Foundation for Authenticating and Reorganizing the Risk

It is possible to re-author the risk into an organized ontology that authenticates the power of a constitutional self-determination.

Attention to a right to self-determination is not to be dismissed as a flimsy, idealistic sentiment of the Enlightenment that does not reflect the real world. It is a practical efficiency that tends to be supplanted by argued efficiencies of scale that consolidate wealth and power.

Seeing to a strong, constitutional self-determination allows markets to operate toward an effective equilibrium, not the disequilibrium we have now of a crisis proportion. The disequilibrium is not limited to an economic affect. It is also political.

Economic disequilibrium affects the political fabric in our social time and space. It creates a force that holds us where we are. It conserves the progress and fulfillment of the Enlightenment's vision of a peaceful and prosperous self-determination, pluralistically endowed with an authentic ontological means-to-ends legitimacy that is easily confirmed right down to the individual.

Conservation of a cyclically algorythmic disequilibrium (recurrent crises) is holding us back.

Determining Who Is In Command and Control

A recent forty-percent rate increase for health insurance due to lower demand of the recessionary trend, for example, technically indicates that the market is too consolidated. Is there not anyone else in the world wanting to share in the multi-billion dollar profits at a competitive price?

The incentive to compete for Anthem's huge margin is not likely in a recessionary trend. Financing is not likely available and, even without the recessionary environment, there is enough collusion in the sector to prevent either a competitive intravention or intervention in a geographic market.

Collusion rigs the market, and banks prefer to finance the low-risk/high-reward ratio of consolidated market share, magnifying the risk into a systemic, crisis proportion. Financial support for consolidation supports the problem--the deflationary trend that reduces demand and raises prices to maintain the profit margin.

Both liberals and conservatives agree that consolidation solves the problem because it controls (commands) the risk. Instead of being an ontology beyond our control, it is rendered a manageable, cyclical algorythm which, of course, plausibly defines the problem as the solution. The problem is, then, continuously innovated to replicate the distribution of costs and benefits that cause the problem; and as the economy becomes more consolidated, effects emerge that seem to defy the "natural laws" (the ontologies) that give legitimacy to outcomes.

While raising prices in the face of falling demand seems to defy gravity, a long-term slow-to-no growth supply relative to demand reduction, along with transfer payments, in a cyclical, deflationary trend supports prices and profit margins. This stagflationary tendency of a consolidating economy, instead of the disinflationary tendency of a free-market economy, prevents a "deflationary" declining rate of profit. The "law" of supply and demand is not being defied.

Consolidation purposefully reduces supply to support prices and profits while the corporate reduces demand by creating unemployment. Stagflation indicates an economy that is too consolidated and easily predicts a deflationary trend followed by an inflationary, government infusion of capital invested to support the weak demand which, in turn, supports the profit margin. As the infused capital consolidates, the economy stagflates because the capital infused does not increase supply, but increases demand.

Just as stagflation indicates an economy that is too consolidated, and the problems that are sure to accumulate, it also indicates the solution--deconsolidate!
We should wonder why the countless hours of discussion and analyses rarely, if ever, mention deconsolidation. The discussion on "too big to fail," for example, is always about not being allowed to fail, not being too big. Is it not obvious that being "too big" is for the purpose of not failing--of avoiding the deflationary declining rate of profit in which the oversized corporate body collapses in cardiac arrest without a cyclical government infusion of new, life-giving capital by Dr. Keynes' prescription?

The oversized corporate body, instead of reducing size, is encouraged to get bigger, gormandizing on the technical largesse of preventing systemic crisis in the interest of the general welfare.

Gorging itself on the general welfare into a morbidly obese body of bureaucratic blob, the body corporate has stroked out and been recussitated so many times it presents with severe dimentia.

An oversized corporate is irrational and delusional. The People paying the captains of finance massive bonuses for massive unemployment, record foreclosures, budget deficits and, sooner than later, tax increases, is completely absurd.

The corporate expects the body of The People to be grateful for all the misery and mayhem. What appears to be irrational and delusional, according to the corporate, is the secert, elite knowlege in the "black box" that produces the inscrutible benefit of the "invisible hand."

Experiencing the price of goods and services increasing as demand declines, for example, among a host of other irrational technical inversions and unreasonable if not delusional expectations, organizing an oversized corporate renders a body politic in the throws of full-blown psychosis.

