Stag(flation) Hunt

The hunt for value is like a stag hunt--the classic, game theory simulation in which, essentially, the players optimally position for the reward by anticipating the position of the other players.

In the stag hunt, the players are acting with intention. Each player is angling to reduce errors to gain the reward. In the stagflation hunt, the players, in the same way, fully intend to minimize the fully assumed risk of loss.

In the stagflation hunt, however, the players deny full culpability. The value derived is determined by market conditions which, subsequently, determines the market position of the players. This is a temporal fallacy. It is a deliberate, post-hoc play (an attribution) that positions other market participants to take the risk in late order (without retribution), and then the risk-value consumed is considered to be legitimately derived from free-market interaction and non-retributive.

If the value derived is retributed (taxed or regulated to transfer the value to parties that did not earn it in the hunt, and thus reduce the value of the detriment), the value is misattributed and causes error. The error affects the fundamentals and the risk assessment. It causes systemic risk (added complexity) that all the players must adjust to. So we run with the herd, or reposition for adversity, to avoid being trampled, and by trying to avoid the risk we are corralled into detriment.

Since the added complexity is incorrectly considered added risk, more error is added by trying to reduce it, and the risk goes gamma. Alpha risk (self-interest that prudently regulates, or retributes value in the marketplace) becomes self-retributive--it becomes detrimental. Calculating the quantum value that is self-interest is now so complex that "the risk" is shifted (it transfers) to elite expertise.

Risk managers take control of our self-interest, efficiently managed through market activity, operating in the dark with the legitimacy of it all being too complex for mass participation. Without direct participation in the alpha dimension, however, free-market legitimacy is abandoned for "market efficiency."

What doesn't transfer with the risk is responsibility. When participants gain more detriment than benefit, it is their own fault, and according to Romney and Ryan, this is the opportunity to participate in the American dream. Default (strength or weakness in the marketplace by natural condition) is the opportunity to benefit from the detriment of others, always on the hunt for new opportunities (poaching in the dark).

Efficient-markets theory is a deliberate process, deriving value from detriment while claiming the outcome is the result of the invisible hand in a free market. If we are trying to assess the risk etiology using the predictable result of the working model, a free market is not the logical conclusion, especially if stagflation is the effective result.

Achieving "the American dream" by saving it from itself, using policies and programs that yield the current economic environment, lacks good intellectual value. We have to consider that the stagflationary environment Romney and Ryan say is crushing the American dream is the same program as the previous administration, using efficient-markets theory.

According to Romney and Ryan, the Obama administration does not believe in free-market economics, which is essentially true if it continues to apply efficient-markets theory. With this theory being the only choice among the alternative brands, voters are binomially positioned for the risk, democratically determined.

(This is called "phantom branding." If you buy a Quicky Burger instead of a Speedy Burger because it made you sick, while it may seem like you are sanctioning Speedy Burgers, you have to consider whether they are made by the same company to avoid the risk. When markets "efficiently" consolidate, consumers have to sue to sanction or go without consumption on demand.)

The vast majority are the stag, and the rest are the hunters, and we all know what happens to the stag...it is consumed by the hunters, and that's the American dream, deliberately pursued by natural right and non-retributive.

Value derived from commodities speculation has had a predictable effect--slow demand at high prices. If you are in the top income class, you're living the American dream--stagflation. Income is high at the lowest possible cost, with plenty of supply to be consumed on demand.

When we see, for example, the CFTC raise the rent on energy speculators after the hunt is over, the value (the stag) has been consumed. The accumulated value will be used to pay the margin requirement and position limits busted with phantom branding (mergers and acquisitions to afford the margin). The hunt will continue with fewer hunters and a larger herd.

So what is your likely position in this game?

In pursuit of the American dream, will you be running with the hunters or the herd?

Despite the Romney-Ryan vision of "the dream," objectively, we are all in the hunt. Description of the "Obama economy" is the dream stagflated, binomially determined, but the risk of loss is fully assumed with value that is accumulatively retributive, if it wasn't, Romney and Ryan wouldn't be so worried about a moral hazard that obtains with present value.