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.