Deflationary Risk

When the risk is too consolidated, there is deflationary risk. Without a distribution (deconsolidation), the risk becomes extensive, or systemic. An extension of the risk occurs, distributing risk without the reward. The economy is in a defensive (crisis) mode with no one willing to "take the risk" simply because there is no risk to take--it is consolidated.

Entrepreneurs seek protection from the detriment extending from the consolidation instead of seeking growth: cutting costs, hording cash and labor, which makes the risk more extensive. Thus the old saying, "you can cut your way to a profit but not growth," meaning a distribution is in demand but accumulation is being supplied (commanded to apply, extended from the consolidation of the risk).

The oversupply of risk meant trouble for the king who wanted to know the extent of the risk (the assessment of value). Since the risk is consolidated into the sovereign power of the crown, the king not only owns the assets, but the liabilities--and to what extent.

Hedging the systemic risk caused by the crown (the accumulation) meant distributing reward with the risk. The market value then determined whether entrepreneurs would take the risk (implying consent of its source being from the crown's authority), which then delimited the extent of systemic risk (the king's liability).

American colonists took a big risk to challenge the crown's legitimacy to rule, to command, the distributional coefficiency of risk and reward. The crisis that occurred was a critique of sovereign power--it was more than deflationary (economically defensive), it was revolutionary (politically offensive). Thus was born the political-economic extension of the risk in a consolidated form.

We now face the spectre of global consolidation where the market is free from the sovereign power--the natural laws--of The People, providing an operational gestalt of supra-sovereignty, and global extension of the risk.

Without deconsolidation of the risk, the need for government just gets "bigger" from here in order to control the over-extension of risk.