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.