Can We Have a Depression?

Another Black Monday certainly can happen. It is a post-monetarist event.

Monetarism is a technology invented to stabilize, or predictably manage, the business cycle. It allows for cyclical oscillation without bringing the model of legitimacy--consolidated market capitalism--into question enough to throw it out for another model to be tested for legitimacy (the scientific method).

The current model of political economy in operation, the Hamiltonian model, maintains a hyopthetical legitimacy of regressive taxation (a trickle-down tax burden) to produce economic growth and the general welfare. This regressive tax structure is the fundament that guides and predicts the direction, the cyclical dimensions, of our economy, now in a command mode of stagflation to deflation. Thus, the hypothetical legitimacy of the model is strong-negative, meaning that the model (according to the scientific method) is to be thrown out for a model that will test positive for the general welfare.

The logical remedy is to reverse the fundament; that is, progress the tax code for a progressive tax burden, but that does not happen. Instead, we always have risk-management technologies in place to bureaucratically manage the demand, the need, for change into a cyclical technical correction of managing the supply of money.

Management of the money supply is a demand-side measure. It is adjusting the demand, not increasing supply. In fact, it is designed to reduce supply.

Supply is determined by organization of the markets to allow or disallow the investment to produce supply (economic growth). The added liquidity largely functions to reduce the perennial crisis of overproduction (a lack of disposable income, or demand--a regressive tax burden). This substitutes for the needed progressive tax code by adding liquidity from the central bank in the form of a public debt, to be paid for by a regressive code, and thus ensuring a predictably recurrent cycle of boom and bust (the crisis of overproduction, or insufficient demand).

The deflation we face now is an innovation to "the cycle" by peak-pricing commodities so that it looks like demand is exceeding supply, and so it looks like the crisis of overproduction is not a lack of disposable income due to the regressive tax code (the trickle-down economics), but a fundamental lack of supply.

The problem, however, is fundamentally the same: a Hamiltonian model of political economy in which markets are allowed to consolidate to limit supply on a monetized demand. The investment being made, public and private, is to increase demand, not add supply. The result are unaffordable prices, or a lack of disposable income which eventuates into deflation and an exponetiating public debt to perpetuate "the cycle."

Monetarism was invented to make the severity of the cyclical oscillation manageable; in other words, so that the retributive value does not overaccumulate enough to call for the rejection of the Hamiltonian model. The retributive value is borrowed and stored in the form of a public debt as government programs substitute for a lack of a free market legitimacy.

Hamiltonians falsely argue that government causes the public debt. That, in turn, effects remedies that just cause more debt to be regressively paid. The result is a gigantic accumulation of retributive value to be manifested in a deep cyclical compression.

At this point, the retributive value is demanding to be paid, but argued by Hamiltonians as just being a "natural" swing in the business cycle. It is the job of the monetarist to manage this accumulated debt so that it does not result in rejection of the falsely legitimate model.

Hamiltonians argue that rejection of their model is to reject the free market model of economics. Quit the contrary. Rejecting Hamiltonianism allows for acceptance of the free market model.

It is time to accept your freedom, your right to self-determination and stop being slave to a bunch of feudalistic, want-to-be overlords.

Join the coalition for Barack Obama and declare your natural right to be free from a continuously failed legitimacy of power.

Very best wishes.

Copyright 2008 by Griffith Lighton.