Extension of Credit and Subordination of Risk

Credit is extended, supposedly, in everyone's self-interest. Keep in mind, however, that "the market can wait longer than you have money."

Those fittest to survive are entities that are too big to fail (and the most likely to be abusive). Operating with an economy-of-scale efficiency, these firms ("people" operating in the marketplace with limited liability, which is not a free market at all, but a command structure that, of course, renders credit worthiness) borrow from the reserve without risk of default. The risk, instead, is consumed by average incomes (people with the lowest credit scores) expressing upper-class ambition.

Operating with an upper-class identity that gives us the objective identity of a "consumer society," the average consumer relies on the extension of credit, or economic rent (renting the money needed to participate in the marketplace). When the rent exceeds the ability to pay, which is why average consumers pay more rent-to-income in the first place, the risk of default accumulates.

If the risk is positioned to be consumed by those least able to consume it, which results in default, then it is unreasonable to expect anything else, and that is far from the natural condition of self-determination.

The value of the prudent regulator is objectively identified by modern economics as a "consumer," not a "renter," which is a more classical classification of the risk-taker. Nevertheless, it is an accurate description of the risk. Clearly, the more rent you have to pay to participate (to self-determine), the more at risk you naturally are.

Living in a consumer, on-demand society, eager to demonstrate an aristocratic, self-determined, unsubordinated identity, the middle class tends to be a spender rather than a saver making enough money to hold value in reserve. Its equity share always tends to turn negative (into subordinated debt) because it does not have the value in surplus necessary to prevent confiscation of their property by predatory capitalists operating with the risk of default (being too-big-to-fail) always in their favor.

According to capitalists, equity liquidates into debt because consumers are essentially imprudent (which causes them to be naturally subordinate despite the aristocratic ambitions "We the People" may have to declare independence). We can't control our appetites, and so we cause inflation, and because we selfishly want to be paid more for doing less, capitalism naturally unemploys people to prevent shortages (controlling demand by raising prices against falling income).

The ability to prudently regulate is being held in reserve. It is being horded, grossed, in the dark, centrally planned, supposedly in the public interest.

With a centrally managed economy operating in the dark with a presumed free-market legitimacy, and a consolidated, regulatory authority presumed to operate in public trust (acting sub rosa to ensure markets are free and open by committee), class warfare can be the only reasonable expectation.

Self-interest is being held in reserve. It is held in the dark because it is private stock exclusively managed by its proprietors. While "We the People" have the political right to freely protest, economic fate is literally owned (subordinated) by the top one percent with the right to use private property as they see fit. The right to determine the "self" (your "self") is Constitutionally endowed.

Profit and loss (the risk subordinated to self-interest) in zero-sum outside the alpha-risk dimension accumulates risk that must be somehow managed or it will burst and reoccupy the alpha dimension. This reoccupation, remember, is the risk of loss fully assumed (the retributive value) in priority--it always exists with a 100 percent probability, meaning that the 99-and-1 risk proportion is not sustainable.

The corporate currently manages the 99-and-1 risk proportion (keeping in mind that its stock--your self-interest--is publicly traded but privately owned). The Federal Reserve System is its prudential regulator, not you, not me ("We" are subordinate to the corporate body), and as discussed in previous articles, the Fed holds value (what is neo-classically referred to as consumer demand) in reserve and distributes that value (applies accumulated risk) to resist the declining rate of profit.

Recent action by the Fed to redirect accumulating risk associated with the Euro crisis, for example, along with five other central banks, involves the use of liquidity swaps. This is a way to manipulate interest rates (the economic rent) to contain the classic crisis of overproduction (declining consumer demand concomitant to declining income, which means insufficient funds to support the profit margin, and means the property owner ends up paying the rent--the interest on the debt that is swapped to avoid, but not prevent, being subordinated to the risk). Since this "market" is notoriously dark, accompanied by a shadow banking system that is even darker, what is the value of the risk and where is it located?

If you are on the inside, directing the position of the risk at any particular time within a particular policy space, like lowering what commercial banks are charged for short-term dollar loans, is critical information for determining the counterparty to the risk (who takes it) and the philosophy of its general utility (who makes it). Generating this critical information by creating the conditions for it and then using it (swapping it) falsely induces the evidence to support its utility with an organized tautology. It is a deliberate deceit giving the appearance of a naturally occurring, organized, structural valence that vigorously resists deflationary risk (the declining rate of profit) with added liquidity. It is a kind of autonomic nervous system that keeps capitalism alive in spite of itself.

When Goldman Sachs sets Greece up with bonded debt (added liquidity), it is not "betting" on anything. Sure, there is some risk, but it is subordinated (gamma)--the house wins most of the time (with the force and legitimacy of government--sovereign debt--authority).

Bear in mind that the added liquidity does not add supply (it is risk avoidance, not risk prevention, by means of public authority). Instead of disinflation (controlling prices with added supply, which increases income and the capacity to self-determine, or prudently regulate without elite authority), we see, for example, the added liquidity bidding up energy futures, which is deflationary.

While monetary expansion is supposed to add supply to reduce inflation and unemployment, these monetary mandates are defeated in dark markets.

Monetary expansion is being used to support the profit margin (through the CFTMA, for example), which adds inflation and unemployment. The argument is then made, post hoc, that monetary and fiscal policy (government intervention) causes the derived detriment (inflation and unemployment) and that the derivatives market provides the liquidity necessary to pull us out of recession when it is actually being used to cause it. With this kind of twisted analyses occupying the policy space, we can only expect the worst while hoping for the best, which is what Fed chairman, Bernanke, essentially told a congressional committee today.

While corporate earnings get support by adding negative equity, resistance is at the same time being added to forestall immediate consumption of the fully assumed risk proportion. Classic, recurrent crises that otherwise threatens the very existence of capitalism is neo-classically designed and administered for its "prudential regulation" in the gamma-risk dimension.

Credit is continuously extended, and risk subordinated to it, in the form of sovereign debt (economic rent) bonded to "We the People" on-command in dark markets rather than legitimately on-demand with the full accountability needed to prudently regulate it. Instead of freedom, "We" are bonded to the detriment, condemned to the angst of being slaves to what appears a random walk misdirected with the force and legitimacy of public authority.

Instead of low volatility and the predictive utility (low angst) a free market provides in the light of day, we are subordinated to risk that is contrived to appear self-determined in the dark. If that isn't complicated enough, determination of the "self" is confounded with the added volatility of government intervention (and remember, this does not add risk, but can add angst by trying to reduce it).

Government is added to subordinate the risk to the appearance of its prudent, consensual regulation (retributing its value) without deconsolidation.

Without really deconsolidating the risk to achieve a pluralistic, alpha-risk proportion, risk is allowed to accumulate in dark markets where it is recycled (swapped, for example) to derive detriment. The derived detriment adds volatility--it adds angst, an emotional reaction that is likely to misattribute the quantum "risk" to be retributed.

We lose the rational vision--the fundamental attribution of risk--that a free market provides by always trying to avoid it with economy-of-scale efficiency that achieves an aristocratic identity of unaccountability (of not being subordinated to the risk). Without deconsolidating to ensure a free market in priority, the risk-value will not retribute. Crises are not to be prevented if maintained in a too-big-to-fail proportion.

Risk is likely to yield an emotional response that is easily used to subordinate people to its accumulative management. Risk easily takes an emotional valuation, dialectically conserving the value in historical perspective, irrationally anchoring its accumulation to reducing the angst it technically adds by organizational design.

Credit is rationally extended, supposedly, in everyone's self-interest, but the market is organized for an emotional response--it can wait longer than you have the nerve to risk your money, and that reaction is, technically, the result of beta volatility, what E-Wave analysts, for example, rationally refer to as "impulsive" and "corrective" waves.

Lost and Found

Instead of on-demand, organic, economic growth to surplus value without unemployment, reserve value is being commanded (in the dark where we can't see it) so that demand is not sufficient to consume production.

Supply-side management on demand in the dark is really demand-side management. Shortages are cured by demand destruction. For example, when inflation--like rising gas prices--forces you to consume less of everything, which is deflationary, there is plenty of supply to consume if you are rich enough to afford it.

Effectively, supply-side management as proposed and practiced by right-wing conservatives to add supply is really means-tested rationing. Rather than add supply, it serves more to verify a person's class by consumption, or on-demand.

Value produced on command is the supply-added dimension of "supply-side" economics (hidden in the dark so we cannot easily know it, and thus seek it, as our self-interest). The reserve is used to force as many people as possible into default by what the commanders (the "market makers") argue to be market demand.

Risk-value is derived and added (on demand) to the supply, which is consumed on demand by the masses. Distribution of the risk and the reward is classified, its consumption determined by who is too-big-to-fail. If you are too big to default, you consume the value derived from the risk (which is, at the same time, the means to cause it--or make it to take it--on-demand in the marketplace).

