Controlling the Future(s)

Big or small, the investor is looking to predict the future. Big investors, like hedge funds and private equity firms, can control trends--a sure predictor--in spite of the technicals.

The effect, the intended result, is the small investor, the small business, the small income at the mercy of big, consolidated capital, inimical to a free-market economics.

The data generated by the small investor is easy to track by big financial firms. The technicals that the small investor relies on to divine the future are easily manipulated to create "surprising" market valuations that are based on the position of the small investor.

A "surprise" means you missed it and will not share in the wealth. Rather you will have lost value, if not directly, indirectly so that you will not properly associate the cause with the effect, the cost with the benefit, the profit with the loss.

Without a proper correlation of cause and effect there is no proper accountability. There is no legitimacy "demanded" of the outcome, the intended effect that is not supposed to be legitimately commanded.

If you are playing poker, the player that stacks the deck, deals the cards and knows what everyone in the game is holding is always likely to win with the legitimacy of the law of averages. The player in command of the game induces and accumulates a retributive value, a risk, that must be managed which includes keeping the other players in the game with a false legitimacy, like just being lucky.

If the small investor goes long, big money managers go short... and so we have the recent move to limit naked shorts by regulatory decree, for example, to defend a free-market legitimacy of the outcome.

The element of surprise also presents in the irrational valuation of derivatives, like commodity futures, which affects (supports) their "derived" equity valuations in an upward trend while demand is being reduced to support (effect) a deflationary trend. Combined with the ease of monitoring who owns what when, the small investor technically does not stand a chance.

The result of the action of this consolidated capital is, as the evidence of late clearly demonstrates, a massive reduction of net worth and further consolidation. Technical corrections for the result in posteriori by government decree (what conservatives argue is inimical to a free society and economic growth) only serves, as we see, to support the macro trend of consolidation.

For conservatives and the neo-conservative opposition, it is a win-win outcome. The allowable political choice is two types of conservatism that conserves the consolidation of wealth and power by administration of Ivy-League Hamiltonians.

Despite all the "hope" for "change we really need," the future of a consolidated capital is being technically well conserved.

Consolidated capital operates with inequity that naturally causes crisis and dispossession. The massive loss of net worth by the vast majority of Americans has been accumulated (consolidated) and used against them in futures markets to "defend" a command position and support the deflationary trend.

The consolidated value is now being prepared to be resold, distributed, at a profit. This value added will be falsely characterized as economic growth. It is a zero-sum loss (a detriment) shammed as a collective benefit (the accumulated profit). The benefit is not collective if it is accumulated, or exclusive. It must be distributed to be inclusive.

The distribution on the accumulated profit (reducing the surplus of supply that supports the deflationary trend by increasing demand) is the investment that fuels the recovery and provides the false collective benefit of providing for economic growth, which is not growth at all. It is a "recovery" (a distribution) of what had been lost in zero-sum in order to sustain the process of the business cycle in a state of disequilibrium--an inequitable distribution of income that defeats the equilibrity, and collective legitimacy, of the free-market mechanism.

The cycles provide the recurrent crisis and the business transactions necessary to consolidate wealth and power. The transactions, the buying and selling, gives the process a collective legitimacy of market mechanics. Without the demand dimension being the full determinant, however, it is a false collective legitimacy.

Where the command dimension is largely in operation, as it is now, the economy lacks a free-market legitimacy. It is necessary, then, to correct for the lack of legitimate power.

The gamma risk is operationalized with the retributive value that accumulates along with the consolidation of power (the illegitimate means to command the economy). It operates to manage the lack of demand economics--the free market, democratic dimension that provides a genuine, collective legitimacy of the process.

Technically correcting for the retributive value accumulated reduces (manages) the risk inherent to conservation of the command economy and the distribution of income that determines it.

The sacrifice of income that finances the zero-sum accumulation of value gains a collective legitimacy by operation of public process, mitigating the loss with the force and legitimacy of public authority. Without it, the legitimacy of the outcome is at severe (gamma) risk, and the means to the ends is technically corrected to manage the externality of the retributive value.