Our schizophrenic liberal vs. conservative approach to defining the problem just results in more bemusement with technical characteristics that, rather then being illogical, are upon closer inspection symptomatic verification of what exactly the problem is.

The purposeful (organized) manipulation of supply and demand essentially defines "the problem" we now face. It is offered as the solution with the concept of "organic growth" meaning: continued consolidation of the risk to be easily managed in an aggregated (crisis) proportion. The result is "organized crisis." It has a purpose (telos) with the ontological legitimacy of natural law (supply and demand, and the rights of humanity which includes the corporate "body").

A spiraling, deflationary, declining rate of profit is a classical, cyclical ontology of capitalism our executive, legislative, judicial, and administrative processes are entrusted to resist in priority, not support.

While government does operate to resist the declining rate of profit,
government, however, acting in posteriority (because, supposedly, no"body" really wants a crisis, it just naturally happens)--acting to palliate rather than prevent--tends to support a spiraling, deflationary trend that resists demand (unemployment) and supports the formation of capital (the profit margin).

Despite the populist rhetoric to resist the current trend, for example, policy has largely supported the deflationary trend, prices, and profits. Stimulus measures have overwhelmingly supported deflation of middle and lower-class assets and incomes while resisting a deflationary, declining rate of profit. It is not difficult to see how the one finances the other. The partisan wrangle over health care reform, for example, will produce the same neo-classical effect in the ostensible theatre of legitimate public process.

Anthem's insurance rates increased because it was less able to spread the risk to support the margin, what a free market essentially prevents by spreading the risk in "disinflationary" priority.

The free market avoids the declining rate of profit being a failed expectation. The impetus to rig the market to support the profit margin is supplanted with support of a robust demand structure and the impetus for economic growth, not stagflation. Anthem would be expected to reduce rates to retain or win marketshare and maintain or increase margin in an expanding marketplace, not a consolidating one.

Collusion to rig markets is illegal. Where is the prosecution in defense of free markets (to increase the supply so that the consumer has a choice to demand--bid for--equitable behavior rather than government being trusted to command it)? Instead, as in the case of health insurance, what is being offered is a big government alternative that will do little-to-nothing to control costs in the entire health care sector.

It is no secret that buying insurance will not ensure health care, but it will support the profit margin; and when care is delivered, the cost gets support.

Collusion of the public and private sectors is not illegal, and the distribution of costs and benefits cannot be considered illegitimate. Although the distributive result may be considered undesireable, the organized means is too big to fail.

The financial reform legislation in progress is vowed to eliminate the too-big-to-fail doctrine and the organized incentive (the exculpatory ontology of purpose) to use its accumulative power to a detriment.

The best way to redirect the risk of an organized consolidation of power to detrimentally decide the fate of others in zero sum is to deconsolidate--what health care and finance reform is not likely to do. The diffusion of power and risk will not be easily relinquished into a genuine model of self-determination.

The word "determination" includes the word "deter." Self-determination is where the ability to command and control has reached its allowable limit. It is possible to deter the pursuit of power beyond the allowable limit.

No Weak-Dollar Recovery

Organization of the economy over the last decade, and perhaps going farther back, anticipated a weak-dollar recovery as events predictably transpire (or conspire) into the current recessionary trend.

Despite the CFTC's effort to regulate futures, a weak dollar will continue to be a program price-signal to buy energy futures. The support for energy prices is deflatonary, resisting support for the dollar, recovery, and employment.

Indeed, this program trage conspires to continue the accumulation phase of the business cycle despite the mounting regulatory resistance.

Discouraging an asset class from futures contracts is easily circumvented with structured investment vehicles that do not appear on balance sheets. The program not only hides the reward of the intended deflationary effect, but the risk to that reward.

The hidden risk systemically appears as an ontological, cyclical trending that is, nevertheless, deliberately program generated.

Ontology of the Moral Argument and Technical Analysis

There is no difference between the moral question and the practical question when analyzing economic trends.

When, for example, the analyst observes that the accumulation phase of the business cycle is followed by a distribution, it is critical to also observe that the latter phase tends to structure into a political process that confirms the distribution of power, dominated by argumentation of "the right thing to do." If the majority of The People do not have the economic power (the income) to exercise choice in the marketplace because it is in an accumulation phase, they will look to political means for a distribution.

