The Political Will

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.