In recent testimony before Congress, the chairman of the Federal Reserve said we have the reserves to pay down the public debt and reduce the budget deficit. We have the money to reduce debt, Bernanke said, the question is whether we have the political will.
According to Bernanke, current monetary policy is designed to accommodate debt reduction without increasing the money supply. The money available for debt reduction, then, as he suggests, is willfully held in reserve and politically motivated (existing in a gamma-risk proportion). It is the Fed's charge to manage the reserve (the accumulated risk) without political motive, coaxing the accumulated wealth into productive capital.
The Fed is empowered to use the reserve to charge the economy with economic incentive. The incentive, bureaucratically derived, provides jobs and consumer demand (inflation: low bond prices at a high rate of economic interest). It provides the demand needed to resist falling prices as income rises at the top margin (deflation: high bond prices with a low rate of economic interest that accommodates the demand for debt).
Debt reduction, politically motivated, poses extreme risk for an already beleaguered middle and lower class who need an economic solution. The current solution, binomially determined, is to politically exact economic austerity (exceeding a level of tolerance that a free market will not abide). While Democrats pose to resist the austerity, Republicans anchor the resulting political compromise from an extreme position. The upper class wins, and everyone else loses. It is a political solution that will increase the demand for debt while the call is for its reduction.
The instability of this contradiction is what Bernanke is referring to. Anchoring is a gaming tactic that will conserve, and horde, the value needed to achieve growth while reducing debt. With the needed value conserved as wealth in the upper class, the lower classes must submit to austerity to share in that wealth (to convert it back into working capital). The systematic alternative (the political will binomially determined) is to realign with Democrats. The inherent risk of liability associated with consolidation of wealth (the risk of loss fully assumed) is then systematically accumulated into public debt (raising the debt ceiling). In true Hamiltonian form, elite authority masquerades as the will of the people, appearing to achieve the general welfare with the consent of the governed, falsely reducing the gamma risk to a proprietary (alpha) proportion of self-determination. The risk, however, is really being managed in the aggregate by a bureaucratic elite, resisting the declining rate of profit which is inherent to consolidation of the wealth and fundamentally defines "the risk" (the loss fully assumed in the alpha dimension).
Remember, in order to make a profit from the risk, there has to be someone there to buy what you are selling. There has to be a counter-party to the risk. Binomially, the political will is systematically determined, always providing a counter-party to the risk, delivering economic detriment to The People (the non-elite) with virtually no liability. Accountability is sufficiently absorbed by the political process to ensure economic instability (the risk to be arbitraged), and the outcome is patriotically characterized as the noble heritage of The Revolution to be conserved at all cost lest we risk the foundation of civil society.
Funny how the correction for what ails us is always what ails us. The value of the risk (the risk of loss) is always conserved (fully assumed) and politically delivered to the counter party.
The fix for the fix is to demand an economic solution--the political will, as Bernanke suggests, to ensure a free and unconsolidated marketplace which requires a distribution from the accumulation to pluralize, rather than consolidate, industry and markets. Using the accumulation (the huge horde of corporate cash and personal wealth) to merge industry and markets is anti-free market (anti-American dream).
Bernanke favors a more progressive tax code (allowing the upper-end tax cuts to expire) because he knows it is necessary to open what is otherwise an increasingly closed market that supports a deflationary trend, causing the need for debt. The question is less about whether we are capitalist or communist or this or that, but whether we are free, and without a free market, freedom is lost.
Tuesday, January 11, 2011
Saturday, January 8, 2011
Assuming a Proprietary Position
For small investors looking to not rely on social security for retirement, investing has resulted in reduction of net worth; and at this point, of course, average-income Americans are being told they must work longer and for less money. Let's just say that small investors are expected to assume their natural position, and like it.
According to conventional economic theory, the loss of net worth (and thus the increased need for welfare) is a legitimate function of freely taking a position in the marketplace and taking on the risk "posed" by assuming the position. If we didn't want to take the risk, then we should not have posed in that position.
Even after having been thoroughly violated, the risk seems to be permanently posed in, you know, that position.
Without being too risque, but to offer an apt description, let's just say that average-income Americans have been royally turned. According to conventional wisdom, however, average Americans knowingly and willingly assumed the position.
Of course, the exculpatory assumption of the risk is false. Much of the risk was assumed in the dark. Victims were not fully aware of the extent of the risk until it had been fully assumed, and the public is still not fully aware of the extent. There is much more risk that remains to be assumed (dark marketed). At this point, the public is being politically prepared for the extended application of the risk which is modeled to be fully assumed but not necessarily assigned by visible means of tax and subsidy.
