Proprietary Position

We tend to keep risk confined to a Cartesian geometric. There is, however, risk in a third dimension to time and pitch. It is the proprietary risk.

Proprietary risk is essentially who owns what when--or the extent of your proprietary position within the binary space of time and pitch. Within this space, your risk is either on or off (the risk of loss is fully assumed). The amount of risk owned (or assigned) appears to oscillate between 0 and 1 in two dimensions, but your proprietary position is correlatively constant. Proprietary risk, actually, is always either zero or one, which is why, for example, people that do not need credit are always able to get it (with the risk of loss to those that can't fully assumed, keeping the value in reserve).

With the business cycle, proprietary risk demonstrates its consolidation in the gamma proportion. So, when a distribution occurs from an accumulation, while the proportion of risk appears to change, it is actually conserved in the gamma proportion in the form of extended debt and the risk of default. Consolidation of the risk is reconfirmed in the accumulation phase of the cycle when the risk is off and the call is for debt reduction, like we have now.

Your position (how much economic rent you pay) is confirmed by cyclical oscillation, actuating the proprietary risk (the amount of risk you verifiably own) and the probability of default in the accumulation phase. Since the risk follows the reward, it actually consolidates with the wealth; and since the distribution occurs in the form of debt, not equity, the accumulation phase of the cycle leaves you with a debt you do not actually own. The risk was never proprietarily yours. It is consolidated, extended, and reclaimed with the reward--it is a liability that accumulates with the equity in a gamma-risk proportion to be politically distributed in the form of a public good.

According to Hamiltonians the power to distribute risk independent of reward is a public good because it provides productive incentive. It inspires a vibrant economy.

The non-elite aspire to elite power, which is the ability to extend proprietary risk without displacing the position of the reward and the power it assumes, managing the liability by renting it out. The rent puts the non-elite in the position they are in and the debt assumed is then called proprietary--it is their property, defining their status or class by extension of the risk, just like the king did.

Today, the extension of risk takes the form of positioning counter-party risk. Since we all have the equal right to pursue happiness like the king, it is assumed we all equally own the risk in priority like the king. It is a false assumption (with the risk of loss fully assumed).

Constitutionally, we are all equally empowered to manage the risk from a proprietary position. We all individually decide whether to take (assume) the risk extended to us or not. The Revolution ensures us all the right to take ownership of the risk, which means, just as it was with the king, the risk of loss is fully assumed.

According to the Hamiltonian model, the risk is what we are all entitled to. Hamiltonians make sure it is well extended, ensuring the risk of loss demonstrates and tests the extent of power (with the risk of loss fully assumed in the gamma proportion).

When Bank of America and Goldman Sachs leverage commodity prices from their proprietary desks at a 10-1 ratio--extending risk, demonstrating power--what position does that put you in?

Value in Reserve

The U.S. dollar is our currency. It has "current" value held in reserve.

So that the currency has predictable, stable, present value, the value is stored (held in reserve) and represented in the form of Federal Reserve Notes. Held in reserve, the currency is not only more manageably stable, or unstable, but more portable, backed by the full faith and credit of the Federal government. In other words, the Federal Reserve provides credit instruments that are legally tendered for goods and services.

Business can be conducted (goods and services exchanged) with other currencies (scrip, for example), but the income it produces can only be valued, declared, and taxed in the dollar denomination (the rate of exchange), legally dependant on the value in reserve. While value can be exchanged in kind, for example, the income it produces is held in reserve--The Federal Reserve.

States can print their own money, but its "currency" is held in Federal reserve. A state would increase the value of its currency by increasing its reserves. Since a state cannot buy Reserve Notes with its currency, it can only buy its currency with Reserve Notes, the more scrip it prints the more debt it assumes against the value held in reserve (i.e., in an account credited to The Federal Reserve Bank).

The currency is uniplexed. Flowing from the reserve, the monoplexed value is directed to support an accumulation and achieve an expected valuation at the target with the least possible resistance. The latest political "compromise" on tax policy (deflation), for example, combined with the effect of QE (inflation) demonstrates a process that conserves the transmission of power to at least a one-to-one ratio. The value in reserve is conserved over time and policy space. At the same time, on the economic side, when Bank of America, for example, engages in predatory practices and fraud, it is an expected transmission of value (the extension of the risk) held in reserve (in the form of credit, or debt). Ninety-eight percent of the population incurs an economic detriment with little or no political recourse because it is an expected value reserved for the propertied class who deserve "the credit" (the currency) of being solvent.

So we see the power (the "currency" or credit) of consolidating economic value into reserves. It controls the extent of debt and the extension of the risk, which is why Thomas Jefferson was so strongly opposed to Alexander Hamilton's Federalist scheme to finance private property through credit extended (value iterated) from the top down (in reserve)--what we refer to as "trickle-down economics."

This struggle continues today. It is nothing new, but the means of managing the value in reserve (conserving the stakes since The Revolution) becomes evermore complex and fractal. A joint-stock company is now the modern corporation and the risk it consolidates (the externalities networked) is managed through the Federal Reserve system independent of the Treasury (as an economic entity--a banking entity--independent of political accountability, operating with proprietary accounts).

The modern corporate operates with virtually limited liability and unlimited political and economic influence. Its power far exceeds the power of any one individual that does not reside at the top of the Leviathan. The power of each and every individual is collectively incorporated, held in reserve and extended as the ruling class sees fit just like the king did and just like Jefferson warned us it would, making a mockery of democracy and the republic.

Remember that a democratic legitimacy of power is not supposed to be limited to the political space. A free and unconsolidated marketplace (free-market economics) is supposed to ensure a democratic self-governance (the power to choose on an individual basis) in priority. The republic is to support a democratic form of governance, not operate against it and limit the liberty of the Sovereign (We the People) to act in self-interest. It is to ensure a free and unconsolidated (a democratically proprietary) marketplace in priority with the force and legitimacy of public authority.

While the Federal Reserve operates as a quasi-proprietary entity to keep the markets "open" through the Federal Open Market Committee, the evidence, however, suggests it keeps markets proprietarily closed with enough "easing" and "accommodation" distributed from the reserve (in the form of debt) to suggest an exculpatory, free-market legitimacy.

The republic, operating with value in reserve, either ensures a genuine free market in priority (turning debt into equity) or prosecutes the criminal element that intends to profit by causing a detriment (rigging the market for default, or turning equity into debt).

No one wants to do business with anyone that can't be trusted--anyone that intends to do harm or deliberately cause a detriment. If we have to do business with malefactors, in the absence of a free market we want the liberty (the complete lack of resistance) to prosecute the criminal element. Instead, we have a corporate body that quickly consolidates value and reserves it for exclusive use (most likely to cause a detriment) in a too-big-to-fail, proprietary proportion. (Keep in mind that there is not much reason to be too big to fail unless there is some intended consequence that would otherwise make you fail, like Bank of America's practice of robosigning and dual-track fraud. As long as Bank of America keeps enough in reserve as a member of the reserve system, it will not fail, and would not be allowed to fail anyway because it is too big.)

In a free market, there is little need for prosecuting the criminal element because bad intent will not survive the marketplace without rigging the market. The criminal element will not survive without consolidating industry and markets into economies of scale to network the externalities, which includes limiting and co-opting the political risk (the risk of liability kept in reserve, or the retributive value of the risk that cannot be avoided, only proprietarily accumulated and distributed).

Being suspicious of wealthy interests that want to build economies of scale is characterized as a cynical paranoia--a droll psychosis typical of conspiracy theorists at the analytical margin. The Great Recession, however, is not the result of big government requiring banks to make bad loans. It is the result of overleveraging in a too-big-to-fail proportion, and with that value being held in reserve, it is not yet over. It is a legacy of the Federalists (the Hamiltonian Tories) who gained control of our financial system at the inception of our nation and have maintained it with the extension of debt, prompting Jefferson to declare that The Revolution is not yet over.

If you are disgusted with the federalist extent of power, Jefferson shared your sentiment. The purpose of The Revolution was to create a free people, not a "monocratic" monster with the sentiments of a loyalist.

Being Well Fed

If Bank of America and Goldman Sachs showed up at your door and demanded 2% more for food and fuel so that their trading desks could make a profit, keep their reserves well fed, and provide you with the opportunity to get rich, you would likely be offended to be so brazenly played for a fool. A visibly direct accountability would be very impolitic, so we have the Fed to feed the appetite of bankers for exacting austerity (the economic rent) that keeps the rich well fed at your expense.

Now that FDIC banks can legally operate as investment banks, taking deposits and making loans is only about 20% of a big bank's business. These banks are so big, like Bank of America, they command the marketplace. Don't be fooled by rhetoric that describes this consolidation as the means for feeding you and your family with an efficiency only possible by building economies of scale. No! This continued consolidation is intended to drive down your income and drive up the prices you pay to feed the greed; and all the evidence is there to support that hypothesis.

Continuous consolidation does not allow for more pluralism, it allows for more command and control structured into the Federal Reserve; and what is put in reserve is your income to support banking activity that causes inflation and unemployment, deflating your income, minimizing the probability you can get rich to nearly nothing despite being told otherwise. The result is dependancy on a consolidated business-government entity that commands and controls the risk and the distribution of reward with highly indirect and technocratic means.

The Fed is independent of government authority, managing the banking system independent of political influence while it indirectly exacts austerity (extends political risk) in the name of free-market economics.

With the result being anything but a free market, we have to wonder what exactly we are being fed....

A lot of baloney... and more than enough!

We're being well fed alright.

Illusions and Delusions

A binomial dialectic gives the illusion of progress. We should not delude ourselves that the the new tax cuts will be more effectively distributive.

