The Path to Austerity

Considering where we are now, the classical model of capitalism--the plan (the objective reality) Romney and Ryan have for us--is the path to austerity.

The result of the Romney-Ryan plan is always the classic crisis of overproduction. Stagflation prevents the crisis proportion (the retributive value of objective reality) from presenting all at once (something that a free market will do by preventing, rather than ensuring, the crisis proportion). Although you may not be the stag consumed in the latest hunt, the detriment will cycle around to you and yours if you are not always trying to gain value that is highly retributive--value that is not in your self-interest because it adds value only by reducing the capacity to consume it (i.e., it produces self-retributive value).

Diminished consumer capacity may seem counter-intuitive if we want to resist a recessionary trend, but according to Romney and Ryan a more regressive tax burden and cutting programs that support consumption (which resists overproduction) is the path to prosperity. These two, prominent features of the Romney-Ryan plan will have a deflationary effect. Instead of the path to prosperity, it is the path to austerity, and they know it.

Of course, reactionaries cannot be intellectually honest about the so-called path to prosperity because it entails a benefit that derives from detriment. Knowingly and willingly "making markets" to cause detriment (which Dodd-Frank explicitly identifies as a legal and proper means of efficiently managing risk) is impolitic. So it is necessary to rationalize the detriment as being somehow in everyone's self-interest, which includes the reactionary philosophy of risk (the economy-of-scale, too-big-to-fail theory of making markets more efficient to reduce risk) that underscores Dodd-Frank.

Keep in mind that economic demand is dependant on income (what is paid out to apply the risk). Income is how we all make demands in the marketplace (and it is no coincidence that jobs added after the Recovery Act are at half the price). If you don't like the way Bank of America does business, then you stop demanding it by switching to a smaller, community bank that, by the way, is subordinate to banks so big they can determine its fate by applying a macro-risk proportion.

Banks too big to fail have the oversized capacity to self-determine (determining your fate and mine) in a macro (gamma-risk) proportion. Oversized firms then say the result (application of self-interest) has the force and legitimacy of a naturally occurring (alpha-risk) ontology. The result not only has the force of nature, understand, but moral authority--objective reality verified by market forces, which confirms class identity, and application of its self-interest, with moral force.

Claiming a free-market legitimacy, big banks will force the economy into default like in the Great Depression, which keeps Bank of America, for example, in demand to hedge the risk. For depositors, however, the hedge (identifying their self-interest with the morality--the assumed beneficence--of the hedger) is a false positive.

Depositors misprice the risk in a too-big-to-fail proportion. They feel like their self-interest is better served by an economy-of-scale despite that consolidated firms will dump deposits into hedge-fake funds to adversely possess those funds.

By "making the market" in the name of free-market economics, Bank of America and Goldman Sachs convert your self-interest (your funds) into theirs, and this act of conversion occurs without presumption of abuse (with moral authority) because, remember, self-interest is the only objective reality, the only measure, in which to judge the propriety of the outcome. The value lost is not ("poof") evaporated, it has been converted, it has been dispossessed. Your assets are turned into detriment, which is managed to reduce the risk of loss (retributing value you have gained or earned back to the so-called "job creators") with economy-of-scale efficiency (being paid back out at half the price, which stagflates the risk proportion and conserves the value of the risk in historical perspective). Value earned in the form of wages and salaries is, according to capitalist theory of efficient markets (in Hamiltonian perspective), best managed to add supply (and reduce the risk of social instability) if legally and properly possessed by morally mindless maniacs touted to be the best and the brightest.

Elite recruits are prepared to exact detriment with the efficiency of emotional detachment that derives from a lack of empathy characteristic of a detached, elite status and a psychopathic personality. People that borrowed against their homes and have massive debt against negative equity are considered, for example, looters and freeloaders when suggesting they need a bailout, but when Goldman Sachs and Bank of America use depositor funds against them, and as big banks leveraged up to 100%, the bailout that occurred was "the general welfare." The marketplace was efficiently managed in the image of the psychopathic personality, designed (and maintained in aristocratic, Hamiltonian perspective) to satisfy itself in everybody's self-interest.

(People capable of exacting the austerity needed to support the profit margin without compunction are highly valued, and so they are paid extravagant salaries and bonuses, and because the lack of moral intelligence is considered a high level of clever competence, they are qualified to be President. This too is a case of mispricing risk. Like depositors, half the voting population considers right-wing, reactionary philosophy to fit their social status. They fully assume the risk of loss is less likely if they buy-in to a status that in reality positions them to take the risk--willingly assuming the role of the stag in the hunt.)

