Technical Errors of Economic Recovery

In the previous article, two technical errors were identified that accumulate to give a spurious and confounding appearance to the metrics. These errors create what technically appear to be an ontological, random volatility, which is arbitraged into an accumulated zero-sum valuation of the risk/reward.

The trage appears to be subsequentially derived, which gives the appearance of an exculpatory (undirected) accumulation of value. Although the value is produced with a seemingly unintentional extension of the risk, the outcome is a predictable eventuality, and thus preventably culpable, nevertheless.

Technical features dominating the current debate over deficit spending and debt reduction are: the anchoring effect and causal attribution. These two technical aspects will determine the extent and valuation of the risk proportion going forward.

It is important to recognize that the risk proportion operates with a detriment that is deliberately directed to derive the value and is fully culpable. While it may appear, for example, the two parties are locked in conflict, the resulting political settlement (the compromise) only gives the appearance of a pluralistic ontology. It results in a deliberate, binomially derived detriment that is cryptically cooperative by systematic design, offsetting the risk into a white-space of inculpability and virtual, bi-partisan unaccountability.

It is important to understand that the deliberate, binomially derived detriment will benefit the upper class in fully expected Hamiltonian fashion if a third-party element is not present to deliberatively limit the value of the risk proportion. Refusing to increase the debt ceiling, for example, will immediately, deliberately, limit the inflationary erosion of middle-class wages, salaries and savings which systematically deposits into upper-class accounts hedged to cause the risk that derives and accumulates the proportional benefit.

While not raising the debt ceiling is technically risky because the working, Hamiltonian model fundamentally assumes the Federal government will never default, the Tea Party delegation fully expects the budget to be technically derived within that assumed value. Without raising the debt ceiling, the value of the risk changes the nominally arbitrary value of the dollar denomination--inflation becomes a more definitive measure of austerity anchored to the limit.

With a less arbitrary, more stable, nominal value of the currency, the causal relationship between risk and reward is politically less alienated and not as technically ambiguous. Thus, it is more difficult to manage, and manipulatively arbitrage, the risk with rhetorical devices which, combined with inscrutable, technical jargon and analyses, easily misattributes the source and apparent culpability of a detriment (the austerity) that is deliberately derived on the inside, in the dark, by an exclusive, financial, elite authority that operates to literally command market performance. (The Republican sentiment for not raising the debt limit was reversed to accommodate the forex arbitrage. It would have blown the forex stop/limit algorithms with a more direct and unambiguous accounting of inflationary expectations. Not being able to manipulate expected values day to day, if not minute to minute, blows the certainty principle of the hedge. Limiting the debt proportion reduces the hedged product to more of a gamble, destabilizing the means to derive exclusive value from an extensive risk proportion--including commodity-futures price inflation--alien to common understanding, including members of Congress, and the commonwealth.)

Determining the causal factors for inflation risk, for example, is largely focused on the energy-risk premium and the strength of the dollar. While both risk dimensions are being fundamentally determined by an over-accumulation of capital, it is not technically considered to be a causal determinant for political purposes (i.e., because it infers a technical liability of creating reward by causing the associated risk proportion).

The result is fundamental attribution error, which accumulates econometric errors much as Schumpeter described it. These cumulative errors create so-called unexpected volatility and the value to be arbitraged. Capital then continues to accumulate instead of being distributed. The risk proportion increases instead of being reduced although the extended, economy-of-scale capital formation is supposed to legitimately create jobs and sustainable economic growth through market innovation.

Instead of providing for general economic health and welfare, we are committed to a so-called efficiency provided by organized economies of scale that are too big to fail. Corpulant corporates are not, as we have seen, the picture of health and welfare. Instead of the American dream, they prove to produce debt in proportion to the wealth accumulated. (Determining who owns the debt and who owns the wealth--the debt-to-equity proportion--is the political game played to distribute the risk and accumulate its value. The distribution of risk and reward defines class distinction, inversely correlated with the ability to pay the debt and avoid the risk: the less able to pay the debt, the more likely to incur the risk.) Instead of innovating industry and markets to reduce risk and leverage a general benefit, the innovative capacity of big corporates largely operates to innovate the means of deriving a risk-detriment that accumulates value in zero-sum with limited liability.