Risk is processed for classified consumption in dark markets using financial instruments called "derivatives" (you know, that phenomenon, supposedly, only God can adequately understand and thus providentially control).

Since we are a consumer society, and the value derived is fair and equitable (determined by popular demand--the invisible hand--in the marketplace), value that has been lost in a too-big-to-fail proportion is considered to be an unidentifiably entangled quantum that exists everywhere and nowhere at the same time.

Value that is non-attributive is non-retributive (it effectively does not exist--it has been handily rendered anonymous...invisible, but not unmeasurable). The value's identity has been rendered so common that it is tragically lost and nowhere to be found (absorbed into the economy-of-scale corporate collective that we are all subjected to by popular demand and to which we must conform to earn the value necessary to self-determine).

Remember that the value we are told is lost in hard times is really hidden away in dark markets. If we are told by expert analysts that it is value lost, and we can't see it because it operates in the dark robbing us of our capacity to self-determine, then we will not be looking for it. By default, we do not have the means to be the prudent regulator freed from the oppression of a governing authority. If we do not seek the forbidden fruit hidden to keep us from knowing evil, we will not find out what it means to be the sovereign power.

For the vast majority, seeking the added value (the savings supposedly lost) is not a function of its regulation, but its deconsolidation.

Although consumed in hard times, savings is held in reserve, nevertheless, so that the average consumer is at the mercy of creditors (people that have acquired your assets by default posing anonymously as corporations with limited liability and thus, no incentive to modify their behavior through a free-market mechanism the corporate is organized to defeat by consolidating your assets). Mercy, however, is in short supply because there are insufficient funds to demand it and because, remember, the corporate demands we confirm our objective identity by pathologically subordinating our "selves" to debt.

Being subordinate not only classifies the debt, but the debtor. Peonage may be illegal but it is effectively practiced by maintaining an economy of scale that relies on credit to both create jobs and generate the demand necessary to prevent systemic accumulation of risk. When Bank of America tells you to short-sell your home or be homeless with a mortgage you own and still have to pay back, the bank effectively owns you, and that ownership can, and will, be accomplished indirectly, in late-order, through derivative valuation of the risk in dark markets.

Bank of America says its vast size allows it to acquire and extend credit on a global scale so that we all have the freedom to find prosperity, but it will be sure it is lost in the dark and subordinated, as well.

Corporates organized to be too big to fail are pathologically corrupt. It would be interesting to see what the MRI scans of leading, Ivy-League, corporate recruits look like, or anybody for that matter who thinks organizing for the extension of mass subordination is the virtue to which we are to "credit" our objective identity.

Small investors need to always keep in mind that big money is always operating to force you into risk to acquire yield.

It's no accident that a Treasury bond has virtually no yield, which supports equity values against rising negative equity. Eventually this divergence of risk-reward (the lower the risk the higher the yield for assets with a high, make-it-to-take-it classification) will converge into a crisis proportion that effectively subordinates small investors to all the risk.

Hide and Seek

We have plenty of savings hidden away, we just have to seek it.

Seek and you will find value hidden in the measured effects. GDP, for example, has missing value to be found elsewhere if you look hard enough for it.

There is more than one-quadrillion dollars hidden away in dark (unregulated), derivative markets. Since the mass majority of citizens do not operate in dark markets, because they do not own enough of the reserve, they cannot demand its use or consume its benefit--an effect essentially measured as GDP.

Remember that in dark, unregulated markets, the more capital vested in them the more likely default will appear in the light of day. By simply not investing the probability of growth, default is "put" in the money. It is a classic self-fulfilled prophecy that Wall Street explains away as "risk" ontologically derived by means of free-market mechanics when, by organizational design and practice, there is no free-market, alpha risk in operation. It is all gamma risk--risk consolidated into sovereign debt--by design.

The ontological valuation is an outright fraud that goes unprosecuted because there is not only the shadow of doubt, the evidence is in the dark.

All the CEO of MF Global had to say is, "I don't know" when asked over and over, "where's the money?" Determining the legitimate value of the risk, if not the actual quantity of principal at risk, becomes a game of hide and seek using "risk-transfer vehicles" known as "swaps" in a market structured not to hedge the risk of default, but to cause it.

Also keep in mind that losses are characteristically described as vaporized--as if the value no longer exists, so it cannot be retributed. This, too, is a fraud in every case.

Paper losses result in real risk being transferred to other parties. Sovereigns, for example, print money to cover the short interest, which then presents as late-order effects that rob average incomes of purchasing power--the means to self-determine without government intervention.

The value still exists, but it has become entangled--hidden away, structured into an empirical, quantum value to, supposedly, prevent contagion.

Quantum entanglement, however, is engineered by Wall Street "quants" to prevent the value being retributed by the free market or by government intervention. The value is stored in complex, risk-transfer vehicles, both public and private, to protect the value from the fully assumed risk of loss.

Notice that we have a shortage of engineers to innovate new products, which creates jobs, being employed by Wall Street to engineer the risk that makes the probability of default all but uncertain, which creates unemployment.

Keep in mind that the loss creates value--risk-value--that is added as GDP and supports, for example, equity prices. Economic growth is not supporting equity valuations considering that equity, for most participants, is effectively negative. Instead of investing for growth, the accumulation of capital supports equity shares by buying them up, which pushes GDP, and demand for employment, down.

We see, then, GDP being added by subtracting it. The differential (this contradiction falsely described as a natural paradox--an undirected, risk ontology) is the equation that quantifies and entangles the risk. It is the beta volatility (on command) that arbitrages the risk to produce the value in the form of capital gained (the carried interest--economic rent collected--that is being taxed at the lowest possible rate).

Organizing to command the risk, through market processes that operate on-demand, produces risk-value. It does not, understand, add risk and it does not add supply, but it does add detriment (it turns equity into debt). It accumulates risk into a crisis proportion and converts the value produced into private property by design (by default).

Keep in mind that the value lost is capital gained in the form of risk-value and does not add enough revenue to cover the public debt that finances the value added at the margin if it is taxed at a low rate. The quantum missing--hidden--in the entanglement results in policies and programs that are classified as "needed austerity measures," which are nothing but a way to expropriate value through late-order effects fraudulently pitched as self-determined and ontologically derived.

We are told that we get the government we deserve and nature is to blame for the value that derives from the risk. All Goldman Sachs and Bank of America has to do, so they claim, is time the market (buy and sell with benign objectivity) to capture the benefit--the value--of the risk, meaning that they do not make the market to take the profit, and so taxing it away illegitimately confiscates their private property, legitimately derived.

Government then, so conservatives claim, needlessly adds risk by trying to add the lost value. The result is inflation of the value, not caused by bankers conspiring against us with our own money, and what they claim to legitimately be theirs, but by interfering with the free-market mechanism that naturally fills, or retraces, the missing value with economic growth through productivity gains.

The missing value, you see, is the hidden risk that is supposedly lost. Its value is transferred--transformed in the dark into productivity gained: working for nothing to pay off an increasing debt burden, which produces negative equity that is sure to result in a financial crisis. By design, the opportunity is created to consolidate the value of your assets, not prevent it, with economy-of-scale efficiency.

The value is not "lost," the risk is simply no longer attached to the reward. Risk is transferred--put--to a counterparty set up to hold it by default. The quantum value of risk-reward is separated and managed in reserve to position it for its classified consumption.

Right-wing conservatives react to "class warfare" as divisive and dysfunctional because we eventually come to realize that risk is being manipulated for class consumption with a fraudulent, free-market legitimacy. For reactionaries, the worst thing that can possibly happen becomes the most probable: occupation of free-market space with value that has been supposedly lost, but found to cultivate organic growth by seeking profit, and since keeping as much of the value you produce is the American Revolutionary way, it is likely to happen.

Now, as it was then, The Revolution is more likely to proceed from the right, determined to defend conservatism, than from the left, determined to offend it.

Predicting the Future (by Popular Consent?)

The Commodity Futures Trade Modernization Act (CFTMA) was enacted in 1999 to expand the marginal profit as a "supply-side" measure.

By adding supply (expanding the pie), income rises, and rising income provides the means to self-determine. The savings rate (marginal income added with the marginal product) increases so that consumers effectively govern on demand and thus effectively determine the future, modifying the behavior of market participants with the invisible, collectively anonymous hand of popular consent.

Self-governance, according to free-market theory, is made possible by expanding the pie. Adding to marginal productivity (through competitive innovations that result in labor savings--needing to work less for the same amount of income, or productivity gains) adds the income (discretionary spending) necessary to predictably self-determine.

According to capitalists, however, the best way to innovate and add the marginal product is not by competing for the profit margin (which reduces it by popular consent and shares its discretionary power with labor to predict the future), but by encouraging inorganic growth.