The retributive value accumulated on the current cycle is immediately about $2 trillion, which is about the value lost in net worth of the average income in the last quarter of 2008. The amount of deficit spending is quickly approaching that nominal value to correct for (mitigate) the accumulated loss to maximize conservation of the accumulated benefit. Thus we have the tension between the interjection, the demand, of the gamma risk and the imposition, the command, of the consolidated capital in a conflicted, volatile trend of deflation and inflation.

The recovery will be considered an inflationary trend by the Ivy-League managers of the consolidated capital. The result will be sustained unemployment and an aggregate effect of defending the value of the accumulation with a deflationary consequence of incurring the gamma risk (a disincentive for capital investment, being crowded out by public finance--deficit spending). The trend is thus in an almost complete command mode with capital moving into commodity futures to "hedge" against the inflating dollar by inflating the profit (the continued accumulation of income) without growth.

Administering this process of deprivation, of course, according to Hamiltonians, deserves a bonus because it provides for the public good (the sacrifice necessary for the consolidation of capital that finances the investment for economic growth).

Administration from the public sector in combination with the private sector, like the Federal Reserve, is to give the command a "demand" dimension.

The Federal Reserve saved us from financial firms that were allowed (a choice) to be too big to fail. The intended effect is coercion--extortion, racketeering--characteristic of a criminal element.

A free-market economy is supposed to be dominated by the element of choice (demand), not the element of having no choice (command). It is the very essence of freedom, or the lack of it--the legitimacy of power.

According to the Fed, we have no choice but to bail out the agents that caused the crisis and pay them bonuses to continue to use the bailout money in a manner that caused it, reinforcing the behavior because it is profitable. The consequences are fully intended to support the command structure of the economy and resist the democratic element of demand to form an elitist model of power: a bureaucratic model of power and political economy in which the public and private sectors are effectively merged to command and control, to resist, pluralistic, democratic tendencies.

If the economy is allowed to be in a demand mode, the consumer (the vast non-elite of "unbonused" if not unemployed) is the primary determinant of economic trend.

Instead, the sacrifice required to surplus the capital for investment is really being used to reward (bonus) the administration of the command mode. It is being used to conserve the consolidation of value in a neo-classical, neo-conservative manner.

The distribution by the public sector on the value accumulated is being operationally accumulated by the MBA, "bonus" bureaucrats in the private sector. The result is a stagflationary trend, keeping the economy out of a demand mode.

With each indication of recovery is a spike in energy prices. The data confirms that consumers are spending more than they make with these steep oscillations in price. (The short, sharp oscillations keep the profit high and the rate of substitution, as well as demand destruction, low, rigging the market for stagflation.) Continued erosion of net worth, and consolidation of that value, is the aggregate, intended result, always supporting the deflationary trend with a reduction of demand.

That reduction of the "demand" dimension results in a spike in bankruptcies, which has also been confirmed by the most recent data, further reducing the "choice" dimension of the economy with fewer small businesses and a reduced ability to pay, or to choose.

The unemployed sacrifice, suffering the deflationary demand reduction to provide, or finance, the benefit. The unbonused employed sacrifice as costs rise while their incomes decline, continuing to erode their net worth, financing the so-called collective benefit of consolidating the capital to achieve maximum economic efficiency (the economy of scale and networked externalities by horizontal and vertical organizational integration).

The collective benefit of the sacrifice is false. It is a zero-sum distribution. It is a loss with the vast majority of individual incomes incurring the detriment without fully participating in the benefit, rendered by a process of exclusion.

The growth, the purported benefit, is really not growth at all following negative growth with the supply having been "conserved" by the sacrifice of the excluded non-elite (the unsophisticated masses who willingly sacrifice without fully sharing in the benefit).

Conservation of the supply is critical to understanding the indirect scheme of consolidating value so that it looks legitimately unconnected and "uncommanded." This is where our Ivy-League economists tell us the value is forever lost, and not a zero-sum consolidation.

Supporting the deflationary trend by controlling the future(s), along with extracting the value by such incremental means as flash trading (which also manipulates the technical data), means the value of the existing supply is in cantango.