Who will be assigned the fullest extent of the risk is to be decided in the current political process, and it is no coincidence that the process is currently being defined as having a right-wing bias. The compromises that occur will be political mitigation of economic risk (i.e., mitigation of the risk in the gamma proportion).
Elite theory postulates that The People naturally assume the proprietary position they are in. It is foolish to assume the position of risk and expect not to have to take it. Although small investors didn't see what was coming, they should have known that by putting their net worth out there, they were likely to be stuck with the risk (and size, especially when it comes to investing, does matter).
So, with the risk of loss fully assumed, The People are fully expected to assume the proprietary position...but not without all the good taste, civility and propriety of due process, of course.
According to conventional economic theory, the loss of net worth (and thus the increased need for welfare) is a legitimate function of freely taking a position in the marketplace and taking on the risk "posed" by assuming the position. If we didn't want to take the risk, then we should not have posed in that position.
Even after having been thoroughly violated, the risk seems to be permanently posed in, you know, that position.
Without being too risque, but to offer an apt description, let's just say that average-income Americans have been royally turned. According to conventional wisdom, however, average Americans knowingly and willingly assumed the position.
Of course, the exculpatory assumption of the risk is false. Much of the risk was assumed in the dark. Victims were not fully aware of the extent of the risk until it had been fully assumed, and the public is still not fully aware of the extent. There is much more risk that remains to be assumed (dark marketed). At this point, the public is being politically prepared for the extended application of the risk which is modeled to be fully assumed but not necessarily assigned by visible means of tax and subsidy.
Who will be assigned the fullest extent of the risk is to be decided in the current political process, and it is no coincidence that the process is currently being defined as having a right-wing bias. The compromises that occur will be political mitigation of economic risk (i.e., mitigation of the risk in the gamma proportion).
Elite theory postulates that The People naturally assume the proprietary position they are in. It is foolish to assume the position of risk and expect not to have to take it. Although small investors didn't see what was coming, they should have known that by putting their net worth out there, they were likely to be stuck with the risk (and size, especially when it comes to investing, does matter).
So, with the risk of loss fully assumed, The People are fully expected to assume the proprietary position...but not without all the good taste, civility and propriety of due process, of course.
Thursday, January 6, 2011
Creating Counter-Party Risk
While risk is coefficiently constant, parties can be created in which risk is assigned to cause a reward. Depending on the ability to make the market, market participants are put in a position of proprietary profit or loss.
The more consolidated industry and markets become, the more ability acquired to make the market and position a counter-party to take the risk (and thus the need for government regulation to control the extent of the risk, or the externalities). In order for the beneficiary to gain and secure the entire extent of the profit, management of the risk also includes avoiding the liability of gaining profit by causing loss (the retributive value of the risk--a counter-risk--that cannot be avoided, only accumulated and distributed in a gamma, or political, proportion).
The propraetors of who win and lose in the province of finance have to be careful not to look like tyrants, especially if the legitimacy of the outcome is dependant on the lack of tyranny. In order to drive a distraction, attributions are created to suggest a cause-effect relationship--like when congressman Issa puts out a call for CEO's to contact his oversight committee regarding regulations that prevent them from creating jobs (instead of financing headline inflation, which puts jobs at risk).
Instead of creating jobs, the capital accumulated from middle-class net worth is being used to cause headline inflation. While demand is being reduced, the ability to command the price (which also determines the quantity that can be consumed without debt) increases. It gives the appearance of general prosperity (inflation), but is really an indication of general crisis (deflation). The value of counter-party risk is created, driving up stock and bond prices, for example, but at the expense, rather than the benefit, of middle-class net worth. The result is a middle class deliberately positioned to own more debt than equity. The demand for government then increases to consolidate the risk of default into the form of public, or sovereign, debt, which overleverages the counter-party risk into the persistent value of unemployment while the call is for cutting the public budget.
While cutting the public budget and paying down the debt is good for demonstrating power and verifying class distinction, it is exceedingly bad for the middle class. In fact, it is catastrophic, reducing the difference between the middle class and poor in the worst possible way--not by providing, but by depriving the American dream. We will blast back to the past when Henry Ford consoled unemployed Americans with the hope of having nowhere to look but forward. What happened going forward was world war and unprecedented government regulation of the private sector, especially the financial sector to prevent the ability to extend counter-party risk into the current crisis proportion.