Organizing to build an economy-of-scale efficiency consolidates the risk (the right to self-determine) so that, unparadoxically, free-market mechanics is organized to produce the marginal product at the lowest possible cost (at the expense of labor value, which is deflationary).

Deflation, remember, is a crisis proportion that liquidates assets. It consolidates wealth into a class identity, and participating in markets largely exclusive to particular asset classes (big money rather than the discretionary spending of most consumers) predicts (determines) that future. This predictive utility is accomplished through "futures" pricing--predicting the probable value of the risk in the future, and if that value is higher food and fuel prices, for example, instead of adding supply, value (a risk premium) is added to the supply, effectively "determining" the risk commodity-futures trading is supposed to avoid.

Growth can produce negative equity if it is organized inorganically. Inorganic growth processes the risk for the premium--the marginal income that distributes to the upper class, and because the value needed to self-determine is consolidated, all the risk is left with the lower classes who, at the same time, are told their fate is self-determined.

Instead of processing risk to produce a marginal product (organic growth and the highly divisible legitimacy--the self-determination and secure future--a free market provides), the market has been modernized to cultivate inorganic growth and insecurity in the name of hedging risk.

The CFTMA was supposed to add the marginal product--the measure of economic growth that creates jobs, reduces inflation, and pays down debt--not risk-value (detriment).

Instead of adding employment and supply, application of the CFTMA has resulted in massive, and persistent, job losses and commodity inflation that is being falsely attributed to fundamental forces.

Meanwhile, we're still lurking in the dark, waiting for the benefit to accrue to the ninety-nine percent of so-called market participants that are being stuck with all the detriment.

This is a governance by consent, right? We consent to the detriment by popular demand, having to buy fuel to get to work or heat our homes. Our homes being, of course, an asset that represents most of our net worth and, by no accident, has lost half its value.

It is no accident that half the value of the average citizen has been reduced to negative equity.

Remember that this financial reform was enacted to liberalize the market, freeing it from regulatory constraints that ties the invisible hand to government, reduces supply, and causes unemployment. Unparadoxically, by no accident, the Act has had the opposite effect.

We are not being, as the President says, "held hostage to energy prices." We are hostage to an organizational theory that verifiably fails to add supply and positive growth. Instead, organized consolidation, and markets made to manage the risk into detriment (like the CFTMA allows for), verifiably adds unemployment, higher prices, and negative equity.

Instead of being governed by consent, we are being governed by a risk premium distributed as a marginal product. Since the margin is not the product of popular demand, but organized to produce the detriment it legitimately proposes to resist, the margin is a fraud. By design, it does not operate with a free-market legitimacy but relies on government authority. Instead of growing the economy, it grows the need for government.

It's impossible for average incomes to save anything if prices keep rising while income and net worth is falling.

Ivy-League analysts are trained to tell us that our savings has simply vanished. The value, they say, has not been expropriated. It has not been hidden away, they assure us, in dark markets where it conspires to cause the detriment the CFTMA, for example, is there to reduce, not produce.

Having a Negative Reaction

As Hayek was apt to say, people need to have income to self-determine. He was not averse to guaranteeing each and every individual a minimum income, and while this is not exactly the conservative ideal, it is, however, a reaction to America's penchant for avoiding what de Tocqueville called "the perils of equality."

Although Hayek is a favorite reference of right-wing conservatives, his liberal sentiment confirms a dysfunctional, aristocratic identity that left-wing conservatives react to by ensuring government provides enough income to the lower classes to prevent a depression.

Risk prevention is what Hayek had in mind, but liberals occupy this distributive-policy space with reactionary, risk-avoidance measures that conserve the risk-value (so if you wonder why liberalism doesn't add self-determination, it's because it doesn't intend to make us more equal, but prevent us from demanding it). Policy conforms to, and confirms, the aristocratic identity of the policymakers, "making markets" so that the risk consumed is not the marginal profit.

Instead of ensuring self-determination for the masses, liberalism functions to support the marginal profit (equity values, for example, are again at pre-recessionary levels despite pervasive negative equity in the marketplace). Support at the margin maintains the elite identity of the risk, rendering a distribution of equity that accrues risk-value to the upper class (avoiding "the perils of equality") without increasing the probability of a declining rate of profit. Understand that this is not socialism--it is a reaction to Marxist theory (and that reaction, keep in mind, only serves to confirm it). This is what Marx predicted to be "anti-socialist socialism"--a soft tyranny of upper-class, socio-economic elites distributing enough value to prevent the risk of their own default by acting in their self-interest (which requires venturing perilously closer to equality).

(We have to objectively consider what it means to have a distribution that occurs because too much has been accumulated out of self-interest. Technically, self-interest is not in operation but selfishness is--what Adam Smith warned results in a declining rate of profit and bankrupts the wealth of the nation both morally and monetarily.

Remember that risk avoidance accumulates detriment that eventually presents in a crisis proportion. Avoidance, rather than prevention, ensures the probability of detriment--the inventory of distressed assets to be consolidated and resold at a profit.

We have to consider what that margin of profit actually represents--enlightened self-interest or soft selfishness. Right-wing reactionaries say it is the "soft tyranny" de Tocqueville referred to, which describes what we now call "liberalism.")

A philosophy of selfishness (moral bankruptcy) posing as the utility (the virtue) of self-interest bankrupts the wealth of the nation. It results in negative equity.

Equity values at record levels while the inventory of distressed assets is rising, for example, does not indicate record prosperity, but record disparity.

When the average income buys into equities to save for retirement, it is no coincidence that they lose value when needed (liquidated) to survive (to pay the rent). That is the way capitalism is supposed to work--turning equity into debt (what classical economists referred to as a "subsistence wage"), and as the value of labor tends toward subsistence (which is likely to cause a bad reaction), value earned and saved is turned into risk (a late-order detriment). This risk, understand, is not added, it is government that is added in reaction, which transforms it into gamma risk to keep the detriment (the bad reaction) to at least a subsistence level (negative equity).

The risk-detriment is a fully assumed loss that is technically engineered to distribute by class identity, and when it goes gamma, the unavoidable risk distributes with the force and legitimacy of public authority.

The more savings we have the more self-determined we are, Hayek and Smith would agree, but the more the rate is identified with aristocracy, the more negative the equity and the more reactionary (the more liberal) it becomes.

Our savings rate is negative--that is, the equity share in the capital invested is negative...it avoids "the perils of equality" by ensuring it has a negative reaction.

"Left" in the Dark

According to reactionary philosophy, the left is always in the dark. It does not understand that capitalists are not selfish, they are self-interested. It is a qualitative distinction that determines the quantity of economic value added.

Operating with a philosophy of self-utility--which is our natural condition--produces a standard of living that, without a proper, objective understanding, is easily taken for granted.

A rising standard of living, and expectations, tends to make us "intellectually lazy." It is easy to mistake the utility of self-interest for selfishness, expecting unlimited supply, and low prices, from limited resources. Capitalism, we should all understand, organizes labor and capital to prevent shortages.

Without allowing capitalism to freely organize unregulated (the theory of efficient markets that repealed Glass-Steagill, for example) we experience the vice (the angst) of selfishness instead of the virtue (the productive incentive) of self-interest...we're left in the dark.

When capitalism merges and acquires (consolidates industries and markets) to build economies of scale, it is actively organizing to improve productive efficiency, which is in everyone's self-interest. Capitalism does not selfishly steal value form labor in the form of "productivity gains" (unemployment), but instead cures shortages through "pricing power" (inflation).

Analytically, however, looking at the equation used to derive value from the capital, we see that labor not only pays rent to occupy space in the marketplace (paying the highest possible prices at the lowest possible labor cost) but pays to rent back the value consolidated, which forms the capital and creates wealth, supposedly, in their self-interest. (Keep in mind that self-interest is a confirmable hypothesis. It can be measured and the means can be thrown out if the ends do not measure up. Consolidation, understand, reduces the probability of revolutionizing the means. If the means of power is so big and overpowering that it takes a catastrophic event to revolve it, which is the gamma-risk proportion I talk about on this website, the means and ends are conserved not by verification, but by validation of arguments that proceed from principles such as "the masses are incapable of self-governance." At the same time, however, aristocrats that maintain this argument also say everyone is self-determined, which is both inductively and deductively contradictory, and the contradiction is explained away as being a paradox. Eventually, the contradictions become so obvious that the maintenance of power has fascist tendencies, validating the means of power to control civil disorder--a self-fulfilled prophecy referred to as an organizational tautology.) By accumulating risk through consolidation of industry and markets, capital formation is falsely attributed to the invisible hand, and the value of labor is "left" in the dark.

The populist sentiments of labor are attributed by reactionaries to be selfishness. The unemployed are identified as "looters" and "slackers," and while liberals are more sympathetic, the sympathy is as much a sense of noble obligation (an aristocratic identity) than altruism, foolishly mistaking their selflessness (the virtues of hope and charity without really sacrificing anything, but with the hope of supporting the virtue of acting, and reacting, in self-interest) as being risk-averse when it is really risk-prone.