Distributive measures added to the tax-cut extension will be consolidated by merging financial interests. The short-term relief provided suffers the illusion of a counter-cyclical, long-term distributive trend. All the rhetoric about the unfairness of the extension is a Burkeian gaming strategy, binomially determined with the illusion of caring about the people that are sure to suffer a massive detriment the tax policy will extend. Hope that springs eternal, especially in this case, binomially determined, admits to delusion.

Ninety-eight percent, despite the compromise, will suffer no illusion of the extended detriment. The benefit will accumulate into the top two percent with the appearance of populism provided by the Tea Party delegation who very callously oppose the extension of unemployment compensation, for example, which is hardly a populist sentiment.

Interesting how direct access of populist sentiment is limited to conservative values and principles. While unemployment compensation is sure to reverse the deflationary trend by providing the demand businesses need to reduce unemployment (everybody wins in a populist fashion), the Tea Party advocates tax cuts for the rich, which will cancel-out the extended benefit of the compensation, extending the risk of default instead.

Tea Party sentiment will extend unemployment as an expected value, suffering the delusion it will cause employment and thus deficit reduction. Unemployment, however, in Reaganesque, supply-side fashion, does not cause employment and reduce debt. Unemployment rises, the demand for debt increases, and risk continues to accumulate in the gamma proportion.

The expected value of the accumulated risk is about a trillion dollars. Half of that is already consolidated. The other half is expected to be consolidated as monetary and fiscal policy combines in the next two years to fight deflation.

Interest rates will be low to "accommodate" deflation and "ease" the mounting debt. Monetary policy will be applied to prevent a depressionary trend (a point at which the gamma risk is poised for catastrophic distribution and marginal tax rates must settle at 90% to conserve the stakes). A macro-risk ceiling is maintained to conserve the value of the risk (the arbitrage spread).

Accommodation and easing gives the illusion of prosperity. It appears that wealth is expanding, but this is actually risk being extended to consolidate the reward. Equity values, for example, will be pushed to peak levels (along with peak oil, etc.), forever suggesting a recovery that, again, is a hope that springs eternal (the benefit forever arbitraged--economically hedged if not politically compromised--into a detriment).

Slow growth, persistent unemployment and the demand for debt will be risk derived from a financial sector that continues to consolidate. The consolidation of too-big-to-fail institutions will be allowed to be even bigger to manage the extreme demand for debt (the risk of default). As the demand for capital requirement increases, the economy deflates. If there is not a double dip, it will be very close, nevertheless. Preventing the double dip is to reduce the gamma risk (demand for increasing marginal tax rates), not economic growth.

A binomial realignment, as we have seen, will not reverse the deflationary trend, but will bounce it along the upper limit. The political economy of any portfolio is to play the bounce off the ceiling (which measures the expansion and contraction of the risk arbitraged in the gamma proportion).

Investors should not suffer the illusion of risk being managed in an alpha proportion. Preventing a double dip is for the purpose of extending risk into default and consolidation of the equity. It is not to spread the risk, which prevents default, consolidation, and the demand for debt (reducing gamma to arbitrage in the alpha dimension, measuring real economic growth and cost-saving innovation).

A populism that calls for extreme marginal tax cuts while reducing budget deficits suffers a delusion of massive proportion. A current populist sentiment that suffers the illusion of power by merely accepting conservative principles is to allow the empirical power of popular consent to be used against them.

Iteration of Value

Analysts seek to discover iterative patterns of value causally determined. Descartes, for example, postulates that knowledge is obtained by rejecting what you already know (with the risk of being wrong fully assumed and truth geometrically propositioned), and for Kant, investigating nature confirms what you already knew (by extension of the proposition). In both cases, knowledge is an iterative feedback.

With knowledge comes power--predictive utility. Without it, determination of value is randomly chaotic and catastrophic, and when it comes to politics and economics, this is a value in itself to be exploited towards predictable outcomes without the risk of liability.

Describing the way arbitrage works, for example, derivative swaps are described as an ontological, market means of managing the accumulation of risk. If a commodity, like oil, becomes overvalued by one unit, the free market is expected to arbitrage that value to equilibrium and settle at "fair" value. The arbitrageur gains or loses capital speculated on the expansion and contraction of the spread, and the more money (liquidity) in the market, the less the spread, keeping the price as close as possible to fair market value without adding a unit of supply.

If the one unit of capital gained is not invested to cause an added unit of the commodity, the price of the commodity is expected to increase, causing a detriment. A swap then occurs based on the expected detriment, accumulating the capital gained from the detriment. As the capital accumulates, the detriment increases, causing a deflationary trend with the risk of default.

Value that deliberately iterates into a detriment incurs a risk of liability that must be reduced. If it is not reduced, the risk value is likely to be redeemed.

While the value empirically iterates into a detriment, the risk to the accumulated value will be rhetorically reduced, which continues the accumulation of the risk and deliberate iteration of the expected economic value, politically derived.

It is the job of the CFTC to manage the accumulation of risk into a political (gamma) proportion. At this point, the detriment occurs because we allow it to happen--it has redeeming social value, politically derived, mitigating (discounting) the liability (the risk of loss fully known and expected to iterate into a macro proportion).

It is no coincidence that the swaps market operates in the dark (OTC), controlled by a few large banking interests. This controlling interest iterates the liability in the marketplace, which predicts the expected value.

This is nothing but rigging the market and defines a criminal element to be prosecuted.

The criminal liability in our economy is extensive and determinant, but not being prosecuted.

Wheat prices, for example, are up 40% because big, consolidated financial firms are bidding the price into a detrimental valuation, raising prices against a declining demand, turning equity into debt instead of adding supply.

Stimulus value being politically postulated with the tax-cut compromise will be used to support a unit of demand against a unit of supply not added. Futures prices increase to support, not resist, the deflationary trend, resulting in the highest possible prices at the lowest possible cost, accumulating wealth into the top two percent with a liability that is reduced disproportionate to the extent of the risk.

Despite there being outrage over the accumulated detriment, the accumulation is allowed to continue in the name of economic growth and an efficiency of markets that occurs by allowing consolidated capital to operate in the dark and iterate the risk into a gamma, macro proportion.

The iteration of value is fully assumed by the model, knowingly and willingly applied as the expected value of the risk.

Iterative patterns that are causally determined by means of deliberate ontology have a risk of liability efficiently proportional to the detriment. If not redeemed, the expected (known) value of the risk ontology (liability) will cause a crisis in that proportion.

Turning Debt Into Equity

Liquidity crises turn equity into debt. When the economy deflates, asset values, middle and lower-class incomes and their net worth fall because that value has been accumulated into the upper class. The lower classes must then borrow the money from the upper class to prevent a depression.

As the lower classes (the lower 98 percent) liquidate their assets, providing liquidity to resist the deflationary trend, a benefit is accumulated in the top 2 percent. The accumulated benefit trickles down in the form of debt, turning equity into debt.

Turning equity into debt is a deliberate extension of the risk (the risk of default). The risk is so high that risk-transfer instruments like CDS's are a sure bet which, of course, means it is not a bet at all. The risk of loss fully discounted is not gambling--it presents no risk to the principle party, but shifts it all to the counterparty who is leveraged into accepting the terms of the extension by default (just like the "deal" recently struck between President Obama and Republicans).

With the old majority being lame, the new deal struck between the President and the new Republican majority advocates turning debt into equity by means of austerity--by forcing the needy to pay the debt. Keep in mind that wealthy beneficiaries of the budget process are well represented in Congress, the needy are not; and keep in mind that providing for the wealthy in priority is supposed to be better for the needy than direct income transfers. According to conservatives looking to reduce debt-to-equity, it is better for income (equity) to trickle down (austerity) than be turned into debt.

Since people are more likely to choose debt over starvation, it is the noble obligation of the power elite to force the austerity by the democratic means of compromise, rendering the process dialectical rather than empirical. We have to make the same mistake over and over again before we have a realpolitique that turns debt into equity.

There is a long and short cycle, or wave, that occurs to unwind the accumulation of risk. A short dialectic occurs, like the recent tax-policy compromise, and a long wave in which the business cycle distributes and consolidates equity into debt. All you have to do to affect the cycle both long and short is to horde cash, effectively deflating prices, which is a predatory model. The Walmart model, for example, is intended to consolidate pricing power (and horde the cash), benefiting from the deflationary trend induced, rendering a firm that is too big to fail.

Remember that too-big-to-fail firms do not operate to pluralize and expand the marketplace, but to reduce it, causing inflation AND unemployment (increasing pricing power while reducing costs), with the result being deflation. Walmart is our nation's largest employer because it successfully exploits the deflationary model into marginal profit (inflation and unemployment). It successfully causes harm with the impression of doing good (causing deflation while pretending to fight it with disinflation).

Deflation prices average incomes out of the market while disinflation prices them in with low prices and high employment. Retailers like Walmart gain market share and put small retailers out of business with the result being more deflation (unemployment with falling incomes and net worth), forcing even more customers through their doors and even more deflation. Yes, prices are lower, but incomes are deflating (supporting the marginal profit at low prices) while debt, including the tax burden, is inflating along with commodity prices (the horded cash being hedged against the declining rate of profit), resulting in general inflation. The result is accumulation of gamma risk that must be dialectically unwound through recursive, political-economic processes both long and short.

While the problem of extensive debt is presented to be dialectically determined (as Marx and Hegel described it, and our binomial system presents it), it is not, however, a hard determinism. Rather than cyclically liquidating equity into debt, we can choose to transform the debt into equity and avoid liquidity crises.

This is very simple. Wherever debt is being provided to resist deflationary crises (a detriment to all parties, including the upper class), provide equity instead.

Providing equity instead of accumulating debt, the current crisis will quickly abate and we can all get on with living life instead of just trying to survive it (the accumulated risk).

Instead of the choice being reduced to debt or austerity, it is more imperatively logical to reduce austerity with equity, producing an empirical benefit for everyone, categorically reducing the gamma risk for all income classes. Sustainable economic growth does not have to occur only with extensive debt and the probable risk of default. Extending equity instead of debt provides social security for both rich and poor. Instead of sacrificing the ability to get rich, it will maximize the probability of it.

