Creating Risk Exposure

Creating risk exposure relates to accumulation of wealth, consolidation of risk for distribution, and limiting the risk of liability.

Let's say you are an investment bank, Soldem Craps. You are looking to benefit by causing a detriment without liability. You want to avoid the risk that will retribute the value back to the risk taker--the party that unassumingly assumed the risk by your risk-transfer devices, creating a zero-sum, high-yield gain without risk to you, defying the high-risk/high-return hypothesis. It is your job to turn private property (like savings) into capital for gain, and so you "make the market" to create the risk that causes the reward.

Pleased with your record profits, having sold 'em plenty of crap, everybody gets a bonus, having turned capital into your gain (private property). While you built a lot of houses, the accumulation of capital into private property (your savings account) has reduced demand and left millions of Americans with all the risk in the form of a deflationary trend. You now look to gain favorable tax policy in order to turn your private property back into capital, but it is really so the accumulated value will not be "confiscated" and retributed to the risk "takers" which will reverse the deflationary trend that gives the risk the current value you want to conserve.

You pollute popular media with supply-side propaganda, vehemently arguing tax cuts for the rich or the economy will get worse. There is no incentive to turn private property into working capital for economic growth (adding supply to disinflate rather than deflate prices) if government (the sovereign power) is going to tax away most of the return (the property) to be gained.

There is plenty of supply, however, just no demand. There are plenty of empty houses for sale, and homeless people to occupy them, but they are unaffordable at any price (because potential buyers were given all the risk, and thus they are considered "high risk" and not creditworthy).

The supply-side argument is absurd to even the most casual observer, but it is not clear why. If the "risk takers" know why (and keep in mind that "taking" implies consent if not intent), the risk goes dangerously gamma, and according to your elitist hypothesis, mob rule is to be avoided at all cost. So, it is necessary to consolidate the risk for redistribution, which is your "market-making" specialty, leaving the means of power (accumulation of value) intact for elite rule.

Considering your capital-marketing practices are a public menace (increasing "the risk" for mob rule and a possible Reign of Terror), you fully anticipate being regulated, but that's alright, you have plenty of lobbyists on retainer and only two parties to contend with full of politicians that aspire to be wealthy members of the ruling class, if they are not already. No problem!

Since you "made" the market, the only risk exposure left to you is gamma--the risk that cannot be avoided, only recycled and transformed into beta risk, which you use to magnify your profit (your private property) back into capital to arbitrage (recycle) the value of the risk you have created. Where does that added value come from?

While you have accumulated wealth, you have not created it in proportion to the profit that you "made." The disproportion causes a demand crisis--there is plenty of money, but not adequately distributed. As the economy cycles into a deflationary spiral, the capital you have recycled is being evermore exposed to the gamma-risk proportion. It becomes apparent that the profit (wealth) has been accumulated in a zero-sum proportion. Now you have to testify to the social benefit of your accumulated wealth in a public forum.

Since the accumulation of wealth is an honored profession, being called to justify the accumulation is a symbol of status, a mark of achievement to be entrepreneurially aspired. You do not fear the gamma exposure because you are protected by moral imperative--the accumulation of wealth. It is confirmation of an honorable achievement as much as it is a public scourge.

As long as the inquiry is focused on the accumulation and not the creation of wealth, the issue is debated in a safe mode--your private property is constitutionally protected and public policy is focused on turning your private property into capital. The value of the accumulated risk is conserved in a gamma proportion to be recycled, exposing everyone else to the gamma risk.

As long as the political apparatus is organized to protect your right to your private property--a redistribution being next to criminal, you are protected from the gamma risk. It is essential to correlate the accumulation of wealth with the creation of wealth in order to conserve the value of the risk you have "made" and will continue to make and consolidate in market form.

As long a you are the source of the risk (made possible by the accumulation of value and reduction of demand), your exposure (the risk of liability) is limited to anything and everything but a deconsolidation of the risk. You may pay huge civil and criminal penalties for all manner of abuse, but you can afford it. You are shielded from the risk of liability to the reward because you can and will be held accountable for damages on a divisible basis in a court of law. The systemic risk you create for an indivisible public consumption is a political, not a legal, matter to be sanctioned by popular vote, which is binomially determined and bureaucratically managed by highly technical means well beyond the understanding of the non-elite.

Good job!

Everybody is exposed to "the risk" but you!

You deserve a raise!

Anyone that has not achieved elite status is exposed to the liability of the risk. Non-elite investors, for example, must have a way to turn their savings into capital without being exposed to the risk created by consolidated capital.

The only way to do that is to deconsolidate the capital, accumulating wealth for the nation created by a more divisible distribution of the risk.

It is time to create and accumulate wealth, not risk!