Distribution of the risk selfishly occurs in the dark (to the exclusion of the vast majority of market participants) in order to predictably derive and accumulate value in a space occupied by the top one percent of income class. When this value integrates at the top, rather than deconsolidated for its prudent regulation at the bottom with a government that governs least, a liquidity crisis always occurs to distribute the accumulated value. The distribution occurs in the form of increased debt-to-equity (deflationary risk and fiscal crises) like we have now with a government that governs the most.

(Since we let the corporate get so big and consolidated that it occupies government space--which has the effect of fully consolidated power, with more government, not less--we may as well use it to deconsolidate the risk with public-private partnerships. See, for example, "Operationalizing the Risk Proportion" by Griffith, as well as other articles by Griffith that discuss convergence theory on this website. There is also an exceptionally good book recently published by Jeremy Rifkin called, "The Third Industrial Revolution."

Rifkin presents economic modeling that describes and explains what deconsolidation looks like. It is the kind of practical modeling presented on this site, recognizing that the tendency for big government should be used to reorganize and deconsolidate the risk as the public and private dimensions of power continuously converge to network the externalities. He describes an historical pattern of "lateral expansion" that this site, for example, refers to as pluralistic tendencies that naturally act to deconsolidate the risk proportion--what we tend to mistakenly refer to, and manage, as added risk when it accumulates.

It is important to remember that risk is not added or reduced, it is an accumulative or distributive value that depends on organizational design and technology. Rifkin's book presents a detailed description of what a convergent, more distributive, and mutually beneficial risk-value looks like in practical application.)

The distribution of value reduces to whether there is a deflationary or disinflationary distribution of the risk proportion (both are discussed on this web site along with the concept of retributive value). The more of a free market there is--the more labor shares in profits--the more disinflationary the economy tends to be because there is more supply always being innovatively added to meet the demand (and thus make a profit). Conversely, the more consolidated industry and markets become to avoid risk and reduce labor costs (and thus make a profit), the less demand there is, and falling demand results in a declining rate of profit, which is deflationary.

While both result in a declining rate of profit, deflation is a crisis proportion, disinflation is not.

The more labor is paid the less the marginal profit, and that, according to capitalism, is a moral hazard because it reduces the reserve. We foolishly end up consuming the capital from which employment (the wages and salaries that demand consumption) are paid. This, you see, is not a paradox, it is a contradiction, as Marx pointed out, and so we ignore it as crazy, ideological rhetoric that advocates against the philosophy of selfishness that capitalism mistakes, unparadoxically, for self-interest.

(Although the value held in reserve, or "surplus value," accounts for the inequitable income distribution we have now, the reaction by liberals is to expand the money supply with fiscal stimulus, and conservatives with fiscal austerity. Neo-classically, understand, expansion of the money supply--inflation--is inevitable. Without it, capitalism dies as a means of producing value because, due to a declining rate of profit that can only be resisted by adding to the supply of money while, at the same time, exacting labor savings to increase the margin--unemployment, "the capital" is then, by every empirical measure, neither capable of controlling inflation or unemployment. Capitalism becomes an easily recognizable liability. Instead of adding value, it is always adding quantum complexity, which needs elite management to accumulate and distribute "the risk" that "conserves" the reward accumulated over time.)

In order to control the accumulated error (the systemic risk) of consolidated labor (and notice how the risk factor--consolidation--is mutual), labor must be cleverly managed and directed to accept the necessary loss.

At the expense of economic expansion, labor is positioned to take the loss necessary to expand the marginal profit. (This is what economy-of-scale, too-big-to-fail banks, like Bank of America and Goldman Sachs, are in business to do, and other businesses organized too-big-to-fail benefit with a high margin of profit that distributes to shareholders at the expense of labor. Much of the expense occurs, keep in mind, as a late-order effect, the Great Recession being the latest example, which is then argued to be "the invisible hand" and not an expropriation by deliberate design. This does not mean that the invisible hand is a non-entity. If you operate a small business, not only are you subjected to alpha risk, but the gamma-risk dimension that operates to take your profit, and add it to the too-big-to-fail marginal profit, through rising inflation and unemployment.) Instead of productivity, capitalism, contrary to its advocacy (like we have now), is paradoxically prone to producing and managing the risk of loss (risk-value) by intelligent design.

Rather than reducing angst (remembering that risk cannot be reduced--it is fully assumed--but angst can be by, for example, deconsolidating, or spreading, the risk), risk is accumulated and distributed according to income class. The result is a class of anxious risk takers (small businesses and labor) being dependent on (subjects of) the risk makers (the so-called job creators) who admit they are not in business to create jobs (like small businesses do to make a profit), but to manage risk to expand the marginal profit.

Since the best way to expand the marginal profit is to organizationally consolidate the risk into a too-big-to-fail (high anxiety) proportion (the detriment that paradoxically plagues us in our self-interest), and since the marginal profit (capital gained for investment) is what expands the economy, government policies and programs that ensure healthy marginal profits ensure maximum supply. (Value is not added by adding supply, however, but by adding value--risk-value--to the supply, which adds to the marginal profit at the expense of consumer demand, which is deflationary.)

Consequentially (remembering that we are not in business to create jobs, but to make profits), always adding value to the supply side (measured by expansion of the profit margin) adds jobs. Employment is added as a late-order effect (a marginal product), efficiently determined to be at the highest possible rate the free market (the invisible hand) can create on demand (at the lowest possible cost).

(The Commodity Futures Trade Modernization Act, for example, is supposed to expand the marginal profit, which supposedly adds supply. It's no coincidence, however, that commodity prices have spiked since its enactment, and while persistent headline inflation is being attributed to worldwide shortages and rising demand, these fundamental factors did not present as the high prices we have now until commodity futures were, by act of congress, "modernized."

Although the futures markets were reformed as a "supply-side" measure--allowing your savings to be invested in futures--supply is not what is being added. Risk-value is being added to the supply to derive capital gains on demand, which is taxed at the lowest possible rate because, supposedly, it expands the marginal product--economic growth that drives the demand--at the lowest possible cost.)

As a function of the marginal product (the volume, economy-of-scale discount Wal-Mart provides, for example, at the lowest possible labor cost), employment is subjected to the marginal profit. It is dependent on capital to provide the value necessary to self-determine, which according to reactionaries functions to avoid "the peril of equality"--the lack of productive incentive and creative ambition--relying on government is sure to cause.

Labor is subordinate. Its value is controlled on both sides of the equation: what it is paid to produce, and what it pays to consume it; and because maximizing the margin derives from controlling costs while increasing pricing power, it is no wonder that consolidation of industry and markets typically results in both inflation (despite the volume discount) and unemployment (despite the value added at the margin).

(It is important to understand that the detriment consumed--inflation and unemployment--is transformed into gamma risk, which is described and explained on this website. Keep in mind that the gamma is, paradoxically, both good and bad. While it measures the quantum detriment consumed, it also measures the fully assumed risk of loss that capitalism manages as a liability. That liability is an asset, nevertheless, in which fully obtains the intelligent measures necessary to avoid the crisis proportion the gamma always attains.

The gamma--the quantum risk being consumed on command rather than "on demand" like in a free market--indicates the need to deconsolidate the risk so that it occupies space in the alpha dimension where "the risk" is mutually beneficial and unavoidable. Alpha risk is a liability that capitalism is designed to resist because it affects "pricing power," which is the ability to command the marginal profit that in a free market measures the consent--the marginal, unconsolidated risk--of consumers "on demand" in their self-interest.

Consent means that the detriment is mutually beneficial--it provides strength, virtue, to the entire system without risking the natural intelligence, the hedonic calculus, of the self. This, you see, is where capitalism relies on philosophy--the right ideology--to deduce an objective, moral identity. It can't focus on policies by induction because they are always being disconfirmed. Instead, it focuses on unempirical measures that avoid the virtue, the empirical truth, of a popular consent.

The marginal profit capitalism argues is necessary to stay in business is really a philosophy of selfishness that, paradoxically, is described as moral intelligence; and if you don't think that gangster capitalists are not operating with the highest degree of moral intelligence, then you must be a socialist--a communist who believes in the destruction...the darkness...of freedom and self-determination. Advocating that markets need to be deconsolidated to ensure freedom and self-determination, which sacrifices the marginal profit to popular consent and turns the governors into the governed, is counter-revolutionary.

Paradoxically, suggesting that we ensure a free market in priority--by making sure the risk is deconsolidated so that no single party, or collusion of parties, can "make the market" to detrimentally gain and control more capital than anyone else--is considered by conservatives, both on the left and the right, to traduce the Constitutional right to life, liberty and the pursuit of happiness.