Tax cuts for the rich maximizes debt and austerity, not economic growth and the probability of realizing the American dream.

Conservatives looking to reduce debt-to-equity are right, it is better for equity to trickle down than be turned into austerity.

Determining the Extent of Entitlement

Notice that the word "determine" contains the word "deter," denoting a limitation to the terms. Rather than let nature decide the limitation (a laissez-faire ontology), we consciously limit the probability of the risk to moral sentiment (a calculated, categorical deontology).

Thus, testing the limit of the probability derives the technical means of governance, or government intervention, logically (ontologically) determined to deter the extent of the risk. Ontology is not dispensed with, it is conserved, as is the risk that is to be "determined." (This conservation of natural ontology is what Hegel, for example, describes with his dialectical determinism in which freedom is an illusion subordinate to nature. It is a logical reduction that I empirically reject for the philosophy of natural rights that logically determines the extent of freedom, taking Hegel off his logical head and putting him on his empirical, deontological feet. While it is true there is no escaping nature, or God, nature provides us with the cognitive capacity to freely de-ontologize the risk, what Hegel described as the phenomenology of the mind, or God.)

For the analyst, understanding Hegel is to know the extent of ontological risk. The old saw, "the technicals do not lie," for example, expresses the expected extent of ontological risk. This ontology finds technical expression in the E and K waves, for example, or the Markov chain in which the analyst is "naturally" forced to discount the probability with the risk of loss fully assumed (i.e., truth can only be known by null hypotheses and never known to its fullest extent). President Obama, for example, found himself accepting tax cuts for the rich despite its technical benefit being a thoroughly disconfirmed hypothesis. While the truth is compromised, which is an expected value of a republican form of government, the argument is maintained by Republicans, nevertheless, that tax cuts for the rich are truly good for everyone, as best can be determined. The hypothesis also got purely tactical support, being tested against a time limit that would very clearly be bad for everyone, effectively limiting the liability for all classes.

Compromise is more an art than a science. The Great Recession (a massive zero-sum accumulation of wealth into the top two percent of income classes that resulted in a massive deficiency of aggregate demand) rendered "tax cuts for the rich benefits everyone" a clearly disconfirmed hypothesis. Although it is a primary cause of the defaltionary trend, the hypothesis will be sustained in the interest of reversing the trend, nevertheless. In terms of applying a political agenda, it makes sense. Supporting the deflationary trend (the cost-benefit it yields in zero-sum) is, and will be, an empirically confirmed hypothesis.

Compromise is used to force disconfirmed hypotheses into public policy. It is less a necessary condition of a democratic-republic (an expected ontology) than a function of applying an empirically unpopular agenda with a democratic legitimacy (the force and legitimacy of public authority that is supposed to be the empirical value, the market-like ontology, the governance, of a popular consent).

Public policy that governs the deflationary trend is being inappropriately reduced to bargaining for a price in the marketplace, and the economic rent has settled at a price that is "too damn high!"

A settlement price by compromise substitutes for the democratic, empirical legitimacy of a popular consent. Reduced to bargaining for a price in the marketplace by proxy (with the proxies mostly disagreeing on the method for assigning you the burden of debt), public policy is methodically reduced to a false popular legitimacy with the settlement price (like tax cuts for the rich) being the exculpatory, empirical proof of a bid-ask differential that is considered to be a valid social contract. The result is a limited liability that is only partially true by means of a power to bargain that is exceedingly inequitable both politically and economically.

Since determining truth determines the extent of liability, and truth is different depending on the method for determining it (or finding the limitation to deter the risk of liability), determining the ontology, like whether a free market is in operation and to what extent, for example, delimits the risk of liability.

For example, in Plato's Republic, in order to de-ontologize defects and ensure the public health, the ruling class (the gold class) secretly selects who reproduces by public lottery. While it appears to the public to be ontologically legitimate, who is entitled to reproduce is determined on the inside by the power elite.

Substituting economics for reproduction, we see a close resemblance between the Republic and the way free-market economics operates within the context of consolidated capital. We see foremost how ontology figures prominently for the legitimacy, the social security, of determining entitlement.

Recall, for example, McCarthyism. It bears striking resemblance to the republican paranoia and extremism of the French Revolution, which our founders labored to prevent. McCarthyists believed that any person critical of capitalism is not loyal (just as the king regarded the American Revolutionaries). A non-patriot should be allowed to wither on the vine, legitimately deprived of gainful employment (income) as an enemy of the state (a counter-revolutionary).

The legacy survives. It hounds the cynics and skeptics of today, limiting the critique to court jesters at the fringes of media entertainment. Serious cynics and skeptics that point us to real solutions are either deprived of gainful employment or gainfully banished to the frivolous fringe of a benign jocularity and marginal entertainment that is not to be seriously considered in prime time.

Although the critique is much less limited than the McCarthy era, the non-conventional critic is nevertheless received as unpatriotic, if not subversive, and unentitled. The entitled critic, you will notice, politically advances the party line, limiting the critique to being recursively--patriotically--binomial; and the economic critique is limited to Ivy-League analyses that, whether from the left or the right, are characteristically Hamiltonian. Hence we have a realpolitique that is conservatively biased and an independent element that is systematically limited to that bias.

It is no surprise then that the left wing has capitulated to a conservative bias on tax cuts to which we are all entitled (assuming, of course, that incomes are equal, which they are not, and being unequal determines an inequitable bias, which is also why a flat tax is flatly unfair). This "compromise" rather than "a fight" (class warfare) is systematically determined to avoid the risk of liability in which the cause of deflationary crises (with the effect of losing your home, for example, due to unemployment) is the basis of public policy that supports the trend rather than reversing it. The risk is being deferred--transferred to the future--as an expected value, binomially conserved.

The only reason the Republican party will agree to this deal is because it is a net gain for its constituency: the non-elite have been extended the means to pay the debt and the elite have the means (tax cuts for the rich) to extend it into a deflationary crisis. The risk of liability is successfully avoided (accumulated) and the risk of loss (the extent of entitlement) is fully assumed.

The extent of entitlement is accumulated into a gamma-risk (too big to fail) proportion. According to current public policy, by means of compromise, a person is not entitled to income, or even the means to acquire it considering that unemployment compensation is dependant on providing the means of depriving it. This defines a class to which income is entitled--the top two percent in a proportion that is confirmed, by public policy, too big to fail. According to this public policy, the rich are entitled to determine the extent of tax policy (the extent of the risk--who owns the debt and who pays it). The fact is accomplished, and the liability limited, not by popular consent, but by compromise with what is too big to fail (extortion).

Confirming too big to fail (consolidated control of the equity and extension of the risk) is the problem, not the solution.

The tendency, the need, to extend the equity with the risk is deterred by direct access to public authority (the ability to directly bargain for the settlement price, or the economic rent; and in the absence of the counterparty, to fix it). Distribution of risk and reward clearly indicates the public process is in command of a wealthy power elite. Most of the legislators entrusted to apply The Will of the People to confirm a legitimate, popular consent are in the top two percent, busily limiting (deterring) the liability that extends with the risk and accumulates with the reward.

Risk is being supported in the gamma proportion. For the analyst, this means that crisis is pending (increased up-side call activity). A double dip is an expected value not to be deterred. The risk of loss is fully assumed and discounted to fit the Hamiltonian model in which the rich are entitled to foreclose on the lower class.

The loss, and the gain (the upside call activity), is argued to be ontologically determined--it is the result of the business cycle (now in high frequency, making it more difficult for the small investor to stay ahead of the trade--the next "big" market move--and participate in the equity instead of being left holding the risk). It is like the hydrological cycle (accumulation-distribution). It just happens and there is no stopping it. Sometimes it's too wet, sometimes it's too dry, but on average, it's just right (the expected value--the "law" of averages--ontologically determined).

While the economy is "naturally" deflating, the top two percent is gaining equity, turning the equity of The People into debt, to which, according to the elite, they are entitled, and will be commissioned to pay.

By technical, but what they describe as ontological means, the rich turn debt into equity, taking title to assets by default in a deflationary cycle (nature achieving the average, ontologically "normal" distribution through cycles of boom and bust).

According to conservative philosophy, interrupting the normal distribution of the business cycle with counter-cyclical (counter-revolutionary) measures, or trying to de-onotlogize the risk, just makes it more painful. Trying to re-distribute the risk (the liability) results in a compromise (price settlement) that stengthens the deflationary trend, like we have now. The non-elite foolishly expect to be entitled--an expectation that the working model does not assume and will, therefore, fail. The result is a fiscal and monetary crisis, like we have now.

For small investors and the employed who thought it might be possible to Tea Party their way into entitlement...nice try.

The practical model fully assumes the risk of loss, de-ontologically discounting the debt into equity, deterring the extent of entitlement.

The rich intend to take a double dip. If you were not discounted last time around, maybe this time. You are not likely to avoid that which you are fully entitled. Both Republicans and Democrats will make sure of that.

By compromise, with the force and legitimacy of public authority, democratically determined, everybody gets what they are legitimately entitled to, right?

With the prospect of extending the Bush-era tax cuts, if you are not in the top two percent you are currently at the very highest probability of risk. Cutting taxes for the rich is the determining variable. The cuts, despite the compromise, will turn whatever equity is promised to the lower classes into debt, to which, according to the Hamiltonian model, the non-elite are naturally entitled.

The terms of the bargain are limited to the assumptions of the working model which falsely relies on a laissez-faire ontology to measure the legitimate extent and entitlement to the risk.

Understanding Deflation

If the denominational supply of money is $100, and your counterparty has consolidated 100% of that value, you have two choices, starve or go into debt.

