Underlying", "fundamental" -- no wonder
Doug's name sounds like the past tense of dig. Digging down another layer,
what's *underneath* those profits? An elephant? A turtle? It would seem to
me reasonable to say that corporate profits are only constrained by the
financial accountant's ability to represent values as profits. Bedrock turns
out to be symbolic rather than tangible.
The symbolic is not infinitely malleable (poets die). But it's malleable
enough to frustrate efforts to draw one to one -- or even approximate --
correspondences between "nominal" and "real" values.
Regards,
Tom Walker
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