Understanding the paradox is to realize that a philosophy of risk is in technical operation. Specifically, a philosophy of selfishness is technically posed as the productive utility of self-interest.

Since philosophy, in the age of science, keep in mind, is largely confined to lawyers tricks, its technical use is easily limited to successful exculpation of value derived from detrimental risk. As Loyd Blankfein testified on Capitol Hill, for example, detriment is technically a public good--a quantum value that derives productive incentive, and adds value, from self-interest.

All manner of legal chicanery is utilized to exculpate the value of the risk-detriment. The risk-assessment is technically not a function of philosophical analysis until it is adjudicated for compensatory damages, and the retributive value is then typically limited to a civil liability that the corporate body absorbs as a cost of doing business.

Philosophy of risk is technically critical for assessing criminal liability as well. Although it is more rare, due to limited liability of the corporate body, which cannot be assessed with intent because it is really, technically, not a person, a criminal intent is perceived, and a retributive, gamma-risk valuation accumulates, nevertheless. Organized consolidation of power into the corporate body is not criminal, you see, it is, technically, thrifty.

By technically reducing the risk-assessment to a philosophical analysis--with the truth, or objective reality, contained in the paradox--the risk is never actually assumed, but attributed. Late-order effects, like unemployment, for example, have the attribution of a "lagging indicator."

Unemployment, rather than being an intentionally detrimental effect of organized consolidation, is really a natural consequence of free-market competition. In late order, markets are made more efficient, making labor more competitive and thus more productive, which adds supply, reduces shortages, and keeps the peace. Consolidation of wealth and power is, you see, not selfish, it is, paradoxically, thrifty and avoids the peril of equality by ensuring dependence on capital, which in-vests, or encourages, economic productivity over political patronage.)

The paradox of thrift (the accumulation of capital gains that according to capitalists must, by its virtue, go untaxed to ensure its fullest investment value), remember, is supposed to expand the pie. If that were true, however, we would not be struggling to break out of a world-wide recessionary trend. We should be in a state of high GDP and full employment--we should be blow'n the doors off!

Instead, capitalism prefers to derive value in dark markets (markets closed but to a small, technical elite). While this is exactly what a free market is not, ironically, the darkness technically begins with Federal Reserve "swap lines" empowered by its Open Market Committee.

The "swap" effectively controls the policy space necessary to determine the "direction" of the risk.

Currently, in the form of "innovative" financial instruments, risk is being technically directed by the Euronext and the Boerst--two SIFI's that dominate the derivatives market. DOJ has approved merger of these two institutions, and if approved by European regulators will effectively consolidate the capacity to direct and derive the risk with an economy-of-scale efficiency.

Since the larger scale effectively demutualizes risk that otherwise occupies the space of a free and open marketplace, we can fully expect risk to gain an even more catastrophic proportion. Its value is held in reserve and traded in the name of controlling, or directing it in a too-big-to-fail proportion.

As we know, this oversized, economy-of-scale, consolidated proportion is prone to failure, and as we know, this failure results in big capital gains in the form of "credit-default swaps." These "swaps," you see, derive from vesting the reward with the probability of default, which means it is not a probability at all (except that it largely occurs in the dark where your seeing it is highly improbable). It is not a gamble, or an act of God, but a sure thing, and the crisis that quite naturally results provides the need for even more consolidation to protect us all, indivisibly, from the consolidated risk proportion.

Risk is being perpetually derived from itself. It is not being added! This is important because it means we cannot solve the problem by merely subtracting it, like when we increase reserve requirements, since it has not been added! No, risk is organized to rhythmically recycle--what analysts refer to as technical indicators--and "make" it appear ontologically derivative. When hedge-fund managers say they are "making markets" to increase liquidity, they are not adding risk-taking productivity but selfishly protecting themselves, hedging against the probability of default in the making.

Increasing reserves does not reduce the marginal risk because the too-big-to-fail proportion is not only conserved, it is added by requiring more capital than 99 percent of consumers can ever have to demand, and prudently regulate it.

Increasing the capital required to cover potential losses does not in-vest the capital, it keeps it in reserve, which increases the probability of default. Risk is being tautologically re-vested (held in reserve) in the name of capital formation, optimal liquidity, and the investment that provides the incentive to take risk, from which derives our productive capacity.

Productive capacity, you see, according to capitalists, derives from capital, not labor, and the less value imparted to labor the more capital there is to be consumed (the philosophy we popularly know as Reagaomics, or trickle-down economics). As we come to know again and again, however, this is a self-consuming philosophy of the risk. Instead of reward being derived from the risk taken (the capitalist being subjected to the prudent regulator), risk is derived from taking the reward (the prudent regulator--the consumer--being subjected to the capitalist).

Remember, by "making" the market and "taking" the reward, risk is not being added. Risk is being derived, organized, and positioned to predictably occupy space over time. Since this occupation occurs over time in a cyclical proportion, rather than all at once, which would make it look tyrannical, the variable frequency makes the value--the income--it yields look legitimately earned (and according to de Tocqueville, avoids "the peril of equality"). The capitalist, rather than having taken advantage of market participants by subjecting them to detriment has, instead, predicted the probable, naturally ontological and randomly stochastic occurrence of the risk. Thus the reward is not taken, it is earned--derived from technical means of superior intellect.

Capitalists use their intellect, guided by the laws of nature, to turn what is a fully assumed risk of loss into capital, which is then invested to hedge the risk. Successful capitalists do not expect people who are intellectually slow or lazy to understand how this works or how it is serves their self-interest. We should trust that capitalism always does the right thing because it uses nature--our natural, selfish instinct--to derive capital. Doing it any other way is to deny our very nature (we suffer the loss of our true, objective identity, or as Ayn described it, "A is not A"), and that isn't very smart.

Deriving risk from the reward (being prone to crises) may not seem too bright, but it requires the special understanding that Ivy-League MBA's have the capacity--the ambition--to acquire. It takes a special breed to understand that the detriment we must experience (the austerity that provides tax cuts for the rich) is (as Ayn Rand, for example, explains it) our natural condition.

Nature, you see, is complex. Just consider what looks like a lot of incomprehensible scribbling to mathematically describe quantum mechanics, for example, and the minds that technically understand our natural condition as a set of infinite probabilities of unknown quantity have been hired by Wall Street to build a reality that derives, quite naturally, from its philosophy. So, we have the derivatives market, built and managed by the best and the brightest--those with the capacity to understand the secrets, the complex reality, of nature.

Since the derivatives market is so complex that only the gods can understand it, it is hard to see how it can be regarded as free and open. By definition it's not. So, what's it for?

Remember, "In God We Trust." It is our motto, stamped on our currency. If "We" the little people do not understand it--if we cannot participate--it is because we are not capable...we do not have the secret knowledge to see in the dark. We trust in the gods to guide us (direct us) through the dark ontology that is "the risk of loss fully assumed" in a world of infinite probability. So, to protect us from "the risk" (a quantum we have come to know by ensuring its probability), it is directed to derive from the reward, which seems kind of unnatural, paradoxically, doesn't it?

As discussed in previous articles, keeping labor and consumer value integral provides for quick and sure accountability, which, by the way, reduces the need--the demand--for government (and the need for a small, technical elite operating in the dark).

By swapping integral and derivative values, neo-classical, "consumer" theory largely consumes the savings labor has for investment. Consumption of that economic value, you see, is the class warfare--turning equity into debt--that conservatives politically react to as a moral hazard.

Using consumer theory (reacting to prevent a moral hazard that is an integral part of capitalism) falsely attributes the detriment of minimizing labor value (demand reduction that is classic "overproduction") to "the paradox of thrift." The fully assumed integral, but highly divisible, risk of loss in the alpha dimension (the moral hazard) is consolidated into a gamma-risk proportion (a derived, highly indivisible, risk in the political dimension). In other words, you can be stuck with the risk without sharing in the reward.

In the gamma dimension, the risk-reward is not mutual--it is not alpha, which is a moral hazard in the strictest sense because the prudent regulator cannot, then, sanction with the reward and modify bad behavior. Currently, for example, populist sentiment is frustrated with the inability to sanction because the integral value required is being held in reserve with businesses that are too big to fail and a government authority largely operating to protect that trust.

Operating with the theory that value must be held in reserve (consolidated) to prevent general crises (rather than deconsolidated) predicts the crises to be prevented.

The reserve requirement represents a missing modifier (the quantum "risk" with alpha quality) that has reached a critical, gamma-risk proportion. This unavoidable (fully assumed), quantum value, that serves to modify behavior by anticipating future value and the ability to control it (angst), re-presents in a proportion that is uncontrollably catastrophic as long as it is required to be held in reserve.