The problem is not that there is a debt, but that the counterparty controls all of the equity (all of the risk). The debt obligation and the subsequent ability to pay it (the risk of default) are consequential to the problem. The consequences accumulate into a crisis proportion (the effect) and default becomes the problem (the risk) to be resolved.

As the wealth consolidates, your income is deflated. The result is a general crisis. Your lack of income is not the source of the crisis, consolidation of it is.

Understand that deflation is a general crisis. You can't get any poorer, and your counterparty can't get any richer without over-extending (over-leveraging) the risk.

The crisis becomes so extensive that even though it appears you are getting richer, you are really getting poorer. Your income is so over-leveraged that your equity is now negative. Both rich and poor have debt that cannot be paid with the risk of loss having been fully consumed by the working financial model.

The crisis will not resolve without changing the working model, which is imbued with normative value. In fact, changing it is considered an ontological, moral hazard. Nature intends risk to be consolidated to the fullest extent and discretely distributed to control the risk of loss that is fully assumed. Otherwise there is chaos. Humanity is then reduced to mere animals suffering the vicissitudes of uncontrollable natural forces that lack civilized purpose. It is necessary to de-ontologize the risk so that it can be managed with intelligent propriety (as the private property of elite authority).

The elite are naturally endowed to consolidate and manage the risk of loss, fully assumed, to a civil purpose. Despite all the negative equity, according to the elite hypothesis, the result is a net benefit--civil society organized to control nature in the form of private property in pursuit of the "good" life.

Private pursuit and management of property does afford the freedom, the propriety, of a moral existence. It does deontologize a more natural existence, but it is a mistake, as elite authority maintains, to consolidate the risk into economies of scale in order to control random chaos.

The free market mechanism, which is reduced by economies of scale, ontologically rewards and deprives on a deontological basis--by popular consent (the randomness elite authority intends to control to a civilized purpose). If you can't trust your bank not to use your money against you from its proprietary desk, pluralism (what an economy of scale is not) ensures you have a choice (the freedom to deontologically reward and deprive).

Ontology is a philosophical concept that is a measure of intention, or what economists ascribe to incentive. If a student studies to get a good grade, the student is teleologically determined. If a student studies to know the curriculum to the highest degree, a good grade is ontologically determined. While both can result in knowledge of the curriculum, the incentives are different and can affect the practical quality of the knowledge consumed.

The profit motive works in much the same way. An entrepreneur may make a product or service better and faster to make a profit, or may just be interested in doing things better and faster which ontologically results in a profit. A free market mechanism maximizes the productive incentive of each to occur by minimizing the probability the profit motive does not consolidate the risk to prevent the ontology (with the risk of loss fully assumed).

Whether the goal is to ensure a profit margin by determining the risk of loss, or a profit margin that is the result of doing things better and faster, a de-ontology occurs to determine the extent of the risk (how the risk of loss is to be fully consumed).

Ensuring a free-market mechanics in priority ensures the deontological existence elite theory promises but does not intend to achieve by "virtue" (the strength) of command and control.

Ensuring a natural pluralism in priority (instead of an economy of scale) ensures freedom, deontologically determined. As a species, being cognitively hardwired for causal determinism, pluralism ensures we have a choice to achieve a natural existence that is self-determined as opposed to a purely natural ontology which, unlike Rousseau's noble description, according to the elite, is to live like ignoble savages.

Naturally, the elite also extend the ignominy of Rousseau's ideal measure to pluralistic processes that govern their self-interest by means of popular consent. Pluralism, as John D. Rockefeller argued, for example, is unruly and inefficient, so it naturally selects those (such as himself) who are fittest to force their self-interest in the marketplace by consolidating it, thus organizing it, or civilizing it, into a proprietary authority (much as Marxist-Leninists describe it).

The fittest to survive are those that are literally "too big to fail." These are the people most willing--morally incented--to de-ontologize the marketplace and consolidate the equity into debt; or as Marx and Lenin alternatively described it, to consolidate the equity into the Sovereignty of The People, keeping in mind that the more debt The People accumulate the more they own the bank with denominatively negative equity.

Yes, we are more than just animals, but achieving negative equity is not the civil way to confirm it. Rather, it is quite the uncivil act of authority (which is why forming "trusts" or what is "too big to fail" is supposed to be illegal).

If starvation or debt is the choice, debt becomes the more natural existence, and that is the choice we now face as we consider our economic problems toward a civil resolution.

Notice how the current commission to control the expansion of debt has virtually nothing to say about deconsolidating what is too big to fail. Apparently, just as the congress and the executive, the commission does not consider the consolidation of industry and markets to be of negative consequence (i.e., causing deflation and debt). This confirms that debt is considered to be, in true Hamiltonian fashion, the more natural state of our existence.

Keeping the risk (the equity) in a continuous state of consolidation is assumed to be the natural course of things, like Rockefeller argued, but keeping it solely proprietary naturally causes the need for government. The debt to equity is kept under close state control (monetary and fiscal policy) but denominatively proprietary to keep the equity stake ontologically incented with productive self-interest. Unfortunately, the stakes reduce to debt or starvation which, frankly, could hardly be more base. (Marxist-Leninists argue that as this consolidation becomes more civilized, productive incentive reduces less to the base and elevates to a self-determination that is technologically pulled by labor-saving devices. We currently refer to this "pull," this ontological determinism, as "unemployment," and Marxists "the leisure class." Without entitlements, or transfer payments in the current environment, the leisure will result in a deflationary crisis--the income will not be available to demand productivity. Of course, being able to afford leisure delimits socio-economic class, and the leisure class must work to maintain the delimitation by limiting the extent of entitlement--the extent of liability--to a debt obligation which, of course, accumulates into a gamma-risk proportion. Instead of buying time to commandeer available equity, productivity eventually occurs for its more equitable distribution and enjoyment. A person does not acquire a job or achieve an equity stake by depriving it of another person--by deflating another person's equity stake, or entitlement.)

To de-ontologize the gamma-risk proportion, the debt commission is to suggest ways to adjust the debt to equity. The proportion then gains civil authority (due process) to mitigate the risk of liability that results from deflationary trending in which those that have and have not are more clearly defined in zero-sum--what the rich refer to as "class envy."

Class envy in a deflationary environment is nothing but being basely reduced to accepting debt or starvation as a matter of self-determination (by natural right). When the economy is expanding (when the equity is being distributed and debt reduced), people naturally care less about the difference between rich and poor because there is, in fact, less difference. The discrepancy, the conflict, is essentially about entitlement. While the rich claim they are entitled to wealth and leisure, everyone else, by definition, is not. Without basic entitlements for everyone provided by the so-called liberal faction, the risk of liability (referred to as envy) is de-ontologized.

The deontology (the missing interpretation that defines the limit of a natural existence) allows for a more equitable distribution of the risk that "naturally" occurs (the risk of loss is fully assumed). America's founders, for example, demanded a more equitable self-determination of the risk extended from the king. They called this "equity" a "natural right." The king, of course, thought differently...the Revolutionaries were just envious of royal wealth, power and leisure (which includes the time to exercise power and limit the risk of loss that is fully assumed).

Currently, with the risk of loss fully assumed in zero-sum, American government is engaged in due process to determine (deontologize) the extent of entitlement which accounts for the debt (the risk) that accumulates without equitable distribution. With the public debt measuring the extent of the risk (the amount of potential inequity to ontologize in zero-sum), a $13 trillion denomination indicates an impending crisis (deflation) of colossal proportion. So, who is entitled to the debt? To whom shall it be commissioned?

Is it possible to pay the debt without starving?

It is important to understand that deflation is how distribution of the equity occurs and the Deficit Commission is dealing directly with an overvalued deflationary indicator that defines who is entitled to what, and when.

Secret Sovereigns

The risk is anything but uncertain from the inside. It is what "makes the market." Arbitrage (manipulation of the risk, which is what hedge funds essentially do), is dependant on what you know and when you know it.

Liability, by no coincidence, is also dependant on what you know and when you know it, as well as what you do and when you did it.

Long-short funds (hedge funds) intend to cause risk and profit from it. Their defense to having benefited by causing a detriment is that they did not create the risk, which is true. Risk cannot be created because it is constant. Risk accumulates and distributes (increases and reduces--i.e., the long and short of it).

Since they do not create risk but manage it to an effect, hedgers assume no liability for loss that is fully assumed (there must be a counterparty to assume the risk of loss that effects the profit). Counterparties arguably assume the risk of loss, knowingly and willingly exposed to the risk presented. Counterparties are at fault if they do not properly detect signals that indicate the extent, or probable effect, of the risk.

Hedgers, however, are apt to create the illusion of risk or no risk (the long and the short of it). Counterparties are then left to distinguish true signals from false signals, which is nearly impossible without a whole lot of luck or being on the inside. This has an affinity for secret, or exclusive, channels and networks that manage the risk into classes of profitable intelligence. The more money you have, the higher your classification. In the upper class, you have the element of certain value while everyone else is guessing so that the question is not if you will lose, but when. The risk of loss is fully assumed by the practical model, and that model is characteristically Hamiltonian, culturally infused with the propriety of privilege and the savvy of secrecy on the inside.

As long as causal factors are proprietary, privileged information, the element of secrecy, and surprise, easily derives value from the extension of the risk with limited liability. While the liability is fully assumed by the perpetrator in the form of a measurable benefit, confirming it was deliberately caused by a detriment is a conjecture afforded by the element of secrecy, which is defensible as a right to personal and private property.

In America, the right to private property is culturally sacrosanct. It is the legal, and cultural, standard that measures success, failure, and the liability associated with it. While property is a measurable quantity and the causal factors of its acquisition can be plausibly inferred, the right to privacy limits extension of the liability with the risk. The difference accumulates more value (property) than distributes with the risk. Thus, the quantifiable over-extension of the risk and the crises (the accumulated liability) that predictably results (the risk fully assumed).