To say that a distribution MUST occur is an ontological argument.

What happens if the distribution does not occur because the practical philosophy of ensuring a constant state of accumulation ensures the the greatest good for the greatest number? The outcome is always a demand for a distribution.

The deprived, who are a necessary condition of accumulation, are not the sole source of the demand. The beneficiaries, who realize the necessary condition for accumulation, must also demand a distribution to pay the accumulated debt of deprivation. Thus we have cyclical trends--boom and bust--both short and long.

While the empirics of the process ontologically presents in the natural world, it is inextricably linked to teleological influence and provides a predictable sentiment for the analyst.

For the greatest number of The People who must be deprived to provide the utility of the accumulation, the failure of expectation is at its highest level, and is an empirical measure. The measure will be empirically acted on with the effect of a distribution to satisfy the demand. The empirical measure has the moral import of providing the greatest good for the greatest number: an equilibriating, stabilizing, distribution of power that minimizes the retributive value.

The retributive value is approximately the value that must be monetized into a public debt if it is not distributed directly to The People (the greatest number) to either pay the debt or cause the economic growth (the distribution) to render the debt unnecessary by satisfaction of the demand (an increased savings rate that pays the debt and supports the dollar rather than causing deflation).

While arguing that accumulation is, and should be, sustainable is empirical nonsense, it is persistently argued in error nevertheless. Its practical application is not a function of reason but the sheer force of accumulated wealth and power.

The distribution must, and will, occur in the short and long term. The depth and breadth of the deflationary trend is dependant on the length and strength of the accumulation phase and the organized ability to price the consumer out of the market, causing a declining rate of profit.

The declining rate of profit is mitigated by continuous consolidation into "too big to fail." Without the consolidation, equity value is not gained, and sustained, in the form of accumulated capital (and we now see the Dow back up to 10,000 with financials scoring record profits).

The organized accumulation of power, both politically and economically, runs a high risk, however. The demand for distribution is prepared for a facile switch to a socialist legitimacy (the legal authority) to retribute the accumulated value on command.

While the utilitarian moral obligation may eventually present as socialism by historical ontology utilizing the practical means of an organized consolidation of power, the failure of expectations has no recourse beyond the force and legitimacy of public authority. The "greatest good for the greatest number" is whatever the technocrats declare to be a verifiable hypothesis, much like what we have now with a very high degree of failed expectation.

Not expecting the Ivy-League "talent" to be bonused in record amount for wrecking the economy, for example, is not in any way unreasonable. Proponents argue, however, anyone that does not see the moral utility of bonusing the best and the brightest from record profits is not fit to be one of them because they are not initiated to see this deeper, secret knowledge: productive capacity is ensured by profiting from the deprivation of others. (Could that be because it does not make any sense!) The reward (the moral utility) is supposed to be from expansion of the pie, not the deprivation of it. The deprivation and the profit are verifiable, the deeper truth of the moral utility is not...it is the realm of true-believing, and over-compensated, automatons of consolidated power.

Keep in mind as well that compensation is decided by the boards of directors, not the stockholders. The elite, of course, have that secret knowledge to rule in the best interest of the plurality--a moral argument that indicates the probable trend of executive compensation as well as the source of executive recruitment from Ivy-League schools.

High-leverage finance, and the high compensation for executing it, will continue to trend despite being described by opponents as providing a "perverse" incentive which, again, indicates recognition of a moral hazard. Eventually, given the depth and breadth of the recession, the hazard is likely to sublate into a pay incentive that executes growth, rather than consolidation, in order to be profitable. The fundamentals will then be likely to drive the trend both short and long, turning this trading market into an investment market.

The longer the accumulation phase, the longer the recession. Resistance to the distribution, accumulating in the form of the public debt, determines the probable outcome: a double-dip recession with a weak-dollar recovery.

Resistance accumulates by moral argument: avoiding the risk of not ensuring continued accumulation. Socialism (unproductive and inefficient command economy) is the risk to be avoided.

The result of resistance is an accumulating debt that sublimates (and simulates toward a socialist sublation) a distribution, but it has the utilitarian moral capacity, so the unsublated capitalist argument goes, of productive incentive that allows capital to be gained for investment in economic growth.