Instead of being required to deconsolidate, the risk is consolidated into government authority where, unlike a free market, it is managed separately from the reward. This effectively de-mutualizes risk so it can be "consumed" to fit a governing philosophy. ("Paradoxically," you see, while this philosophy posits that reward derives from the risk taken, it is a natural philosophy that assumes loss no matter what, it's just a matter of determining who legitimately takes it, thus delimiting the moral measure from which behavior modification derives.)

Capitalism successfully avoids the alpha risk (behavior modification from the bottom up) by consolidating industry and markets, which is supported with a technical philosophy like trickle-down economics and the so-called "moral hazard" of taxing the job creators. By not reducing labor value to its derivative consumption, however, the paradox of thrift "naturally" resolves. Capital formation will occur not by swapping risk-value in the dark to cause, or derive, deprivation, but freely and openly with the full faith and credit (the positive, providential support) of the sovereign power (We the People who govern by the light of day, not in the dark).

The Invisible Hand and Dark Markets

Dark markets are fully intended to distribute the quantum we call "risk." This quantum is distributed algebraically by design. It is a business plan with the derived detriment producing a benefit on one side of the equation, which derives the detriment--the risk of default--on the other side.

Businesses that use this plan claim that the equation is descriptive--it predicts the detriment and thus the profit derives from a temporal sequence that is an undetermined, ontological risk. If, for example, your home is foreclosed at half its purchase price, and Bain capital is there to buy it at "fair value," the invisible hand is at work deriving value from the detriment, not private equity by deliberate design.

Since the business plan is not prescriptive, the risk-value is exculpated. Private equity's liability is limited and the process of "creative-destruction" verifiably conforms to the legitimate ontology of risk-reward. Value (and risk) is accumulated and distributed through the fair, equitable, and easily verifiable means of market mechanics wherein everyone freely participates with full capacity to self-determine.

An invisible hand derives the risk by default--by operation of the plan--and thus the need (for both labor and capital) to consolidate to protect the "self" from the accumulating risk. Without the accumulated capital (the full capacity) to "make" the market, those who lack full capacity "take" the risk according to plan.

Since, unlike a free market, not everyone participates with full capacity (operating with the full, proprietary risk of the prudent regulator, as discussed in previous articles), the result is a dis-integration of risk-reward. The coefficiency loses its verifiable legitimacy and must be managed with ideological identity (see the previous article).

The invisible hand of the business plan becomes fully visible and verifiable through inflation and unemployment. The ability to pay the economic rent (your level of participation) identifies what class you are in. It is then the job of the central bank (the Fed) to provide the liquidity (the means to pay the rent) necessary to finance the derived value since the value of labor (wages and salaries) is being accumulated at the top of the income scale by extension of the rent the central bank has provided.

By extension of the rent, not only does labor finance the wealth of the nation but has to rent it back to pay the debt. The quantum "risk" eventually gets so huge that the potential for profit (default) on the other side of the equation is all but uncertain.

Self-interest, according to capitalism, drives the profit and, on the other side of the equation, our productive capacity (providing supply the vast majority struggles to buy without debt, or detriment, which cures shortages). The intrinsic motive, the power, to satisfy the self (taking on more debt than equity, for example) is, essentially, the quantum (the measurable risk) referred to as the "invisible hand."

When labor takes the risk that capitalism makes in the dark (unemployment), it is all derived from self-interest. Capital is not culpable because the risk of loss is fully assumed (derived by the invisible hand) when participants enter the marketplace and pay rent to occupy its space.

Capitalism does not selfishly confiscate value form labor and force it into bankruptcy. Labor, instead, selfishly tries to be paid more than its fair, market value, which is why, according to capitalists, it is necessary to bust unions. Collective bargaining distorts free-market prices (inflation).

Labor value, rather than having been expropriated, has been self-deprived (self-determined) by trying to reduce the rent the market demands to create more value than it puts in. (The extra value created is "the capital"--the risk, or the rent, necessary to expand the pie and reduce shortages while, at the same time, on the other side of the equation, creating jobs, which demand the profit and, in turn, the need for productivity that "the capital" derives from value demanded fairly and equitably in the marketplace). To correct for this selfish error in judgment (to be expected of the "great unwashed" who think it is wise to operate without elite identity), the free market (the invisible hand) naturally adjusts in everyone's self-interest (unemployment).

It only appears, then, that capitalism causes the double detriment of inflation and unemployment, and those who think otherwise, conservatives are sure, will always be "left" in the dark, unenlightened by the timeless wisdom and objective reality of a right-wing identity.

Management by Objective Identity

We still cling to the legacy of an aristocratic, class identity. Whether it is the liberal behavioralist looking to manage risk right down to every individual, or the conservative looking to maximize freedom and self-interest with an economy-of-scale efficiency, both tend to rely on consolidation of power to achieve a philosophical objective. Technically, however, increasing consolidation to manage risk is a "big" mistake.

Bigger is supposedly better. Operating a successful business on demand, for example, with how big the business grows being the measure of success (by popular demand), it is necessary to organize and control the externalities into stable, routine tasks that reduce the risk (the probability) of detriment, and the best way to do that is to organize large, bureaucratic institutions (that tend to operate on-demand, or by command, rather than by popular demand). Then, if we want (by popular demand) to control the consolidated power of big corporates (and demonstrate at least some measure of self-determination), we also need big government.

Large corporates organize to control the risk (the extent of self-determination) by operating with an objective identified from the top down. This essentially means power is exercised by ownership. So, for example, trivial as it may seem, when employers require drug tests to acquire income (which is required to self-determine), or the government requires testing to receive welfare, employees, and the needy, are effectively being demonstrated as "subjects."

Being subjected to either the "job creators" or government, the value (the fully assumed risk of loss that needs to be demonstrably controlled, and consumed, in even the smallest way) is conserved in historical perspective, and that conserved value is what we typically refer to as "history repeating itself." While the American Revolution, for example, ended being subjected (owned, or consumed on demand) by a controlling, sovereign authority (other than the "self"), the identity still persists by objective. Today that identity is secured in the form of debt (risk the "self" assumes by social contract) and cyclical boom and bust (risk assumed by natural occurrence) in which history is expected to repeat itself.

(Remember that what business analytics refer to as cyclical risk, huge rewards are engineered to derive in equal proportion. The implication is that the detriment is a naturally stochastic oscillation. It is cyclical like the weather, and when the weather is disastrous it is the role of government to provide relief.

The public and private sectors converge to apply the risk, achieving an economy of scale that has the appearance of trying to predict the weather. For example, mortgage debt can be securitized through GSE's. When the debt defaults, due to insufficient income to pay the debt, the government perfects the commercial-paper losses--the failed CDO's--with a bailout. The depreciated value--the short interest, or CDS's--of the collateral obligated to pay the debt is covered with payments transfered directly to the banks in the form of disaster relief and crisis prevention. The reward is then distributed from the top of the income scale down, leaving the lower class with more debt than equity, or insufficient funds to pay the debt, which is the crisis to be prevented. The private sector then claims the detriment is "government sponsored" because, well, it is.

Government is operationalized to take all the risk, which is distributed in the form of austerity measures to pay debt from the bottom up. The fiscal crisis in Europe is the latest example of this fully engineered process that subjects "the little people" to a recurrent demonstration of power that looks ontological, like the weather, because it is organized on such a large scale.)

Public or private, aristocratic power is a measure of organizational size. The bigger it is the more bureaucratic and stratified governance becomes to conserve the stakes (the risk of loss). The more stratified, the more elitist the power structure tends to be to conserve the span of control (the capacity to self-determine) like the king did, unsuccessfully.

Identity of the risk tends to be conserved by objective. After the American Revolution, for example, there was considerable argument over how big "big business" should be because the bigger the firm the more powerful (like the king). Since the objective of the Revolution was government by consent, having businesses so big they can determine success or failure--and thus consolidate the assets (the private property) of power--was considered, by Republicans especially, counter-revolutionary. It would allow an elite class of property owners to determine the identity of "We the People."

After the Declaration of Independence, and the Revolution, The People were left with an objective reality (an identity crisis) that still plagues us today. We have to choose, supposedly, whether we are dependent on government or dependent on a corporate bureaucracy. Both, of course, are identified with elite authority, which means there is a false dichotomy (and a false identity) that struggles to reintegrate, and rather than being resolved, the dichotomy is organized to reinforce the identity.

The identity results in crisis because, instead of being sure the risk proportion is deconsolidated by operation of government authority, which would very simply and effectively define its limit, we tend to identify with organizing the risk in a complex, aristocratic, too-big-to-fail proportion. Power is organized to operate enigmatically, with secret knowledge hidden form everyone but an elite, inner circle who have the natural, "god-given" power of self-determination, while at the same time arguing we all have the power to self-determine. Since organizing with this objective identity tends to dis-integrate, in a very unnatural way, the legitimate coefficiency of risk and reward (which is why, remember, the Revolutionary War was fought), we tend to always be avoiding potential crises in the name of prevention (toggling between a liberal and conservative, objective identity to manage the risk).