Since the risk is fully assumed, the accumulated value has an exculpatory expectation, culturally valued as legal and proper. The accumulated value and the accumulated risk is fully assumed by the Hamiltonian model which, as we have seen, relies on government to visibly manage with highly technical means of elite, bureaucratic authority.

The cultural extent of the risk and the limit to the liability is a legacy of the Hamiltonian model and the American Revolution. We expect the rich to be winners because they are the elite--they are just naturally suited to manage the risk for everybody. The risk of loss is fully assumed by the model for both the elite and non-elite: the non-elite expect to lose value to the elite who are entrusted to use that "austerity" value to the benefit of the Sovereign (The People). Of course, the long and the short of it is the elite continuously test the limit of "the trust."

The elite get more back long by giving back short. The risk of loss is fully assumed by the model because the elite fully intend to always push the limit of the risk coefficiency which overextends the value. Part of that surplused value is given back short to satisfy the liability (the loss of "trust") which accumulates the value, and the risk associated with it, long. The "trust" is then re-novated into "The Square Deal, The New Deal, The War On Poverty, The Contract With America, Change We Can Believe In, The Pledge to America...," just to name a few.

The long, consolidated accumulation of the risk (too big to fail, for example) always ensures the need to conserve the accumulative value against the illusion created that there is a catastrophic risk of loss. This risk is "too big" to allow. It is tantamount to being able to prevent a devastating cyclone or earthquake...it would be wrong not to prevent it.

Hedge funds and private equity argue they are managing the risk to maximize liquidity for us all, and the best return on their investments (and thus the measure of its social utility) is to merge industries and markets. Although this "inorganic" growth is largely responsible for a debt burden that grows in a too-big-to-fail proportion, it is rarely mentioned as a causal factor when debt reduction gains political priority. Instead, the middle class is commanded to work longer and cheaper to balance the budget.

Who is it that can command the Sovereign (We the People) what to do? Only the Creator can command the Sovereign, right?

The people that create jobs, or not, by risking their capital, or not, command the Sovereign. Since they consider themselves to be the creators, they argue they can--they should--legitimately command the fate of the Sovereign.

Sovereign power is legally applied by popular consent of the governed, so passing legislation, for example, in which The People know what is in it after it passes is patently illegal. Thus, the Tea Party.

In the same way, mandating austerity (applying a detriment) to the benefit of creditors (too-big-to-fail industries and markets) is an application of sovereign power. Applied from the top down, it has questionable legitimate value, but now the congress can claim a populist, Tea-Party participation, and the Tea Party members will be rewarded with elite membership that operates beyond sovereign power. They will operate with what Sarah Palin describes as "that secret knowledge" that only a few citizens are privileged to consume (privilege meaning it is like private property--it is proprietary).

The proprietary desks of large banks, for example, operate to exact the detriment through highly secretive means. It is a direct application of power over the Sovereign (easily accounted for by reduction, and expansion, of net worth in zero-sum). It is an application of power the crown would not tolerate (the sum legally belongs to the sovereign power and the risk/reward is extended as it sees fit). Thus, these supra-sovereigns had to operate in secret to avoid the sanction (the consent) of the legal sovereign which typically extended the risk beyond the reward. The extension of the risk exacted austerity, or sacrifice for the welfare of the sovereign which is now The People operating with popular consent.

By definition, these supra (secret) sovereigns are not of The People. They are the elite and are obligated, like the crown, to care for their subjects. Part and parcel of the noble (feudalistically middle-class) obligation is to give The People the appearance of self-determination to both keep the peace and limit the legal liability when the application of the detriment becomes too obvious to be kept a secret. According to middle-class values (rejecting sovereignty of the crown that does not really care about commoners except to exploit them against their will), it is your own fault if you are not upper class. Everyone has equal opportunity to pursue happiness (property) and the liberty to determine the fate (the lives) of others--life, liberty, and the pursuit of happiness, but not necessarily in that order.

The new nobility that see to the needs of The People is a middle class that aspires to the liberty enjoyed by the upper class. That liberty, just as Palin describes it (and Pelosi demonstrates), comes with a sense of being included in the inner sanctum (all be it in the outer circle) of power, and in many respects, just being ideologically conservative has an elitist self-concept by referencing to the group. Aspiring to status is a highly co-optative quality that the Tea Party delegation, for example, is likely to succumb (and that progressives tend to demonstrate as the ruling class, exercising "the liberty" to limit the liberty of the non-elite--in their self-interest, of course--in true Hamiltonian fashion).

Secret channels and networks were used during the American Revolution to identify who was a patriot or a loyalist. Not only were many of America's founding elite members of secret societies to operate against the sovereign, but to operate as scientists (empiricists) free of religious persecution. Not only did America inherit a covert culture of elite authority, but a secular authority as well.

Being secular has not dampened the puritanical spirit, however. The first thing the new Democratic congress did in '08 was increase taxes on tobacco use (a sin tax). It was a huge tax increase on lower incomes, in true Hamiltonian fashion, in the midst of a strong deflationary trend! Eating, drinking and smoking too much is not busting our economy and causing huge budget deficits. Bailing out what is too big to fail (greedy extortion) is...and that is what We the People got from so-called "liberals" in priority. That is so bad, so exceedingly hypocritical and inimical, that even Republicans look good.

Puritanically, prosperity is a measure of divine (or natural) providence (an exculpatory ontology of purpose), keep in mind, and the progressives of the previous congressional delegation were sure to provide for "too big to fail" while The People got the oversized gavel on a healthcare plan they are mandated to buy with their declining incomes. Isn't it ironic how the fate of the masses is determined by providence of a better judgment they cannot provide for themselves only because of the income elite policies and programs deprive.

A self-anointed ruling class in a democratic environment necessarily takes on the aspect of divine (natural) right. Since a mandate is not likely to be the product of a popular consent, thus the need for mandates, the legitimacy of imposing it has to come from somewhere. Public policy takes on the aspect of being divinely inspired (inherently virtuous and naturally gnostic) but secularly derived by means of public process.

While the American Revolution disestablished divine right to rule, the notion was not completely lost. It synthesized into a more secular aspect. The elite were chosen by divine providence to be the fittest to rule and it is a moral hazard to allow the sovereign (whether The People or the crown) to determine their fate. Thus the practical concept of "liberty" in the conservative sense.

In order to conserve the "natural" order of things, the elite must be at liberty to promote the general welfare; and because it must be derived from popular consent, it is necessary to operate as secret sovereigns. This political-economic modeling survives today as we come out of the Great Recession, for example, questioning the legitimacy of elite information channels and networks. To the elite, operating in secret if not with an inscrutable visibility is a patriotic duty--a legacy inherited from the spirit of the Revolution--despite the legal establishment of the natural right of The People to self-determination endowed by the Creator (natural law with the empirical confirmation of a popular consent). The contradiction of values is reconciled by a conservative philosophy that, for example, has resulted in a two-party system in which The People have a choice (confirmation) that conserves (validates) the stakes over time--of, by, and for The People.

Take quantitative easing, for example.

The Great Recession resulted in a massive consolidation of wealth. The detriment exacted is massive, and if that is not enough, The People are being told they must sacrifice even more (make the accumulative benefit even greater) in order to achieve the general welfare.

Of course, according to elite philosophy, The People lack the secret, exclusive knowledge necessary to understand what is really in their self-interest. Like in Plato's Republic, it is necessary for the elite to secretly and inscrutably apply what The People really need, but with the appearance of legitimate popular consent (to falsely confirm the rule of the legal sovereign). That the state must bear false witness to keep the peace is not exactly the pinnacle of virtue but does provide, nevertheless, a practical measure of strength. The ends justifies the means (what a free-market mechanism easily reconciles, keep in mind, without sacrificing liberty, mind you, but by maximizing it).

Bailing out too-big-to-fail, economy-of-scale financial firms was not accomplished with overwhelming popular consent. Quite the contrary, it just adds insult to injury. The People are not so incompetent they cannot see that big, abusive firms are being profitably supported while The People go bankrupt.

While using the funding to keep The People from going bankrupt would keep the system solvent, it appears that the bailout was designed to extend the risk to The People and the reward to the perpetrators, which extends the crisis--unemployment in particular--to an expected value. Unemployment compensation will be allowed to lapse with one job available for every five applicants because it is an expected "value."

Since keeping The People solvent is considered a moral hazard, the assumed value of popular consent inherent to the elitist model (the public trust) has reached the critical limit. It is necessary at this point to appeal to technical, bureaucratic authority to arbitrate (i.e., arbitrage) the value of the risk into the expected distributive value the model assumes. (Remember that the model operates with the null hypothesis: the risk of loss is fully assumed and is discounted, or disconfirmed, to the extent of the distributive value.)

With the extent of the risk fully assumed, its distributive value is technically determined to trickle down (the defining characteristic of the Hamiltonian model along with a regressive tax burden). The central bank adds liquidity that has been consolidated into wealth, quantitatively easing the risk that the wealth will actually have to trickle down.

If the wealth has to actually trickle down, there is not only the risk of loss, but a confirmed expectation to distribute the value to avoid a liquidity crisis. The accumulation of wealth loses its too-big-to-fail, extortionist value if it is expected to reverse a deflationary trend and distribute the value consolidated. The distribution would confirm the elite hypothesis of a general benefit that the elite intentionally fully discount, to the best of their secret-sovereign ability, with the risk of loss always fully assumed by the model. The risk of loss is supposed to be successfully disconfirmed (discounted by the model), not confirmed.

Instead of the accumulated benefit trickling down to pluralize the system, the central bank provides the liquidity, conserving the accumulated value to buy up the expansion which causes the liquidity crisis that bankrupts The People. Quantitative easing occurs to conserve what is too-big-to-fail in a crisis proportion, with the risk of loss fully assumed.