Avoiding the moral hazard of a government-forced distribution (the gamma risk), the moral argument then becomes: providing the greatest good for the greatest number is by deprivation, identifying just exactly what is irrational about the marketplace we have now.

It is not The People who are too irrational to act in their best interest, it is the elite of power. The ontology of the moral argument is clearly indicated.

Predicting the Short-Term Trend

Back in 2008 when it looked like Obama would be president and the economy languished in recession, I predicted that his election would indicate a bull market. The suggestion met with much disagreement from short-term analysts who were expecting the deflationary trend to be like all the others but with an Obama adminstration worsening the trend.

That was wrong. The bull market occured with a worsening deflationary trend because the money was there to support it and the Obama administration added to the money available to drive the bull market to its current level.

Probable deviation of the short-term cycle was indicated by the unprecedented amount of money accumulated into the top income class. This meant that the Obama administration was likely to add quick liquidity in an unprecedented amount (a gamma-risk distribution). The result was to support the contradiction of no purchasing power and too big to fail (the classical contradiction of the declining rate of profit caused by accumulation of the capital rather than a competitive disinflationary and distributional pressure on profits).

The support for equities is a false positive, however. The gamma-risk distribution has been focused mainly to manage the systemic risk, leaving the fundamental risk to continue accumulating with continued support for the accumulation phase of the business cycle.

An accumulating lack of purchasing power, of income consolidation, supports the deflationary trend. Stimulus funds have been largely captured by firms with earnings power; the funds did not trickle down, but were earned by firms big enough to survive this deeper-than-usual recessionary phase of the business cycle. The fundamental, alpha risk of supporting the deflationary trend, however, will eventually present as a declining rate of profit, precipitating another crash led by commercial real estate defaults which result from a lack of retail purchasing power (continued accumulation and consolidation of income). The pressure will then be overwhelming for a gamma-risk distribution targeted at the fundamentals, signaling a secular recovery.

Risk Factors and the Short Wave

The increasing gamma risk should have affected the short wave indicators significantly.

Iran can very significantly disrupt the supply of oil by intimidation in the Persian Gulf region. The increasing gamma risk with a very high probability will keep fuel prices under support pressure. The support does not have to be anything but an aggravation and intimidation factor, and that will affect the short-term trend, keeping the economy in a deflationary tendency.

Deflationary risk in high probability supports a continued accumulation phase of the business cycle. The cash accumulated from cost reduction revenues (unemployment) will be used for mergers and acquisitions, providing some support for equities. The short-term trend will not reflect the gamma risk and will be susceptible to unexpected reversal of investor sentiment from the big market movers.

The geo-political gamma risk conveniently provides an excuse for continuing the accumulation phase of the business cycle while the government engages in expansionist, distribution-phase politics. The value being provided by government will be consolidated by the big financials engaged in activity that is emblematic of "too big to fail." That will increase the earnings of financials while depreciating the fundamental value of the distribution--economic growth, which supports the value of the dollar and reduces the incentive for gamma-risk support of oil prices.

The antinomy of inflationary/deflationary pressure creates havoc for short-wave analytics with the predictors being squarely determined by the big commanders of market movements. The big movers rely on the short-wave indicators to falsely signal a trend to be commanded in reversal, but with the good reason, the excuse, of the gamma risk.

Not including the gamma risk is a critical error that keeps small investors following rather than predicting probable trends. Rather than predicting sentiment, the indicators cause it. Keeping the accumulation phase of the cycle alive functions, then, as a means of consolidating the plurality of value that makes for free-market economics and "cures" the problem of "too big to fail."

The Re-Inflation Dollar and Short-Wave Analysis

Independent investors often see a direct relationship drawn between the value of the dollar and commodity prices, like oil.

Currencies are akin to a commodity, providing a safe haven for preservation of value that, for a concentrated capital, is mostly an evasion of the gamma risk.

Evasion of gamma risk is not a reflection of fundamental value--it does not measure a causal relationship between the dollar's value and the price of commodities, for example. What it does measure is the determining effect of capital consolidation in the current economy.

A few analysts in popular media do have occasion to recognize that the relationship between the dollar and commodities is not a fundament of value (not money seeking the best value, but the value is caused by seeking it). The value is an effect, meaning that the value is affected by the movement of the capital alone and not a reflection of a fundamental investment that effects economic growth and economic recovery. In other words, the value of the currency and commodities presents significant false indicators for the manipulation of prices and, therefore, the predictive capacity of technical trend analyses.