The value of the existing supply, because the investment to expand it is being invested to conserve it (the liquidity crisis), is realized, or consolidated, when the recovery finally includes the unemployed who must bid up a limited existing supply. The intended effect is to mitigate the cyclical decline in the rate of profit described by all classical economists; and so, neo-classically, we now hear pop analysts heralding the coming cyclical bull market with better-than-expected profits despite increasing unemployment...suprise!

Rising employment will be the fully expected (fully intended) unexpected, surprise premium (the zero-sum loss/gain) that the Ivy-League economists say does not exist.

The rate of profit is neo-clasically supported through the deflationary phase while resisting employment (demand). The inflation is not supposed to happen, classically, in the deflation phase because the demand is not there to support it.

Keynesian stagflation is the neo-classical result, allowing for profit margins that are to be unexpected without the demand (employment). It is really value that has been surplused and later consolidated so that it is not readily, immediately, clear where the profit is coming from. That inflation, that profit, is explained away as the capital formation necessary for growth, rather than the means of limiting growth (limiting demand) to increase the marginal profit.

The inflation will be deemed "fundamental." However, it will have been caused (commanded) by elite control of the economy, and that command and control will be extended to the Fed to control these "market forces" (the cyclical trend) toward a so-called collective benefit by increasing the interest rate, which supports the deflationary trend.

Increasing the interest rate is a regressive burden on incomes. People that must borrow to pay the cost of living (to demand in the marketplace) receive the debtor assignment on the public debt. By default they pay the debt held by those with the ability to buy the debt (to command in the marketplace).

Those with the greatest ability to pay are then, by legal process, those who are the exclusive beneficiaries of The People's collective sacrifice (Hamiltonianism).

The value of the recessionary trend was not lost. Consolidation of the value (the sacrifice) was just timed to appear disconnected with the benefit in the recovery phase of the cycle. That value is also expressed by conserving the ability to command who sacrifices to achieve the efficient formation of the capital.

After the sacrifice (the accumulation of the capital--the loss of net worth by the vast majority), the next phase of the business cycle is deflation. It is the phase the economy is in now.

In the deflationary phase, prices are pressured to fall due to the reduced demand (the sacrifice). Falling prices reduces the surplus, but does not eliminate it. Growth goes from negative to positive. The surplus (the sacrifice) is conserved and the process for expropriating the benefit is maintained to achieve the so-called collective benefit of so-called economic growth.

The recovery phase of the business cycle is then achieved in zero sum. The diminished surplus is replaced, not really adding supply.

Adding supply controls inflation. Disinflation provides the purchasing power necessary for sustained, positive growth, actually adding supply, improving choice, adding demand, reducing the command dimension of the economy.

Disinflation creates savings, which is turned into capital that finances growth and innovation in the pursuit of profit (the return on investment). Deflation is financed by negative growth--the sacrifice that reduces net worth in zero-sum. The value is accumulated to consolidate the wealth and power into an elitist organizational form that is to be systemically self sustaining, but not without risk of having to repay some of the benefit to its source (the retributive value).

The sacrifice necessary to keep the elitist form self-sustaining is what is currently referred to as the systemic risk. It is the risk of systematically incurring more cost than benefit with the legitimacy--the free will--of a collective process of self-determination, like a market system in which individuals choose to participate.

If by the necessity of participating in the marketplace to survive means having to be the one to sacrifice, or to be a non-elit, the pluralistic legitimacy is empirically failed. That incurs a "risk" to the value that finances the elite and conserves the surplus. There could be a "demand" for the illegitimately gained value to be retributed if it is not successfully organized, timed, and argued legitimate on the basis of economic efficiency.

The systemic risk is commanded and controlled by the elite of power through the market system and the business cycle in the name of achieving the highest economic efficiency--consolidated economies of scale that minimizes risk and maximizes the profit (the surplus of capital) for reinvestment. That organized largeness of scale also includes the co-operation of the public sector.