If The People don't understand how conserving the detriment (like losing your job or your home, or just struggling to make ends meet) benefits them, it's because it's a secret. The secret to financial success is embedded in technical complexity so that when The People question the legitimacy of secret information channels and networks to make the market, it is too technical for them to understand how it benefits them, not that it doesn't (with the risk of loss fully assumed).

Secret channels and networks are nothing new, but the perception of it is. The elite model has become more of a debatable proposition than a natural fact of life (fully assumed). Despite the recent electoral gains of Republicans, systematically rigging the risk, and the reward, within secret channels and networks has become the risk to be avoided.

What you know and when you know it is becoming more a measure of culpability and liability than an asset applied to the general will from the top down. This reversal of a cultural sentiment (that the elite have the special privilege--the propriety--to manipulate markets to a general social benefit) confirms that the risk of liability and loss from the top down is, in fact, fully (ontologically) assumed.

Capital Distribution

Accumulated capital is expected to distribute. That failed expectation accumulates a diplomatic risk that, if allowed to persist, will require the legitimate force of public authority (it could be an FBI raid on hedge funds, or the invasion of Normandy). For the people who demonstrate that capital only distributes at the liberty of its holders, hording capital to the point of failed expectation presents the testable limitation of the risk.

A sovereign debt crisis does not present the same level of risk it did in the first half of the 20th Century because of monetary and fiscal tools designed to diffuse the risk in posteriori. The limit has been tested to yield a result that is not expected to be a popular consent for fascism or containment of a global communist threat.

The technology for managing risk in the gamma proportion is sophisticated enough to prevent falling into extreme elitist models that promise The People stability at the expense of freedom and prosperity. However, because the tools are intended to operate in posteriori, after the general detriment has been applied (distributing the risk, not the capital, as a public good), the general benefit is limited to stabilizing the means of deriving the accumulated value of the detriment (application of the risk value) in the future (its present value).

The effect is clearly dialectical: we went from general economic crises (classic liquidity crisis like we have now) resulting in general war, to classic crises resulting in post-hoc stability of the accumulated value and the risk it presents monetized into recessionary, rather than depressionary, trends. The proportion of risk value is synthetically conserved, but not without the thesis of diplomatic force and the failure of legitimate expectation having been technically transformed into a new means of evaluating the risk.

By careful and visible examination of what is a legitimate financial risk (antithetically limiting the liberty of the bourgeois elite since the American Revolution), we are now more concerned with detecting signals that indicate the extent of the risk. Where the crown would just send in the royal troops to contain the risk out of proportion (to protect and conserve the property of the crown in extension), we now discover and prosecute "channel" and "network" risks, for example, that intend to use the signals needed to assess and apply the risk as a function of private property (the extended value the crown lost to the revolutionaries).

The military, for example, wants to know what the risk, hidden in the proprietary black boxes of hedge funds, for example, really is. They want to know what kind of tools hedgers have hidden in their boxes and how they work, and since these tools are intended to craft the element of surprise to arbitrage the value of the risk, it is job one of military analysts to not be surprised. If there is one thing intelligence officers know very well is that the technicals are easily manipulated so that it is virtually impossible to detect what is a true or false signal. It is absolutely essential to detect any and all means of manipulation to manage the extent of diplomatic risk (to either prevent or prosecute warfare) with any predictive utility.

The means of diplomatic force are much more sophisticated now than general or even limited warfare. Fighting limited wars to prevent the threat of communism, for example, is a hard demonstration of power abandoned for softer diplomacy backed by assets prepared for the worst-case scenario. It is critical, then, for the players to have an accurate assessment of the risk.

Warfare distributes capital, it is no secret, and can be operationalized with domestic policy agendas. The war on terror, for example, operationalizes with global economic growth to increase the supply of labor available to the capital. This increases the level of risk on two fronts, both foreign and domestic which is, as federalists describe it, the exclusive, diplomatic domain of elite control. Any tendency to pluralism is countered by the need for authoritative control of potential conflict, keeping a practical and analytical elitist model in both a familiar and apparent (but devised) necessary condition.

An elite model is necessary to maintain civil order (and so doing causes incentive for civil disorder). It is an organizational tautology of conflict--a feedback loop that algorithmically predicts the stimulus and the frequency of the response. The feedback achieves a stable (predictable) instability that tests the extent of the risk by demonstration of power (like the crown did, which is why Jefferson called the Federalists "monocrats").

We see, then, how the elitist model utilizes both validation and verification for the application of power. The need for elite control is built into the model and the extent of the risk is verified by its demonstration.

The elite have learned not to allow the demonstration (the accumulation of capital) to occur (distribute) with world-wide conflict because the risk becomes extensively out of control and ontological; and the more ontological, the more likely risk will pluralize from consolidation into a more verifiably legitimate state.

The power elite of consolidated capital know very well that the cheap labor sustaining the current accumulative trend into the top 2 percent of incomes has bourgeois aspirations. Until those green-shoots mature, the risk accumulating in more mature labor markets is a threat to that accumulation of wealth. The threat accounts for the urgency to fix social security rather than distribute the accumulation to reverse demand deflation. This is a very significant miscalculation of the risk. The jobless, for example, are being told that they will have to work longer to retire, provided you have a job, which requires you work longer if you get one that does not competitively export to a cheaper labor market that consolidates the capital in the form of undistributed wealth.

Without the expected distribution of the capital, The People (the sovereign) are faced with a no-win scenario, and telling them that they will need to pay a consumption tax with the longer working time is an overextension of the risk that has very questionable intellectual value. Thus the need for the force and legitimacy of public authority fully prepared for the worst-case scenario.

The reason Wal-Mart is not allowed in New York City is because it is a threat to civil order. The risk is too high. With that high risk would be a high reward for Wal-Mart, but that reward would not sufficiently distribute to support the rents. Sure, there would be plenty of inexpensive, cheap-labor goods, but massive unemployment and deflation. The risk to the community is calculated to exceed the reward, averting the accumulation of risk (the consolidation of value) into a crisis proportion.

The risk is subordinate to the general welfare.

In either case, whether order or disorder in priority, whether pluralism or consolidation, the constant value is the general welfare. Hamiltonians argue, for example, that equitable distribution of wealth is a risk to the general welfare because we then lose the capacity for identifying those who are most capable of managing the risk. Consolidation of industry and markets (reducing the free market to an economy-of-scale efficiency), then, indicates the proper and efficient management of the risk by those who are most capable of reducing, or leveraging it, to their advantage.

Pluralists, on the other hand, argue that elites are the risk to be managed. Whether it is fascism, socialism, communism or whatever "ism," it is the power elite that presents the risk to be managed.

Without elite management of the risk, it is otherwise managed by The People toward a peaceful and prosperous end (the empirical, popular legitimacy of a free-market ontology, continuously tested and re-tested so that trust is a function of verification). Rather than The People being subordinated to the elite, the elite are subordinate to The People...to the Sovereign (the risk that the elite consider counter-revolutionary).

Natural subordination of the risk to the general welfare is subjected to all manner of philosophical interpretation, but they are all objectively concerned with its accumulation and distribution toward an expected, measurable value (or the possibility of its modification). Failure of that expectation, whether dominant or subordinate, requires the force and legitimacy of public authority to manage the risk the failure represents.

Accumulated capital is expected to distribute, and if it does not, the legitimate force of public authority is a fully expected value of the risk assumed. For a power elite, the assumption of loss is modeled into systemic risk, like the systemic risk that has recently led to bailing out entities deliberately designed to be too big to fail. Deconsolidation--distribution--of the value will successfully manage this risk to the fullest satisfaction of the Sovereign...The People.

With the risk of failed expectation fully discounted in priority, we can be well on our way to the peaceful and prosperous pluralism we all know we should have but are denied with the overvalued expectation of elite authority.

That failed expectation accumulates a diplomatic risk. The force of public authority gains expected value against that risk, and since the risk supports the expected value, the elite naturally conserve the value without fail. The practical, organizational model of "too big to fail," for example, that technically supports consolidated capitalism causes crises that demands elite command and control. Thus, it is an expectation that is assured not to fail, giving it the appearance of repeatedly demonstrating a confirmable success when it is really a systematic means of ensuring failure and the cyclical, zero-sum value of the risk.

The assumption of risk is modeled to value at 100 percent of probable loss. Risk is then expected to be managed, discounted, to the fullest extent of that value--the risk of loss, that is, is fully assumed with the force and legitimacy of public authority. The effect is a practical demonstration of power that recursively confirms (conserves) the value of the risk without failure of expectation, which systematically limits the accumulation of diplomatic risk by popular demand.

Capital that only distributes at the liberty of its holders as a demonstration of power (only after having gained favorable tax policy along with spending cuts that do detriment to the lower classes, for example), presents a reoccurring detriment (an accumulative risk) that falsely confirms the need for elite authority. Hording capital to the point of failed expectation presents the testable limitation of the risk that indeed, by its expected reoccurrence, gains the presence of probable loss.

What Does It Measure?

Isaac Newton said science measures causes unknown. He could measure the effects of gravity, but could not identify exactly what it is.

Today we identify gravity as an electromagnetic force, but we still speculate as to what causes it. We can create an electromagnetic field with dynamic, physical processes, but that does not mean that gravity is being caused, just accumulated and re-presented.

Risk, like gravity, is a weak force that accumulates, and distributes, with capital. Like gravity, when risk is critically overaccumulated, the capital collapses under its own weight. It is the charge of political-economic analysts to know when that critical mass (the gamma-risk proportion) has been achieved, and how to avert crises if not prevent them. Of course, that means having the tools to measure the extent of the risk.

Newton and Leibniz invented the calculus to measure causes unknown, and today it is also used to quantify and manage the extent of the risk. If you are a military analyst, for example, looking to predict the probability of political-economic crises that results in civil disorder, you need to know how financial engineers "make the market."