Within the political, debt-reduction debate, the increased risk proportion (reducing the deficit spending needed to effect a distribution and prevent a crisis proportion) is being described by Republicans as "spending reduction necessary to prevent our children from inhereting an oppressive burden of debt." This rhetorical device represents a significant technical error associated with economic recovery and, as politicians are apt to describe it, the common acquisition of the "American dream." (The wealth is what is largely inherited, which causes debt that is politically assigned.)

Intersecting the budget process with a third-party presence has forced a close examination of the Hamiltonian model toward securing the American dream. Refusing an unlimited debt ceiling, for example, has forced us to clearly account for the risk the model assumes in an ever-larger proportion. Both Democrats and Republicans resist the call for a more Jeffersonian model because it destabilizes over 200 years of accumulated wealth and power that, as Jefferson predicted, has systematically evolved into keeping the American dream within the exclusive domain of the rich and powerful in the name of public service and the general welfare.

Technically defining economic problems as errors implies they are unintentional. It is a significant error to assume these problems are not intended because with that assumption the errors are allowed to accumulate into a crisis proportion that appears to be ontologically derived and undeliberate. Thus, the dirty deeds derived from these so-called "errors" tend to be unaccountably accomplished with a limited liability.

Arguing, for example, that the current budget deficit, and its unprecedented proportion, is the product of left-wing policies and programs is a deliberate error intended to support the benefit derived from the detriment (the accumulated value that resulted in the Great Recession). It is an error of fundamental attribution that anchors the debate, and corrective accountability, to a political parsing of rhetorical artifice. To wit: by means of fundamental attribution error, solutions are anchored to policies and programs that support the problem, accumulating errors into a crisis proportion.

The available policy options are reactionary at best by deliberate design. They are anchored firmly to the right, well beyond the reach of any proactive sentiment which is ideologically branded as socialist or communist. Any attempt to be free of this tyranny of deliberately accumulated errors is characterized as a call to "end the right to private property and its individual pursuit" when, quite the contrary, it is to ensure it.

Since probable policy solutions are anchored to conserving a practical, working model that causes the problem to be solved (i.e., deliberately operating in error), the current recessionary trend will persist if not get worse.

A depressionary trend will decisively move practical politics to the center. Since policy tends to be more pragmatic and non-partisan at the center, all policy options will be maintained to prevent another Great Depression (in which the risk of loss is fully assumed). Notice, for example, that policies adopted following the Great Recession are to control the risk, mostly by increasing margin requirements and a resolution authority that could reduce the number of firms, rather than deconsolidate its proportion. Instead, policy was negotiated and compromised into increasing the risk proportion through consolidation in a classic, Hamiltonian fashion (with the risk of loss fully assumed).

Policy options are designed to conserve the ideological basis for policy formation and evaluation (by negotiated political settlement, which yields a compromise that conserves the problem in the form of a solution).

A non-partisan move to the center is ideologically resisted because it diminishes the reward accumulated from an ongoing detriment deliberately derived to enslave The People. Pragmatism tends to diminish a progressively autocratic consolidation of elite power and authority (whether Democrat or Republican) shammed with the cause of liberty and the path to prosperity. A non-partisan, non-loyalist, unideological sentiment tends to correct for this error that Jefferson warned would surely accumulate into a proportion of crisis and revolution, just like monarchy did, when the Hamiltonian model of political-economy was adopted at the inception of our nation.

Both Republicans and Democrats realize that a third-party element--like the Tea Party--tends to force the technical inflexion point at which the risk of loss is fully assumed. Refusing to raise the debt ceiling, for example, would collapse the accumulation of errors and anchor policy options to fundamentally causal attributions.

"American exceptionalism" may unwittingly be a revolution that technically emerges from the right rather than the left. It will become abundantly clear that limiting the accumulative burden of debt (not raising the debt ceiling) technically requires the elite pay more and everyone else pay less.

It will become abundantly clear, the argument that "we cannot continue to run up debt we don't have the money to pay" is a fallacy of composition. Debt is by definition composed of people that don't have the money to pay it, but owe it to people who don't need it, which is why demanding payment will always cause a crisis if the ceiling is not rising with the "demand" for money (i.e., if it is not monetized).