The non-elit participant, who pays the debt (borrowed from the surplus) and suffers the deflationary reduction of net worth that finances (conserves) the surplus, is greatful, relieved, that the value surplused is trickled down enough in the recovery phase to survive by the good grace, the noblese oblige, of the elite.

Relief of some of the sacrificial burden is systematically substituted for retribution of the accumulated value. It is just enough income to sufficiently pay down the debt, according to an arbitrary credit score, allowing for enough demand to reduce the surplus inventory (the sacrifice and the value to be retributed).

Suffering the deflatonary phase of the business cycle not only elicits an increased demand (a distribution on the accumulation) to support the value of the surplused inventory (matching demand with supply without disinflation), but solicits a demand to retribute the entire value of the sacrifice.

The demand for more participation, for more purchasing power (for more democracy), is a risk to conserving the distributional value of the system.

The systemic risk is controlled by substituting it with a gamma risk that is easily co-opted.

The latent demand elicited to retribute the value is transformed into a demand for elitist command and control. Congress responds with a technocratic delegation of extended representative authority who manage the risk without direct accountability to the electorate.

A lack of full accountability succesfully co-opts the demand for full retribution of the value into a technocracy for managing the risk and conserving the structure that commands the distribution of power and authority.

The bureaucratic model of power and political economy successfully displaces the natural demand for full retribution of equilibriating value. It is placed into the elitist realm of esoteric knowledge so that we must suffer deprivations for reasons we cannot begin to fully understand. This systemic induction of ignorance condemns us to a deductive systemic legitimacy of command and control for our own good; for the general welfare.

We are paying the people that act to reduce our net worth to continue doing it with our tax money because it is for our own good? Despite what behavioral economists say, this can only happen by force and legitimacy of public authority; by a process of command, not demand!

Critical to the cyclical command of the process is the legitimacy of the outcome: being defined as elit or not by process of surviving the business cycle, and whether you are a buyer or a seller within the recovery phase of the cycle. At this point the commanders are merely sellers in the marketplace; the commanded, merely buyers, freely engaged in the process of doing business, being retailed lost value and property.

Merely containing the elements of freedom (choosing whether to participate in the economic process or not) and market mechanics, the organized processes of consolidating capital and the business cycle is argued to be proof of a free-market system and not a command economy in operation. The necessary legitimacy is merely deduced from the elements being semantically present in the argument, not verified, or induced, from the evidence which, of course, tells quite a different story.

Timing the market (controlling the cyclical trend) is essential to the false legitimacy of a consolidated capital as a free-market system freely participated in toward a legitimate, collective outcome.

The longer the slope of the recovery phase, the more the consolidation of value and wealth looks like a "natural," undeliberate process with a free-market legitimacy of collective action.

It is necessary for the market process and the cyclical effects to appear legitimately free. The process must appear to be a product of self-determination instead of a tyrannical command and control and expropriation of ownership that can only be reacquired by borrowing from the accumulated value (being resold) by incurring a debt and the emblem of subordination.

The vast majority of Americans do not have to be slaves to the command and control, the tyranny, of a consolidated capital.

Deconsolidate it!

A highly progressive tax code and reinvestment of the capital to pluralize the marketplace without a huge debt either public or private will achieve "real" economic growth and a real freedom that conservatives argue is an evil tyranny to be resisted.

We hear all the time in pop media that the way to freedom and prosperity is the well-trodden path...the old, or conservative, way of doing things (toggling between Democrats and Republicans).

Believing the solution is the old way that always results in crisis is irrational. The only way to evade the fundamental simplicity of this truth is to convince The People they lack the elitist, secret knowledge necessary to fully understand that the best way to solve a problem is to ensure its recurrence.

The conservative argument is, then, reduced to this plausible absurdity: the problem is not really a problem at all, but a collective benefit that is erroneously perceived by the ignorant masses to be a problem because they must be made to sacrifice to achieve the general welfare.

The public good will not be achieved unless we are forced to do it, as the behavioral economists argue. So, for example, the best way to achieve the public good of providing healthcare for all is to force a public option--a simple dummy variable that will consolidate the market into no choice.

