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.