The "we don't have it" argument is an error of attribution that attributes debt being the problem to be solved rather than what causes the debt. Not using the money accumulated to pay the debt it causes accumulates the need to increase its proportion to equity--it increases the need (the demand) for debt. It is an error that accumulates into a crisis proportion--increasing debt-to-GDP--as long as we fundamentally misattribute the problem to be solved (i.e., misattribute the cause of the problem).

The argument "we cannot continue to run up debt we don't have the money to pay" is a deliberate deceit that accumulates a benefit by causing detriment (the problem to be solved). It is a deliberate zero-sum that does not advance the cause of liberty but enslaves the ambition to power and self-determination to the consolidation of a power elite.

We cannot continue to run up debt the non-elite don't have the money to pay.

Yes, we have a spending problem: the majority of Americans do not have enough income to spend us out of recession, much less pay down the debt and reduce the deficit. That money has been consolidated into the upper class by assigning the debt (the sacrifice) to everyone else, which knowingly increases the demand for debt--it knowingly derives a narrow, distributive benefit by willingly causing a broad economic detriment for "common" consumption.

Half of American household incomes do not pay any taxes because they do not have it to pay. The metric, rather than indicating the top income class is being overtaxed, indicates an over-accumulation of income at the top. Requiring the lower half pay more on the deprivation in zero-sum will over-extend the detriment that accumulates the benefit at the top--it is the point of inflexion to be avoided, especially if the tax code is rendered less progressive.

Both parties know that such an overextension of the risk proportion would be a catastrophic accumulation of errors. Thus, they tend to resist spending cuts and debt limits through a process that appears to be engulfed in conflict but is really conflated to conserve the value of the risk proportion without causing "change we really need." The deliberate conflict achieves a convincing dialogue of political-economic concinnity, never allowing the story to progress beyond the perennial struggle between good and evil. Opposing values never fully converge (the risk of loss is fully assumed but never fully consumed); and with each side claiming that "the good" is technically on its side, the story never ends (and the debt ceiling keeps rising).

Accommodating the technical errors that continue to econometrically accumulate requires raising the debt ceiling, which has led Standard and Poors, for example, to downgrade the dollar. A weaker dollar will raise interest rates and increase the debt (i.e., the impending crisis proportion we are trying to avoid as we exact austerity to achieve prosperity). Already beleaguered middle and lower-class incomes will be exacted a triple-dose of austerity--their incomes will buy less as prices continue to rise, pressured by an over-accumulated capital that has stagnated if not reduced their incomes. If this is the "Path to Prosperity," it is a narrowly defined path littered with jagged technical errors the middle and lower classes will have to travel in their bare feet.

Downgrading U.S. government debt is one way to indicate the accumulation of errors, recognizing the sum of technical errors that are accumulating while anticipating economic recovery. If everything has to be on the table, both austerity and prosperity are critically infused with the risk of loss. Their value is fully assumed, both separately and together, as a zero-sum detriment. Both austerity (accumulation) and prosperity (distribution) present as value of an equally bad proportion, representing a retributive risk that technically, try as we may, cannot be avoided, only re-presented in the future, as it has in the past, in the form of unlimited debt, war, and welfare.

Raising the debt ceiling finances war and welfare--the two aspects of political-economy that are being kept off the table and the two aspects historically associated with the technical accumulation of capital (austerity) and its effective distribution (prosperity).

The technical indicators are showing an extreme gamma-risk proportion that correlates with an over-accumulation of econometric errors. Gamma risk is an accumulation that cannot be avoided without its organized deconsolidation. If it is not, and the risk is organized to continuously accumulate, the classic forms of distribution will manifest. It is a choice between war and welfare (deficit spending and the risk of loss fully assumed). If we do not use our naturally endowed freedom to choose a deconsolidated valuation of the risk proportion (with less need for debt and the risk of loss fully reduced), Nature will.

Nature attributes value without error. Its judgment is perfect, absolute, untranscendable; and its retributive value is undeniable--it is fully valued in priority. It is an unavoidable risk, fully assumed whether we believe it or not...whether we freely choose it or not, presenting us with the paradox of our self-determination and the source of existential angst in a civil society that suffers the conceit of existing beyond the dictates of God.