Pluralism is abandoned for the unaccountable better judgement of elite authority in which application of the irrational becomes a measure of power (success); like cutting healthcare costs by ensuring medicare doctors get a pay increase.

A free market does not tolerate the irrational. It is the consolidation of power that tolerates the irrational. It is an emblem of power to be "conserved" by its confirmed application (like toggling between dummy variables).

Consolidation is argued to be the empirical model, the natural tendency, of efficiency because the pluralistic, free-market model tends to be "irrationally exuberant." The exuberance, however, is caused by mass momentum of consolidated capital following organized economies of scale (large size of horizontal and vertical integration) in every case since the dawn of what we now call capitalism and the crises of boom and bust we needlessly experience to this day.

The free market is not the natural problem, it is the natural solution.

Free-market economics is resisted by being organized into a consolidated capital not because it does not work, but because it does.

The economic problems we look to solve are organizational. Allowing the economy to organize into economies of scale that are too big to fail is the problem, not the solution. It is nevertheless being applied as the solution in the name of The General Welfare.

While networked externalities (organized consolidation) hedged the risk and caused the formation of capital at the inception of capital markets, it "naturally" led to boom-and-bust cyclical trends--crises in which eager small investors became the willing, dispossessed dupes of consolidated wealth and power.

Two hundred years later, the small investor is still being duped into believing the wealth was lost, evaporated, not consolidated. The risk is "freely" taken, but the reward is to be found in the loss of value resold as a profit, bought with a debtor's share of the wealth. Thus was borne the credit economy and liquidity crisis we now endure as free-market economics.

The small investor must now identify where the consolidated capital moves next--where the next bubble will occur. (The bubble never really "bursts," it just "moves" around. Deflation in one area inflates another. The result is the cyclical trend.)

The system of buying and selling, the market system, is the means by which consolidation is "freely" transacted, making it look like the public needs to be saved from itself, and the conservative argument that elite command and control (consolidation) is a necessary condition to ensure the efficiency of markets. The efforts of the Obama administration are, then, perfectly rational, and consistent with conservative philosophy--a confirmed belief in the efficiency of free markets and the need to command and control its irrational exuberance (the gamma risk).

The action of the private sector to avoid the gamma risk requires being in the dark.

Hiding in the dark, the phenomenon of "dark markets," is what a free market definably is not. It is nevertheless what the dark marketeers say they are doing as long as government does not interfere with their freedom to pursue it.

A dark market is a complex maze of seemingly disconnected cause-effect relationships. It is a scheme of buy and sell transactions across market sectors and segments that includes time sequencing and quick, flash transactions that are nearly imperceptible. The more the cause of an effect cannot be detected, the less confirmable liability for illegitmate gains; specifically, gains acquired by means of rigging the market through a system of timed buy and sell transactions of various contractual classes, like options and futures contracts.

Happily hiding in the dark where dirty deeds are not clearly identifiable is the pursuit of not being accountable to either a democratic process of free-market economics or government oversight (avoiding the risk). It is a pursuit that effectively minimizes freedom, not maximizes it, which is the ultimate, Constitutional, measure of success.

As places to hide become fewer at this point, big money will move into a traditional, classical mode of consolidation of real assets, buying distressed businesses and investing in businesses that the recesson had put out of business.
Economic entities will be merged and acquired satisfying the traditional model of maximimum value that draws the most investment (a bubble). This will be a move into cyclicals and will confirm an economic recovery phase of the cycle indicated by the increased gama risk in dark financial markets and a retrace on the value of those assets to an oversold condition, gaining support more at the the fundamental. A secular bull market will then occur.

Controlling the future(s) has become the philosopher's stone of neo-classically managing the risk inherent to the consolidation of the capital. It conserves an organizational modality despite the tendencies to subject it to the risk demanded by The People in an evolving modern world of constitutional legitimacy.

Control of futures will innovate ahead of the gamma risk. Trends will be indicated not only by the path consolidated capital takes, but how it is reorganized into modalities.

Identifying organizational modes will indicate the future of trend analysis by identifying the means of not just profitably predicting the future, but commanding it; not by means of managing the risk, but by virtually eliminating it.