How the market is made (the modeling used) determines the probable extent and timing of the risk, as well as the probable indicators and timing of stability. This is all a fuction of signals intelligence that the military is currently engaged and that our modern-day federalists are looking to operationalize with the threat of international terrorism. Beware of this trend!

What is being politically measured with the signals being detected is timing correlated with rhetorical pitch and policy action, mobilizing the use of military assets in support of domestic policy that increases the gamma risk. Understand that this does not mean direct use of military assets to enforce a policy agenda, like the bonus march during the recession that followed WWI, but indirectly.

While analysts were warning of the elements put in process to accumulate the risk into the Great Recession, for example, we were distracted with the war on terror. That legacy lives and can easily result in the Great-Great Recession without the attention of The People focused on public policy that deconsolidates the risk.

Terrorism that exports from Eastern monarchies forces The People's attention into achieving military security. Economic policy then gravitates to a high level of instability. It becomes a high-risk/reward environment that will, for example, support the risk premium for a barrel of oil (which includes a weak dollar) which, in turn, supports the crisis proportion and the need for elite authority to politically manage the risk over The People.

The Tea Party caucus will ally with the federalists to support what Jefferson called counter-revolutionary, "monocratic" tendencies. It will be hard for the caucus not to be captured by the gravitas of accumulated political power. It will be much more difficult for The People to keep the caucus on course to alleviate the immediate source of our insecurity by realizing what the budget deficit really measures is the detriment caused by the Republican economic agenda, forcing us into the Great Recession.

Republicans would like to convince us that risk analysis measures causes unknown. We can measure the effects of risk, but cannot, without speculating, identify exactly what the source of it is despite their agenda having clearly accumulated risk into the crisis proportion that we now suffer.

We've gone from tragedy to farce which, if you are a federalist, means it is time to ensure the civil order from the top down in priority. Federalists will be reminding us, meanwhile, that our founders ensured a heritage of civilian authority over military assets to protect the sovereign (The People) from abuse of power and from threats to liberty both foreign and domestic.

When military assets are employed to manage the risk directly or indirectly, what is the extent of the risk being measured?

Disabusing the Hamiltonian Model

The Hamiltonian model operationalizes with the risk of loss fully assumed. With economic indicators in a confusing, conflicted array of sudden reversals and unexpected correlations (signaling the risk is going gamma), analysts that are concerned with tracking the extent of risk are compelled to consider worst-case scenarios.

Considering the extent of the risk is going gamma (a combination of a strong deflationary trend, a binomial political system, and strengthening global economic tension), and considering gamma risk is ontologically unavoidable without throwing out the model that assumes the risk, the military, for example, is predictably preparing plans to react to risk accumulating into a political proportion of general crisis.

While this is not a military problem, it is an economic organization problem, operationalizing military assets with conserving the risk assumed by the working model is a necessary condition for securing the general welfare. The model unavoidably relies on the force and legitimacy of public authority (with the risk of loss fully assumed).

The current working model needs to be disabused: the general welfare ontologically expected and verifiably legitimate with the risk assumed to the fullest extent (with the risk of gain fully assumed).

If the risk is fully extended in priority (deconsolidated), the crisis proportion abates. If the risk, however, remains consolidated with an ever-extended proportion of debt, the crisis proportion continues to accumulate for everyone. Controlling the extent of the risk is then a function of the general welfare. Risk is not a privately owned commodity to be privately managed by We the People if the risk is assumed consolidated in priority.

While the Tea Party is expected to vector debt reduction toward middle-class gain, if military analysts were to ask a political-economic risk analyst if the gamma will reduce, the answer is: Without accepting a new model that does not rely on an accumulating debt burden in the middle, the gamma risk is more likely to increase.

Quantitative Leveraging

To turn "the risk" into a discrete, manageable quantity, it is the Fed's job to conserve the value of the accumulated risk in addition to keeping inflation low at full employment, (i.e., manage the extent of the risk).

Since managing the risk is modeled with the Phillips Curve, which assumes full employment only at the risk of high inflation, it reasonably follows that increasing inflation will cause employment. Thus, inflation distributes the risk through the Fed's open-market accounts, keeping close account of its distribution to effect economic activity.

Supposedly, monetarism is a tool for economic expansion--to monetize (leverage) growth, not to cover the debt. One unit of monetary expansion is supposed to yield one or more units of growth to cover the debt. However, what we have is money leveraged ex nihilo to pay the debt in the absence of sufficient growth (employment) to pay the debt.

What is being monetized is the ability to make a profit without domestic employment or growth. Unemployment is projected to be high long term while we prepare to reduce government spending and increase the age of retirement. This presents a tremendous risk to the resulting accumulation of the capital. If it belongs to the wealthy, then they have the liberty to distribute it any way they want. Their property cannot be deprived without due process--the tax code, for example; and if the distribution is determined by one-person-one-vote, the top two percent of income distribution don't have a chance. The top will assume the risk by force and legitimacy of public authority, so there has to be a way to leverage this quantity of accumulated risk into the lower classes.

Conservatives argue, of course, "we can't keep spending money we don't have" which, of course, means we are going to have to spend the money we do have (at the top), or monetize the debt. It is the Fed's job to do the latter and redistribute the risk with a leveraging scheme (with the risk of loss fully assumed) called quantitative easing.

QE maintains the debt without the risk of equity distribution, that is: it pays the debt by extending the risk. The risk of loss is extended to treasury debt and average incomes that are fixed into low-risk returns.

Keep in mind that the very means of QE as a macro-leveraging scheme is via treasury bonds. That means that the low-risk return is transformed into a higher risk of depreciation, making them assets with a high risk of low return (which is accomplished by "making the market"). The bank is using the depositors funds against them, setting them up as the counterparty to take the risk hedged into a counterparty detriment. This is the leveraging scheme that caused the Great Recession; and if we keep it up, without paying the debt from money that has been accumulated in the private accounts of the rich, it only gets Greater.

Since a Great-Great Recession accumulates more risk, the leveraging scheme has to be equally Great. So, some conservatives suggest the Fed drop its dual mandate and concentrate on economic stability. If we don't, our nation will go bankrupt.

Alexander Hamilton, America's first treasury secretary, devised a leveraging scheme that would perpetually keep our nation from default. Cleverly, the trick is to never be solvent. It does not matter if there is not enough revenue to pay the national debt as long as the debt is paid when it comes due. While, technically, the nation is bankrupt, it never defaults.

Of course, there is a significant amount of austerity (inherent risk) built into Hamilton's leveraging scheme. There has to be a scheme (a model) for determining who takes the risk of loss, fully assumed.

Since the lower classes benefit disproportionate to the amount of capital they invest, and risk, with a wage earned and paid in full, it is more important to conserve the means of their employment (the capital) and tax the lower classes to pay the debt as it comes due. Thus, the more capital accumulated, the more security extended to the lower classes to pay the debt without default.

Hence, paying taxes is lower class; and as it was with the crown, the upper class determines the rate of interest (the extent of the risk), and the lower classes, especially the middle class, pays it.

Thomas Jefferson, strongly opposed to Hamilton's Model, branded Hamilton and the Federalists "monarchists." Jefferson said Hamilton's scheme had a whole lot of room for abuse that the Revolution was intended to prevent, and Hamilton's conservative philosophy survives to this day having accumulated a whole lot of abuse, but without the risk of default.

QE is an extension of Hamiltonian modeling, providing a lever for extracting austerity from the least able to pay. The value is extracted from the masses in their own self-interest which, according to Hamiltonians, The People are not capable of knowing.

Who understands QE, MBS's, SDO's, CDO's, CDS's, or SIV's anyway? Apparently, the rich don't have to know how it all works, just that it works, and then it is on to mitigating the risk... playing the game of politics and figuring prominently on the social registry of popular culture which now includes schemes to get rich quick with all that fast-and-easy money out there. One of those pop schemes flipped housing prices into a catastrophic detriment, leaving homeowners with liabilities that far exceed their assets in true Hamiltonian fashion.

Jefferson was right, the Hamiltonian model provides more than enough incentive for abuse with less than enough ability to check it if we let wealth and power consolidate into the hands of the people driven by the animal spirits of greed and domination.

Politically ensuring a free-market system ensures both economic stability and productive capacity.

Keeping industry and markets from consolidating protects us from the tyrannical, extortionist tendencies of too big to fail and operationalizes animal spirits into an incentive for productive capacity (employment with low inflation) rather than operationalizing customers into a counterparty risk and detriment.

The Fed and the Treasury will serve us ALL well by ensuring pluralism first instead of conserving and protecting the accumulated value of the risk. Conserving a fully assumed risk of loss ensures liquidity crises and a continuous accumulation of debt that fits the Hamiltonian model of political-economy.

It is time to employ a model that does not operationalize with the risk of loss fully assumed, but the general welfare ontologically expected and verifiably legitimate with the risk assumed to the fullest extent.

Nothing's Easy

As we come to realize that QE is one huge leveraging scheme, we have to question the rationality of such a huge accumulation of risk in addition to the 30-1 ratios that privately enterprised our economy into an abysmal crisis proportion.

Money from nothing is easy, right? Just create an account and start trading. It's pretty easy till we get to the austerity part of it. Nothing's easy then.

Enterprising at 30-1 effectively increases the money supply 30-1. Thirty times the risk proportionally accumulates somewhere. The trick is not to let it reside in your account. The best place to dump it is at the Fed who will print the money to accommodate the wealth over-accumulated from the over-leveraged risk and quantitatively ease the liquidity crisis you have caused.

Since the economy will grind to a halt without easy money for everybody else, the risk will eventually accrue to your account. It is necessary to extend the risk (debt) to keep the economy from a depressionary level. If that happens, there is no one left to pay the debt but you. The risk to your low tax rate that was supposed to ensure growth accumulates exponentially. If you are stuck with a higher tax rate (a strict liability of causing the accumulation), you are prepared to punish voters with even less liquidity, claiming it was stolen by the government and liberally spent on bridges to nowhere.