Tricks that Get the Fix

With tricks and spin the fix is in.

To lock-in the value accumulated into the upper class that resulted in the Great Recession (and a high level of deficit spending) without liability (without paying down the accumulated debt from the accumulated equity) requires effective techniques for negotiation and rhetorical devices. These techniques and devices are necessary to provide a descriptive legitimacy of the outcome and a prescription for conserving the value to avert crises it is sure to cause in the future.

It is necessary to arrive at a political settlement that does not assume the risk is a function of the accumulated reward. Instead, the reward is offset to the future. It is identified with an impending crisis that theoretically assumes measures are modeled to avert the crisis but, instead, cause it in practice.

These are psychological tricks that fix errors into the system and accumulate into an unavoidable gamma-risk proportion. Despite the rhetoric (whether Democratic or Republican) that policy measures are to avoid if not eliminate the risk, these measures are designed and predictably administered to consolidate and conserve the value of its accumulation, and anchor success to that proportion.

Democrats measure a successful accumulation by the level of deficit spending, Republicans by the extent of its reduction. In either case, the detriment the accumulative reward assumes (the inherent risk of loss fully assumed) is effectively offset. It is politically settled by anchoring it to the probable event of two detrimental alternatives, overtly derived by either bi-partisan conflict or cooperation that appears to be both legitimately pluralistic and, if need be, selflessly combined to administer the general welfare.

Operationalizing the concept of the general welfare as a collective, non-zero-sum consolidation of the risk (rather than a risk-averse, zero-sum deconsolidation that will avert the impending crisis that Republicans say we now inevitably face, for example, without Democratic support), allows bi-partisanship to falsely appear non-partisan (and risk-averse). It is a political trick that has structurally evolved to control the political extent of the risk assumed in the face of recurrent crises. It is a trick independents do not willingly fall for without the structural extortion of a two-party system subsequently translated as a genuine mandate derived by means of legitimate, popular consent.

Unfortunately, independents are only about 20 percent of the electorate. While a swing vote occasionally combines to indicate a non-partisan sentiment, it is never enough to deconsolidate the risk proportion. It is never enough to break the organized tautology of a binomial, political structure into the empirical, corrective value of a genuinely pluralistic, and legitimate, popular consent. The bag of tricks and rhetorical devices that dominate the political settlement stubbornly persist.


The fix is in with tricks and spin,
The devil's due through thick and thin.
The path to prosperity is a selfish lust
If not to boom we'll surely bust.

One thing's for sure,
We'll fix the budget
With a cup of tea
And a lot of fudge it!

Strange Brew

The party is on, tea is served, and everyone is invited.

Both political parties are busy trying to serve-up their own brand of tea, but the Tea-Party faction insists on its own brand. Joining the party means imbibing a strong, robust, undiluted brew that the mainstream doesn't have the stomach for.

Interesting that mainstream conservatives can resist the Tea-Party caucus as radically conservative. The so-called conservative wing of the political spectrum knows very well that such an extreme budget-policy position is neither populist or politically pragmatic. So, we see both the liberal and conservative wings positioning the Tea Party to take the risk.

The third-party element is predictably being set up as counter party to the risk. It is being binomially co-opted despite attempts to throw their own party independent of the mainstream. It is difficult for the Tea Party delegation to avoid the inherent risk an organizational tautology presents.

Breaking the cause-effect relationship of circular, political realignment is no easy task. While the Tea Party identifies the deficiency of probable policy options, the severity of the options it represents will facilitate moving the center of the political spectrum to the right, which effectively limits the policy options (increasing the probable risk proportion at the margin).

Redefining the center may be what the Tea Party caucus wants, but there is a point of diminishing returns. The two mainstream parties have organized to control that marginal risk to derive a stable, predictive value, and they will position a radical caucus to support it.

The party is on, tea is served, and everyone is invited whether the hosts like it or not. The tea party presents the opportunity for real pluralism, and despite best efforts to control the ingredients, the brew can have a strangely radical affectation, nonetheless.