While regulation can affect employment levels, it is a hefty intellectual strain to suggest, as congressman Issa does, that government causes unemployment. It is even more of a strain to suggest that government regulation of industry and markets has caused our currently high rate when the latest financial crisis occurred in the wake of a massive deregulation that congressman Issa is sure to suggest we desperately need to achieve full employment with low inflation. This policy, as we well know, positions the middle class to take the risk; and as we have seen, public policy is not based on what we know, but on what can be politically compromised into the legitimate public authority of the outcome--reduction of middle-class net worth (creation of the counter-party risk and reward).
Middle-class incomes did not gain from financial empowerment. Small, proprietary accounts have been easily positioned to take the risk. According to Ivy-League economists, the massive loss of net worth just evaporated, but small investors are too sophisticated to buy that, fully realizing that their wealth was consolidated into the upper class.
The liability of such a massive conversion and consolidation of wealth would reasonably result in the value being promptly retributed in the gamma proportion. Instead, there was a binomial, politically organized conservation of the risk. Populist sentiment was easily channeled into a conservative, ideological rhetoric that denies empirical valuation of public policy and programs by substitution, allowing continued overextension of the risk into a gamma proportion. The result is political compromise substituting for empirical truth, limiting progress to the dimension of an historical dialectic.
The political system is binomially organized to limit the liability of the risk. The two parties are counter-parties to the risk, safely limiting the liability to the authority of a political resolution. Ensuring an economic resolution would essentially mean deconsolidation of the risk into a more directly democratic (a more genuinely proprietary) resolution of conflicting interests.
While democrats have traditionally expressed the sentiment that the voice of the people is the voice of God, according to republicans, such a sentiment is inimical to brokering the compromises that are necessary for a civil society. Compromise, however, is no substitute for the empirical value (the self-governance) of direct popular consent through the proprietary means of a free-market accountability. Such an accountability (the measure of legitimate governance) only comes with ensuring full deconsolidation of the risk. It is not a rhetoric of hope. It is a practical philosophy that we need now in the fullest practical measure.
Without ensuring deconsolidation of the risk in priority, the probability of a protracted recessionary trend with high unemployment and inflation is politically confirmed. The retributive value has been successfully retrenched and reinvested to conserve the accumulated value of the risk. It is a remarkable demonstration of real, raw power concentrated into the hands of an elite with the apparent popular consent of the governed. Given the obvious cause-effect relationship (the value of the benefit and the detriment being so obviously equivalent), it has to be an unprecedented exercise of power in both a quantitative and qualitative proportion.
The new normal is the natural extension of the Hamiltonian model that Jefferson warned We the People be especially wary of: knowingly and willingly consenting to the means of our exploitation. It used to be that The People were not altogether sure about the means, but now we are aware of being positioned for the counter-party risk. The iterative value of the means to ends confirms the legitimate value of the risk and its conservation as "the" expected value.
We must keep in mind, however, that nature, despite whatever delusion of power we may possess, will surely correct for such an egregious error in good judgment. The risk will be so overleveraged and out of proportion it will be catastrophic. It will implode into the gamma dimension and civility will once again become a thing of the past.
We should not allow ourselves to pass into the darkness of deliberate detriment. Whether dialectically determined or technically derived, We the People are, by Nature, the Sovereign.
Our fate, especially in the age of science, is evermore proprietary and, thereby, fully determined. We are but counter-parties to ourselves. To know thy self is to realize the risk of loss is always fully assumed: coefficiently constant, intellectually valued, and fatefully consumed with moral existence.
The more consolidated industry and markets become, the more ability acquired to make the market and position a counter-party to take the risk (and thus the need for government regulation to control the extent of the risk, or the externalities). In order for the beneficiary to gain and secure the entire extent of the profit, management of the risk also includes avoiding the liability of gaining profit by causing loss (the retributive value of the risk--a counter-risk--that cannot be avoided, only accumulated and distributed in a gamma, or political, proportion).
The propraetors of who win and lose in the province of finance have to be careful not to look like tyrants, especially if the legitimacy of the outcome is dependant on the lack of tyranny. In order to drive a distraction, attributions are created to suggest a cause-effect relationship--like when congressman Issa puts out a call for CEO's to contact his oversight committee regarding regulations that prevent them from creating jobs (instead of financing headline inflation, which puts jobs at risk).