Depositors seeking to reduce the fully assumed risk of loss wrongly assume that investing with too-big-to-fail banks reduces the risk. Government will always bail "us and them" out to avoid a depression while small banks will be allowed to fail, according to plan, which allows people like Romney to feast while we famine. The capacity for self-determination conservative philosophy is so concerned with will be made much less likely for "us," and much more likely for "them," according to plan.

While ninety-nine percent of American incomes are falling against rising prices, Romney and Ryan think less purchasing power is the cure. According to this plan (the classic crisis of overproduction) prices deflate with income. It is a sure cure for stagflation, but results in general default, which is the opportunity to consolidate the wealth even more than it is. The risk consolidates into an even bigger too-big-to-fail proportion that even most of the top one percent are not fit enough to survive, but remember, the path to austerity is paved with nothing but good intentions.

(When prices deflate, remember, like in the Great Depression, supply increases because most people cannot afford to buy at any price. While the Romney-Ryan plan, following repeal of Glass-Steagill, is sure to cure shortages and reduce prices, the cure is worse than the disease.)

The vast majority of us (99.9 percent) have to seriously question how conservative philosophy, and reactionary policies and programs, serve our self-interest. Whether positioned at the top or the bottom, self-interest will be disabused, and so we all have to consider whether pricing the risk into default (conserving more value than paid out, or austerity) is really (objectively) in anyone's self-interest. We have to honestly consider where the difference between prices and what is paid out (the risk-value) really goes.

When a financial crisis occurs, the value described as being "lost" does not simply ("poof") evaporate into a cloud of vapor never to be accounted for. The value of the differential (the risk-value) cycles around--it is timed, precipitating as accumulated wealth and the accumulated power to politically sanction in the marketplace with an inequitable proportion of the alpha risk.

It is important to understand that the large proportion (the economy of scale) transforms the alpha into beta and gamma risk. Rather than value to be retributed (the inequity) being hypothetically ("poof") gone, the value is transformed into volatile, accumulative risk, and because it is considered to not exist when it really does, the value of the risk is mispriced--the value is self-retributive (it raises the rent).

Ivy-League economists are apt to posit the "poof" hypothesis while at the same time maintaining that value is essentially the ability of consumers to demand--buy and sell, or arbitrage--the risk. Overproduction, then, measures the value "lost" (evaporated), not expropriated. On the one hand, the value does not exist, on the other, it exists to arbitrage the risk, which yields value. Hmmm...wonder why the two quantum (existence and non-existence) occuppy the same space? Could it be that "objective" truth, a la Ayn Rand, is being bought by the highest bidder, which is, essentially, to arbitrage the risk?

As the marketplace becomes more and more consolidated to avoid alpha risk, both producers and consumers rely on government to resist crises of overproduction. In the gamma-risk dimension, producers rely on government to resist the declining rate of profit while consumers rely on government to provide the demand (adequate income) to consume what is produced. (Remember, businesses are in business to make profits, not jobs to demand the production).

Attributing risk-value to consumer demand disintegrates the integral value (the objective reality) of labor and production. While conservatives are concerned with adhering to objective reality (a la Ayn Rand), there is considerable value given to ignoring it with the result being analytical errors that identify the solution (deconsolidation of industry and markets and reintegration of labor value) to be the problem.

Again, keep in mind, fundamental attribution error is a symptom of psychoses. Elite authority that refuses to recognize objective reality to satisfy itself is the Objectivism that Rand describes. It is the psychosis of a paranoid, delusional cohort that can't see far enough beyond its subjective self to acknowledge an objective reality independent of it. (Fear of class warfare, for example, is a self-retributive value that is fundamentally attributed to a counter-revolutionary conspiracy, but really, elites are conspiring against themselves. The detachment from reality is so severe that they convince themselves of a threat that is really nothing but their "self." McCarthyism is the most extreme reaction to value that can be attributed only to their own devices--what they pathologically perceive to be application of self-interest.) With the self being the only subject for observation, delusion is reality and reason is subjected to confirming its value by conforming to it.

(So when Caesar gave his power divine attribution, non-conformity, or challenging the objective of that reality, was discouraged with overwhelming detriment, like being crucified; or when the Pope declared a geocentric universe, and empiricists were excommunicated or burned at the stake as demonic sorcerers, the objective reality was absolute, or unchanging, but the reality of the objective, which can easily change, was to confirm the value of the self.