Although the goal is to exact austerity from the lower classes (your margin of profit without growth), the data indicates you have reached the limit. You can no longer exact the detriment with any measure of stealth, risking the margin by exposing its accumulation as a deliberate zero-sum (representing a causal relationship between the detriment and the benefit rather than a correlation that can be plausibly explained by spurious and confounding variables like government spending and regulatory interventions). The risk would then re-present as a detriment to you (increased probability that you will have to pay the debt--the liability).

A government commission to study reduction of debt is in order. That reduction, of course, is to reduce your risk in the public interest, shifting the risk to the lower classes with spending cut three times the rate of taxation.

The disparity will keep us solvent, you contend, with the force and legitimacy of government authority. We will be able to continue borrowing from exporters to buy their cheap-labor imports, supporting the price of commodities (our exports, providing a hedge against inflation--QE, for example--and the declining rate of profit) while resisting a strong dollar.

Now you can claim, with stealth, that the weak dollar causes headline inflation which strengthens the deflationary trend. This creates a whipsaw effect (a stealthy profit margin exacted from austerity), increasing the demand for debt (income reduction) while debt is being cut to reduce it. Now, however, the contradiction (the so-called paradox of thrift) is so overwhelming, stealth is not easily accomplished with everyone looking for the cause of the problem (what is reducing lower and middle-class incomes, and why, which increases the demand for debt, now being stealthily disguised as QE).

There needs to be a technical distraction--a stealthy means of indirectly exacting austerity from the lower classes, allowing you to alienate yourself from any risk of liability (the risk of being the technical cause of the detriment exacted).

QE fits the bill.

Nothing is easy, right? The quantity zero is just whatever you make it. It's easy to create your own reality, just start from zero and fill it up with whatever you want. It's the hallmark of freedom--liberty--to do whatever you want without risk of liability but, of course, you are just kidding yourself. Nothing's easy, right? You have to work for it.

Exacting austerity is hard work, and I hear it pays well.

Finding the Limit

Critical to any analysis is to recognize the limitations of the data. Identifying, describing, and explaining the limitations is where interpretation of the data takes a speculative dimension and tends to reduce to the assumptions inherent to a theoretical and practical model.

Political-economy is replete with an inability, if not an unwillingness, to technically identify the limitations of the data. This is mostly to avoid the risk of throwing out a model which may mean throwing out the principles, or assumptions, inherent to a model; and since political-economic arguments are usually based on immutable, absolute truths, these principles cannot be modified without reforming the model. Arguments tend, then, to be rhetorical and not scientific, refusing to recognize the limitations of the data where the truth is waiting to be discovered.

Philosophically, this discovery of latent truth is called "the thesis of independence" in which reality, Aristotle argued, is independent of perception. The implication to be avoided is that truth is not whatever we want to make it. (When hedge funds "make the market," for example, the risk is not reduced, it is transformed and will re-present in another form.) Our perception of things is immutably either true or false, right or wrong. The scientific method, however, is more phenomenological (dependant) because reality is based on perception (the ability to detect signals that indicate knowledge--the phenomenon--of the truth). That is: reality is only as good as our perception of it, which could very well be limited by the interpretation of the data (the signals that are, or are allowed to be, detected). In other words, without the scientific method, we may, or may not, have the truth, but we would never know it.

Kantians argue it both ways, much like Plato did, postulating that truth can be known by a critique of pure reason, with science (practical reason) verifying what we already know. For Kantians, moral truth, for example, can be logically reduced to "categorical imperatives" that are verified by practical application (verifying what we already knew).

According to Emanuel Kant, there is no limit to knowledge. It is as unlimited as our imagination, which was verified by Einstein's conceptual modeling in the 20th Century, and suggests today's M-theory in which probability is infinitely extensive but quantifiably limited (like the example of the hedge fund's perception of the risk being quantifiably limited and local but extensively unavoidable).

Despite Kant's epistemology, we may have truth but never know it without verification, which is the built-in rhetoric--the universal ethic of thinking, the immutable rule of reason--that governs the scientific method.

Models conceptualize what is believed to be the truth. When applied, however, the results (the signals detected) are likely to modify the perception. If the model is not changed to represent the knowledge of it (the phenomenon), then the "reality" becomes a function of intentional error (teleology). The phenomenon is the reality that philosophers like Hegel and Marx described as "alienation." Even though we may "know" the reality is "not" true (the null hypothesis) in a Kantian way, nature dialectically reconciles the discrepancy (the error), reducing the cognitive dissonance by our choosing the new model, nulling the hypothesis in posteriori (ontology).

Truth just ontologically is. It does not care what our perception of it is and so we are determined to a natural existence despite as we may to teleologically make our own reality in spite of the ontological truth.

The model of capitalism, for example, assumes a free market. The model assumes that capitalism accurately represents our natural existence and is empirically measured by free exchange in the marketplace in which our dollar votes democratically choose the difference between right and wrong, extending down to each and every individual. Winners and losers are ontologically selected (determined) by collective action extended from individual tastes and preferences.

If government chooses winners and losers with tax and subsidy, the system is teleologically corrupted. The model is no longer ontologically true (a free market). Winners and losers are no longer objectively determined by the legitimate logic of collective action and the model has reached the limit of the available data that determines the legitimacy of the risk/reward. The data is now interpretatively limited to validate, rather than verify, the model, which essentially disconfirms it.

The extent of government measures the extent of a free market and the extent of the risk (the alienation that Hegel and Marx describe). The Tea Party caucus detects the extent of the risk, for example, demanding we go back to a free-market legitimacy. They detect signals (budget deficits, for example) that indicate crises that they know by experience reduces the income required to have equitable dollar votes in a free market.

Marxists argue that there is no going back. The evidence, however, does not support that hypothesis.

Despite an observable dialectic, history is not perfectly linear, and a linear projection indicates a marketplace that is so consolidated (the banking system, for example) that individuals have progressively less choice for collective action. It can hardly be considered an improvement despite what progressives may argue in the name of the public good, rendering a public policy environment that is anything but liberal as "liberals" are apt to allow for continuous consolidation of power to control risk (bailouts, mergers, and expansion of debt to provide for our social security) in a characteristically conservative manner (what Marx called "anti-socialist socialism").

We have reached the limit and the Tea Party caucus is an indicator of that arrival. The freedom to choose is not ensured if we have to do business with firms that are progressively more consolidated. Sure, that accumulation of power is destined for a distribution, but that correction does not have to be catastrophic. We can accept the limitations of capitalism and deconsolidate the risk as the primary function of government authority, much as Adam Smith described it economically, and Thomas Jefferson politically. These are not ideas limited to a historical time and space.

The model of democratic pluralism is a model that is still unfolding to reveal the reality of a natural existence that is not limited to the better judgment of elite authority. It is not necessary to sacrifice liberty in order to attain it.

Thomas Jefferson said revolution is a continuous process of improvement as long as power is not allowed to consolidate, much like Adam Smith described it.

Dialectically, the antithesis of directing risk into continuous consolidation is to reverse the trend and deconsolidate. According to Hegel, for example, it is the rational action to take, and what is rational is what is verifiably real (universal, immutable truth); and Kant adds that it is therefore a moral imperative. Hegel argues we are determined to make the right choice because what is rational (dialectically determined) is really not a choice at all. What is rational is immutably real--either true or false like one-plus-one always verifiably equals two. Kant agrees, but contends that choice is not limited to the dialectic--we can choose to be irrational and accept what is not morally imperative, or conversely interrupt the dialectic and project rationality into the future to give truth (reality) the currency of present value (what is and always will be, like our "inalienable" rights, formulated into an ontologically confirmable hypothesis).

Jefferson and Smith tend to agree with Kant while Marx tends to a dialectical determinism. Marx, though, admitted that it appears to be a "soft" determinism, recognizing that we don't have to wait for catastrophe to do the right thing (confirmed by avoiding potential disaster).

Pluralism, according to Smith and Jefferson, is a way to have freedom (the reality of choice) without sacrificing ontology. A free market, for example, puts ontology to work for The People. The dialectic occurs in small packages. Risk is not allowed to accumulate into a crisis (gamma) proportion because it is micro managed by each and every individual according to his or her moral imperative, forming a collective ontology We call a free and open society (the classic concept of liberalism).

Philosophy has everything to do with technical analyses. The assumptions that go into analytical models determine the limits of the data toward a predictive utility. Assessing risk, for example, is a highly philosophical endeavor.

The hedge fund example illustrates the need for philosophical insight to determine the extent of the risk. If analysts consider dialectics to be a lot of Marxist bunk, then they are unlikely to see that risk is not being created with financial leveraging tools, but is being reshaped. Risk is not being created ex nihilo, but accumulated. Then, of course, the complaint is that risk is too accumulated, but because it is not considered to be dialectic, but an expected risk-ontology of the business cycle nevertheless, they do not consider themselves responsible for the full value of the risk that comes back to haunt them to exact austerity in the same measure.

Ensuring the pluralism of a free-market system in priority exacts this austerity (the full value of the risk of loss fully assumed) in small (non-economy-of-scale) units. Factoring in the trillions and trillions of dollars spent over the past two years to manage the accumulated risk, with more to come, the economy-of-scale efficiency is decidedly inefficient on a colossal scale. Nevertheless, we will ideologically (philosophically) ignore the technicals and limit the data, as well as its interpretation, to conserve the accumulated value of the risk in a crisis proportion. That proportion, however, as I have endeavored to describe and explain on this web site, is ontologically gamma--it will unavoidably emerge with a power and determination that needlessly condemns us all to the fate (the inevitable austerity and insecurity) of ignorance and irrationality.