Instead of creating jobs, the capital accumulated from middle-class net worth is being used to cause headline inflation. While demand is being reduced, the ability to command the price (which also determines the quantity that can be consumed without debt) increases. It gives the appearance of general prosperity (inflation), but is really an indication of general crisis (deflation). The value of counter-party risk is created, driving up stock and bond prices, for example, but at the expense, rather than the benefit, of middle-class net worth. The result is a middle class deliberately positioned to own more debt than equity. The demand for government then increases to consolidate the risk of default into the form of public, or sovereign, debt, which overleverages the counter-party risk into the persistent value of unemployment while the call is for cutting the public budget.
While cutting the public budget and paying down the debt is good for demonstrating power and verifying class distinction, it is exceedingly bad for the middle class. In fact, it is catastrophic, reducing the difference between the middle class and poor in the worst possible way--not by providing, but by depriving the American dream. We will blast back to the past when Henry Ford consoled unemployed Americans with the hope of having nowhere to look but forward. What happened going forward was world war and unprecedented government regulation of the private sector, especially the financial sector to prevent the ability to extend counter-party risk into the current crisis proportion.
While regulation can affect employment levels, it is a hefty intellectual strain to suggest, as congressman Issa does, that government causes unemployment. It is even more of a strain to suggest that government regulation of industry and markets has caused our currently high rate when the latest financial crisis occurred in the wake of a massive deregulation that congressman Issa is sure to suggest we desperately need to achieve full employment with low inflation. This policy, as we well know, positions the middle class to take the risk; and as we have seen, public policy is not based on what we know, but on what can be politically compromised into the legitimate public authority of the outcome--reduction of middle-class net worth (creation of the counter-party risk and reward).
Middle-class incomes did not gain from financial empowerment. Small, proprietary accounts have been easily positioned to take the risk. According to Ivy-League economists, the massive loss of net worth just evaporated, but small investors are too sophisticated to buy that, fully realizing that their wealth was consolidated into the upper class.
The liability of such a massive conversion and consolidation of wealth would reasonably result in the value being promptly retributed in the gamma proportion. Instead, there was a binomial, politically organized conservation of the risk. Populist sentiment was easily channeled into a conservative, ideological rhetoric that denies empirical valuation of public policy and programs by substitution, allowing continued overextension of the risk into a gamma proportion. The result is political compromise substituting for empirical truth, limiting progress to the dimension of an historical dialectic.
The political system is binomially organized to limit the liability of the risk. The two parties are counter-parties to the risk, safely limiting the liability to the authority of a political resolution. Ensuring an economic resolution would essentially mean deconsolidation of the risk into a more directly democratic (a more genuinely proprietary) resolution of conflicting interests.
While democrats have traditionally expressed the sentiment that the voice of the people is the voice of God, according to republicans, such a sentiment is inimical to brokering the compromises that are necessary for a civil society. Compromise, however, is no substitute for the empirical value (the self-governance) of direct popular consent through the proprietary means of a free-market accountability. Such an accountability (the measure of legitimate governance) only comes with ensuring full deconsolidation of the risk. It is not a rhetoric of hope. It is a practical philosophy that we need now in the fullest practical measure.
Without ensuring deconsolidation of the risk in priority, the probability of a protracted recessionary trend with high unemployment and inflation is politically confirmed. The retributive value has been successfully retrenched and reinvested to conserve the accumulated value of the risk. It is a remarkable demonstration of real, raw power concentrated into the hands of an elite with the apparent popular consent of the governed. Given the obvious cause-effect relationship (the value of the benefit and the detriment being so obviously equivalent), it has to be an unprecedented exercise of power in both a quantitative and qualitative proportion.
The new normal is the natural extension of the Hamiltonian model that Jefferson warned We the People be especially wary of: knowingly and willingly consenting to the means of our exploitation. It used to be that The People were not altogether sure about the means, but now we are aware of being positioned for the counter-party risk. The iterative value of the means to ends confirms the legitimate value of the risk and its conservation as "the" expected value.
We must keep in mind, however, that nature, despite whatever delusion of power we may possess, will surely correct for such an egregious error in good judgment. The risk will be so overleveraged and out of proportion it will be catastrophic. It will implode into the gamma dimension and civility will once again become a thing of the past.
We should not allow ourselves to pass into the darkness of deliberate detriment. Whether dialectically determined or technically derived, We the People are, by Nature, the Sovereign.
Our fate, especially in the age of science, is evermore proprietary and, thereby, fully determined. We are but counter-parties to ourselves. To know thy self is to realize the risk of loss is always fully assumed: coefficiently constant, intellectually valued, and fatefully consumed with moral existence.
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