What we then have is an overall form of governance that subjects the masses to--and identifies them with, by self-determination--all the economic risk until it accumulates into a political, gamma-risk, crisis proportion. Once that objective obtains (occupying all of the available space), government is needed (organized with the corporate) to bail us "all" out; that is, the greater good naturally converges with self-interest and occupies the space of the common good. Instead of a tragedy of the commons we have then, objectively, a reoccurring tragedy of elite psychoses.

Occupation of all the available, policy space in the gamma dimension is what we refer to as "the general welfare," and keep in mind, being sure that "welfare" is not occupied by the vast majority is "the risk" aristocrats are always organizing to avoid on an ever-larger scale. Class identity is conserved while, at the same time, cleverly claiming it is a product of self-determination verified by class mobility, which maintains a false dichotomy as an objective reality.

Both business and government are organized to conserve the objective identity of the risk, which is operationally organized to produce detriment--the risk to be avoided by means of self-determination. If government is always occupied with saving us from crises, then it is never determined to prevent it by operational objective. Business and government then gets so overwhelmingly big that the concept of limited government has only an aristocratic identity.

Risk is organized into ever-larger, economy-of-scale efficiencies to conserve class identity. Since the crisis of identity--the dis-integrated value--is recurrent, its management is maintained not to avoid it, but to ensure it in priority.

Working with the hypothesis that if we limit the size of government "all" will be well is recurrently disconfirmed (prompting us to throw the toggle switch). No, empirically, increasing the size of corporates always increases the size of government. Without limiting the size of the corporate first, we will not objectively reduce the gamma risk.

Reducing the size of the corporate body will reduce both inflation and unemployment, an objective reality the Federal Reserve, Open Market Committee will always struggle to even approximate.

While adhering to an objective identity that goes back to the founding of our nation will help cure what ails us, we nevertheless find ourselves struggling with the interpretation of that reality. What, exactly, does "limited government" really mean. If, for example, it means the corporate gets bigger, then limited government is a utopian vision.

The bigger the corporate is allowed to get the bigger the need for government to manage the extreme detriment (the accumulated risk). Government, by popular demand, rather than the free market, ironically, is necessary to regulate the risk (like the Great Recession). According to free-market theory, however, popular demand is the only reality that legitimately verifies an objective identity...no secret knowledge is required.

Empirically, it is apparent that government needs to change its objective identity. Instead of operationalizing with big business to cause detriment without risk to the aristocracy, government should be limited to ensuring businesses are small enough to be governed on demand. At our founding, however, those who aspired to an aristocratic identity considered this to be detrimental because it diminishes the power of elite self-determination and subjects it to the non-elite, which (as the king claimed) is a moral hazard.

Detriment, understand, is an objective the aristocracy identifies with the benefit in a too-big-to-fail, economy-of-scale proportion. When Mitt Romney says GM should have been allowed to fail, like in a free market, he forgets to instruct us that GM was deliberately organized to be too big to fail, which defeats the detriment of being subjected to free-market objectives on demand. Romney knows that but, secretly, the private equity firms he worked with operate to profit from the detriment being "too big" causes, not to prevent it.

The bigger you are, the more powerful you are. The bigger, the more capable of organizing, or consolidating, as many people as possible into what is your self-determination.

Self-determination is power, and our founders identified this as an objective reality (self-interest) endowed by divine right to the job creators who, with unsubjected providential power, create value that would not otherwise exist from the capital.

Not admitting to the full, integral value of labor is a critical failure right from the start.

From our founding, aristocratic identity of risk-value, which forgets labor creates value integral to its use, resulted in an accumulated crisis proportion four-score-and-seven years later. Although slavery has been declared unconstitutional, we still struggle with peonage, clinging to a class identity that, while being revolutionary, was founded with an aristocratic objective.

Originally, Hamilton, for example, seeking to conserve the wisdom, wealth, and power of the aristocracy, favored cultivation of a power elite as the natural order (with the elite essentially demanding the consent of the governed), while Jefferson, for example, favored a more pluralistic, deconsolidated organization (with the non-elite demanding the consent of the governors) in the representative form. This philosophical difference technically bifurcated into the liberal and conservative factions that today actively organize our political economy.

As long as we have both liberal and conservative factions always begging the question (which is a fallacy produced by the way the process is technically organized--binomially consolidated), the problem, pathologically, will always be the solution and the solution, ideologically, will always be the problem.

While we continue to struggle with deflationary risk, as the value of the Euro compresses, for example, the "reaction" is to consolidate to keep from adding risk. Since risk cannot be added, but accumulated or distributed, we fail to heed the signs of impending crises.

The Fed, for example, has recently testified another liquidity crisis is soon expected in the form of fiscal instability, which is why it has "swapped" $103 billion for Euros so far. When combined with Bernanke's comments a few days prior that the Fed can't control unemployment, the implication is that there is a causal relationship between sustained unemployment (capital derived at the expense of labor value) and the so-called creative benefit of capital markets organized (consolidated) for impending destruction. It is not the least bit curious, then, that bank stocks moved up on the news of impending fiscal crises considering that they profit form these crises in a too-big-to-fail, gamma-risk proportion.

These crises of liquidity (insufficient funds to pay the debt), you see, are not a random walk, but the result of a business plan that effectively turns the vast majority into peons, working harder and harder for less and less to pay off debt that accumulates at a rate that exceeds income.

Look at how this plays out by objective. The "swap" is organized so that financials will benefit at the expense of labor value, and while conserving the value of the capital is supposed to create labor value, by objective, labor value is expected to be lost.

Value will be derived from labor in the form of austerity measures to stabilize the system, which in turn destabilizes the system. It is pathologically risk-prone in order to be risk-averse, and this stems from an ideological identity, a philosophy of risk, that conserves value--the stakes--in the gamma-risk dimension where it can be easily directed by a technical elite in the interests of an historical aristocracy.

Eventually, the risk becomes so consolidated that a distribution must occur in order to conserve the accumulated value, and since this is a contradiction, not a paradox, the discrepancy historically resolves with an objective, revolutionary dimension.

The risk goes fully gamma--it fully consolidates into a catastrophic, crisis proportion that is derivatively managed in dark markets (with an "invisible hand" that manages risk by objective consolidation rather than a free-market ontology). While fiscal crises are detrimental, they produce a massive capital gain (income that is largely exclusive to class identity) at the expense of labor.

With value being cyclically accumulated (boomed and busted) in ever-larger, historical proportions, and at higher frequency, objective identity (what is being referred to as "class warfare") is being managed by swapping credit for default. (The swap is what Romney, for example, identifies as "creative-destruction," which implies that nature's detriments--the objective reality of fully assumed losses--are best managed with an elite, aristocratic identity, but it is not to be confused with causing the detriment. Instead, private equity--aristocratic wealth and power--is used to create even more wealth from what would otherwise be a dead-weight loss. By organizing the externalities into an economy-of-scale, reality--nature's undirected objective--is managed with an aristocratic identity that, all things considered, produces more value out than put in.) The ontological, "integral" value of labor is credited with debt, which effectively shorts its value (the detriment "derived" by renting back to labor its full value in the form of capital, which is consumed in the form of risk-value, or expected crises).

Instead of credit being distributed, it is consolidated, distributing risk in the form of deflationary, credit-default swaps. While the value derived from the detriment occurs by default, with the appearance of being ontologically derived, the risk is actually being managed by identity.

The predictable result is cyclical psychoses--identity crises in which the aristocracy demonstrates clear, empirical confirmation of its status. Although, keep in mind, this demonstration of power (of identity) objectively operates in dark markets, shammed with the concept of the invisible hand to make the objective (what happens by default) look legitimately undetermined, the outcome is entirely a culpable act of self-determination, which authentically demonstrates power.

Credit-default swaps, for example, are analytically identified as gambling devices to suggest a random, ontological, philosophical legitimacy. Technically, however, their objective use is no gamble.

Exculpation of the Risk

When considering the "objective reality" of capitalism, keep in mind that the pathos of private equity (in spite of objective reality) does not subscribe to labor value being integral to the profit margin.

Capitalists readily admit that they are not in business to create jobs. The prime objective of the self (what determines our fundamental, objective reality) is to make a profit, and trying to deny the self of this natural right--keeping the full measure of its achievement for yourself, like Adam Smith said--is cause for high anxiety and revolutionary sentiment.

According to capitalism, the value of labor is derived--it is organized--from the accumulation of capital. Hence, anything that encumbers the accumulation of capital (like the risk government adds) predictably deprives labor of value. It is then the job of private equity firms, for example, to re-create (reorganize to innovate) value from the destruction (the dis-integrated relationship) of labor value derived from capital (the value to be exculpated, typically with government intervention).