When political risk consolidates, which a free market prevents in priority and why capitalism tends to an economy-of-scale proportion, confirmation, rather than demonstrating truth, is a demonstration of power that strives for moral absolution by reducing the risk of being challenged, but without actually reducing it. Instead, the risk increases. It accumulates into a crisis proportion that redefines the reality of the objective, not objective reality, as caesaropapal power regimes always confirm with an accumulation of retributive value.)

Since, for example, disintegrating the value of labor and the value of production creates profits at the expense of creating jobs, the overproduction that occurs is attributed to government intervention in the free market. While it is readily apparent that a profit can't be made if there is not enough money circulating to pay it, reactionaries nevertheless maintain that government programs assisting the needy, which adds income to support profits, is supporting slackers and looters.

Government, according to right-wing reactionaries, discourages productivity. Thus we have a high rate of debt-to-GDP, which means we do not have a crisis of overproduction, but a crisis of low productivity. When productivity is low, prices are high, and when combined with transfer payments, a debt crisis ensues with markets becoming illiquid and even more unproductive.

Debt is incurred to demand the production because, reactionaries explain, taxing the profit (the measure of productivity) transfers the risk to the "job creators" who demand they be without risk. The capacity to demand production is taxed away with the result being oversupply, or excess productive capacity.

If we want businesses to create jobs, and the income to demand the supply, the economy must be allowed to consolidate into tax-free "efficient markets." Job creators must be allowed to add supply just like it was before the Great Depression. Without government regulation (like Glass-Steagill, for example), growth will be roaring just like it did in the 20's.

According to conservatives, it wasn't until government intervened that we experienced overproduction (declining demand) in an extended crisis proportion like the Great Depression. Demand deflated because the value supporting it was suddenly ("poof") gone. The value (the income necessary to demand production and resist overproduction) was not objective reality, which is a fundamental misattribution that still plagues us.

Obviously, the value (the purchasing power) was real, but subordinated to debt, which according to conservatives is a problem if government intervenes to adversely alter the natural course of things that confirms objective reality. Liberal redistribution of the value accumulated (changing the objective without deconsolidation of the risk) in reality prolongs the crisis it poses to prevent, just as conservatives say it does, resulting in low productivity and high prices (stagflation) like we have now.

The difference now is that the debt is monetized, and instead of deconsolidation, monetarism is used to resist the declining rate of profit, which supports the economy-of-scale crisis proportion it purports to prevent by "making markets" more "efficient."

As long as debt is publicly managed to support the profit margin (prices) against falling income for the vast majority of consumers, there is too much demand for taxing the job creators who then pay the rent with less employment. Contrary to Keynesian theory, relying on public debt does not add supply, it adds debt and increases taxes. It perpetually keeps us on the path to austerity because it reduces productive incentive (increases excess capacity) with easy money.

Monetary easing is used to consolidate industry and markets with a deflationary effect. The economy consolidates even more to avoid the risk rather than expand with a disinflationary effect.

Rather than the expected inflationary objective of supporting prices and the margin of profit to increase excess capacity (i.e., to cause unemployment), monetarism that operates with a disinflationary, pluralistic objective deconsolidates the risk into a non-catastrophic, alpha-risk dimension. Since pluralistic expansion reduces the opportunity to consolidate the wealth (buying out distressed assets under deflationary pressure like Bain Capital), for people like Mitt Romney, disinflation, not deflation, is the risk to be avoided.

Conservatives, like Romney and Ryan, say we should go back to the good ole days when everybody goes bankrupt and relies on the J.P. Morgans of the world to bail us out. Back to the days when our assets were consolidated and sold back with debt consolidated from our net worth...the days before government intervention, when overproduction was nothing but blue sky and an expanding life of leisure.

Until government stepped in, capitalism was pure and simple. The path to austerity was easily paved with the promise of prosperity, properly dispossessed by private means. A person could borrow his way to prosperity with even the most marginal existence, not dissimilar to the liquidity trap set up for homeowners in the latest deflationary crisis. The only difference now is that we have detriment being exacted by means both public and private--banks bloated with consolidated value conserved with government intervention.

The result of low productivity, rising prices and the debt needed to pay it is the stagflation we have now, reactionaries explain, but the description does not square with reality. It is a fiction, a fundamental misattribution that fits a narrow, subjective, self-concept of reality that Ayn Rand calls "Objectivism."