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.