Bubbles

To paraphrase Churchill (who said this in relation to democracy), capitalism is the worse economic system, except all others. But despite its flaws, capitalism motivates workers better than any other system and allows for a far greater amount of economic freedom for a greater number of people than any system. It channels aggressive drives into socially productive endeavors (entrepreneurship) rather than into the pursuit of political power which often happens in totalitarian economic regimes.  But one of the areas that capitalism doesn’t handle very well, and this relates to philately, relates to bubbles. In a capitalistic system everyone seems to run after the same thing at the same time. In the last ten years it has been the housing bubble that has produced the Great Recession that we are now in. In the 1970s inflation caused an asset bubble that was felt in stamps with a huge run up in prices as everyone wanted to invest in stamps at the same time (Janet Klug has a very fine article about this phenomenon in this weeks Linns magazine). And the bubble du jour is the stamps of PRC. Most prices of better PRC have doubled in the last two years after doubling in the two years before that. Its easy to say that with a population of twenty million collectors and an undervalued currency that this can continue forever or that PRC prices are not overvalued and that this time things will be different. But that is wrong (things always seem different with each bubble) and at sometime in the probably not too distant future PRC stamps will peak and begin to go down in price. The fall will be precipitous and if you have any surplus PRC stamps that are not part of your long term collection now would be a good time to dispose of them.