The reward for working to derive value, remember, is the profit--value created that would not otherwise exist--and when combined with the risk of loss yields an added margin called the return on capital investment, or a marginal profit, often referred to as "working" capital used to add more labor value. So, for example, when both liberals and conservatives agreed to expand home ownership at the margin, they reasoned that the marginal profit would add the marginal product--the labor value--necessary to pay the mortgages.

Capital, however, was put to work in dark markets using "risk-transfer vehicles." RTV's, remember, are the innovation that repeal of Glass-Steagill promised to produce, allowing the financial sector to freely enterprise--consolidate--toward general prosperity. These innovative, risk-avoidance, financial "products" created a marginal profit by starving labor of added value, effectively positioning labor to take all the risk, leaving private equity with all the reward.

Since the profit margin is based on the amount of risk taken, reaping the reward without risk is illegitimate--it is racketeering.

Disguised as free marketeers, "gangster capitalists" do not just predict outcomes, they cause them. They determine outcomes with the intent to cause harm, and the only risk left is the risk of retribution. The exculpatory claim here is that capitalism predicts nature by organizing its otherwise high-anxiety, undetermined risk, and so encumbering the free enterprise of capital increases anxiety and the risk of civil disorder.

To protect themselves from the risk of retribution, these criminals must engage in a moral narrative that exculpates the risk-value, typically arguing that prosecution deprives the talent (the psychotic intent, the selfishness, that they refer to as self-interest) needed to put capital to work. (In order to conserve the philosophy of selfishness as the moral imperative--as the prime objective--government is then used to conserve the status quo. Conserving the inherent risk in order to avoid it, which is extremely psychotic, is referred to as maintaining civil order, or reducing probable panic, by bailing out industries and markets designed to be, in everyone's self-interest, too big to fail.)

Organizing the capital for expanded home ownership resulted in massive unemployment and foreclosure. It was rigged to yield a marginal profit by causing detriment, meaning that the reward was had not by taking risk, but by making risk--making the market for its conspicuous, class-consumption. (The consumption is conspicuous because it defines--it gives objective identity--to who occupies socio-economic space. Since anybody can occupy this space by organizing risk to make a profit, like Steve Jobs, the risk is generally exculpated. So, for example, it would be a moral hazard to mandate Apple, or any other firm, make its products in the US if it wants to sell them here, or tax away the marginal profit to provide the income to buy its products.)

In the case of the mortgage crisis, instead of adding the income--the labor value--needed to pay mortgages and maintain the net worth of the middle class (if you are shipping jobs off to China, for example), the capital derived from labor (both here and in China) has been, and will be, put to work consolidating these assets into the wealth of the upper class. The added wealth is referred to as "the wealth" that measures the general prosperity "of the nation."

The accumulated wealth, naturally, overflows and generously trickles down. Surplus wealth naturally transforms into capital to provide for the less fortunate. Wealth is provided to the less enterprising who depend on the organizational skill (the capital formation that comes with the desire to make a profit derived from labor) to produce equity.

The objective to consolidate wealth (and the power derived from it) adds value ("equity," or private property that markets determine to be "fairly" valued upon acquisition). Capitalism adds private property...specifically, the private property foreclosed and resold, or that trickles down to "make" markets so that profits are generated to re-add the (fairly determined) value consolidated. Liquidation, then (a contradiction that is euphemistically described as a paradox), provides the liquidity necessary to generate the nation's wealth and the employment--the productive incentive called "labor value"--to sustain it.

Private equity, you see, and "making markets" performs a public service. It provides a public good--the capital that creates jobs. That is, according to the pathos, it derives labor value from capital that would not otherwise exist. Capitalism, rather than being the abomination that deprives labor of its full value, "objectively" provides labor with more value than it would otherwise have.

Instead of being risk prone, capitalism, in reality, Ayn Rand would say, for example, is objectively risk averse. Since liberals do not have the depth of understanding (the secret knowledge--the pathos of the unseen hand that exacts fairness) to realize the benefit private equity provides, they mistakenly try to add capital through stimulus programs.

Liberals do not understand that by exacting economic rent from existing businesses we add (with the invisible hand) the stimulus value needed for sustainable, economic growth. By mistaking economic rent for detriment, liberals do not understand that the profit paid to form the capital (the rent), with debt acquired from the discount window at near-zero rates like private equity, hedge-fund firms, and the proprietary desks of big banks do, adds all the value we need to repair the damage of government intervention.

The profit paid to gain capital should not be taxed or regulated if we are to enjoy its fullest benefit. Instead of making big banks pay down home equity values from profits made on money borrowed at near-zero rates, for example, the market should be allowed to freely enterprise.

Private equity, "acting" in self-interest, should be allowed to freely demonstrate its power to provide liquidity (which was paid by homeowners in the form of economic rent). Private equity will solve the liquidity problem by buying up millions of homes in foreclosure whose value was essentially destroyed by RTV's and the proverbially postulated, providential hand of economy-of-scale firms invisibly operating in dark markets. Liberals, however, according to right-wing reactionaries, do not understand that beneficial value is (paradoxically) created from the destruction (the detriment) if they do not "react" by intervening in the marketplace.

(It is important to understand that given a consolidated marketplace the "invisible hand" simply refers to a lack of transparency and participation, and again, this is a contradiction--a liability--that must be exculpated by fraudulently claiming it is a paradox to be tolerated. Given an unconsolidated, free-market, organizational ontology, however, the "invisible hand" effectively acts, rather than reacts, to limit the need for government intervention.

That a free market really works if we ensure it in priority rather than supporting a too-big-to-fail ontology as a given, objective reality is the secret knowledge that capitalists don't want us to know. Capitalists don't want a free market because, without deconsolidation, arguing for limited government renders an invisible hand that visibly "ex-acts" detriment, which demonstrates who has the power to self-determine, or who consumes the detriment "ex-actively."

If allowed, by objective, to operate without a genuinely free market, the detriment that capitalists exact demands government react with intervention. Not only does it exculpate the risk-value, but consolidation results in welfare, which includes bailing out wealthy bankers, subsidizing corporate conglomerates that pay out healthy dividends, providing doctors with a very healthy fee for service, and health insurance premiums by government mandate, just to name a few.)

The secret knowledge--the reactionary pathology--is that fiscal stimulus does not add value, it adds risk, and so, according to the psychopathic predators of private equity, liberals--and their ignorant constituents--mistakenly think that capitalism deprives value when it really derives it. Not that this is wrong...capitalism does derive value that would not otherwise exist, but it is falsely derivative value that naturally tends to re-integration and causes the angst--the crises, the gamma risk--that capitalists falsely claim is added risk.

The mistake of liberalism, right-wing reactionaries contend, is the source of our anxiety, not capitalism, because it adds risk, but as we know, risk cannot be added. Risk, however, can be liberally reacted to. It can be transformed to accumulate and distribute so that the retributive value is never so high that the risk and the reward does not fully reintegrate (or converge). Labor value is conserved as a false derivative of capital formation and risk is kept consolidated in a predictable, too-big-to-fail, crisis (or gamma-risk) proportion that is always being re-acted to.

(Reactionary politics, in other words, does not allow the risk and reward to converge in the gamma dimension where the value derived from the risk is otherwise exculpated with the force and legitimacy of public authority. Acting to deconsolidate the risk in this dimension will reduce the divergence, and thus the need for government that is otherwise reacted to as added risk.)

When government authority reacts, then, to the accumulation of labor value as integral to the value of capital by retributing the value in the form of welfare (or warfare, perhaps, including class warfare, like we have now, for example), the wealth that we call private equity is there to reap the profits of the distribution. The derivative value is maintained in historical perspective and private equity then claims it is operating--deriving value--by predicting the outcome.

Exculpated by exemplum, capitalists argue that the objective is to add value by reducing risk, not immorally adding risk, and causing angst, like liberal "socialists" do.

While private equity and hedge funds may profit from the errors of liberals by predicting the outcome, capitalism, conservatives claim, does not manage capital to cause detriment by objective, and indict their critics are too "intellectually lazy" to understand the benefit it objectively provides. The detriment is really an intended benefit, but most of us just aren't smart enough to get it, and so the gangsters claim they are prone to being unjustly victimized, prosecuted, for doing the right thing.

Enterprising capitalists do not "make" a profit by "making"--or determining--markets, but by organizing it to reduce the risk, which predictably yields a profit. Never mind, however, that the risk reduction they refer to "makes" for a consolidated marketplace. Instead of reducing it, risk shifts to anyone that is, anxiously, not too-big-to-fail (which makes for the ninety-nine percent).

Always arguing for, and maintaining, an economy-of-scale efficiency of markets does not reduce risk. Instead, it keeps risk in occupation of the policy space.

Being constantly preoccupied with avoiding risk, rather than taking risk, gives us a sense of objective identity that empowers the elite with the occupation of managing what is considered to be a natural dependency, while at the same time declaring the outcome to be the result of self-determination.