For short-wave analysts, the fundamental attribution error can be a critical failure. The latter part of the accumulation phase of the business cycle is where short-wave analysis tends to false indicators because the causal determinants are a function of a long-term over-accumulation that results in a short-term arbitrary valuation of risk that can be the dollar today, gold tomorrow, and oil the next. It appears as randomness, but it is not. Running short regressions to induce the evidence of a trend is just an exercise in randomness unless, of course, you are controlling, commanding, the capital that causes the trend.

Analysts generally agree that the technical indicators lose predictive capacity in the kind of economic, and political, environment we have now with volatile beta (mergers and acquisitions, for example), and gamma (possible policy alternative), risks.

The macro modeling indicates the probable short-term trends.

The re-inflation dollar is highly probable to minimize the gamma risk to the consolidation of the capital. Treasury secretary, Geithner said today, for example, that time should not be allowed to lure the system into a false sense of security.

The re-inflation dollar will buy the time to minimize the gamma risk to the high systemic risk/reward still in place. With interest rates to remain below 1 percent for an extended period, according to Bernanke today, not only will the dollar be poised for pro-growth to assist demand for goods and services but for the overleveraging that causes demand reduction (unemployment). It is the formula for stagflating into the next liquidity crisis and forgetting about the high systemic risk/reward that causes it.

Keynesian expansion of the economy out of the recessionary (demand deflation: unemployment) trend will inflate the value of the dollar. The re-inflation will fuel the "happy days are here again" sentiment that Geithner is warning us about (and that is a good piece of public service that speaks truth to power...I wonder how long he will be able to keep his job if he keeps doing that).

The re-inflation dollar will be the counter-measure for not allowing the high risk/reward ratio of the embedded systemic risk to be correlated with the high unemployment measure. Rather, the high risk ratio will be argued the cause of the "growth" that will not be growth at all, but simply a retrace of the cycle; the argument will be a material misrepresentation--a fraud--that is endemic to the corporate (bureaucratic) organization and management of the economy.

The short-wave analytic will be conflicted with the inflationary and deflationary tendencies working together. The dollar inflates and seeks value in commodities which will deflate demand by increasing costs. The economy is essentially right back where it started supporting the deflationary trend and a high risk/reward benefit that is largely financed with a high unemployment number (demand reduction that supports a low interest rate).

Rigging the market for a low interest rate keeps financials profitable despite the overleveraging that causes demand reduction with slow growth investment. Thus, profitability without employment...it is capitalist heaven!

Utopian plutocracy is with a false free-market legitimacy, however. It is a dystopic risk (the gamma risk) that runs ever higher. It is an accumualtion of risk that plutocrats must continuously manage politically in the name of what a free-market economic system would otherwise legitimately provide: The General Welfare.

The "New Normal"

Treasury secretary, Geithner describes the "new normal" of the business environment after last year's liquidity crisis to indicate where we go from here. The implication is that the well-trodden path is to somehow be different.

With unemployment continuing to rise, more foreclosures in the offing, and continued consolidation of net worth, the "new normal" is the old Keynesian reinvention of the old classical model and dynamics of capitalism. Nor is the global economy anything all that new.

The type of modeling predicts future trends.

Capital, industries and markets will continue to consolidate into the business model of "too big to fail" which bodes well for earnings and explains the steep rise in equities despite the prospect for economic recovery being very bleak by the same measure.

It used to be, classically, that earnings will not improve unless there is a distribution on the accumulation, causing employment. The gamma risk was virtually non-existent. Now, however, neo-classically, the money supply is maintained to allow for profits to lead employment (refered to as "capital formation") in a stagflationary trend. It is largely the result of managing a burgeoning gamma risk that is the "demand" for government action, substituting for the lack of demand (a deflationary accumulation) in the marketplace.

Geithner is indicating that, despite the rhetoric for a high gamma risk, the classic macro model will be the predictor for micro trends.

Since the classic model calls for continued accumulation, a double dip is highly probable. The gain in equities will retrace by at least half.

A macro distribution will not occur and pull the economy out of recession until commodities reflect the fundamentals with another sharp dip that will sustain a disinflationary trend and bring the consumer's dollar back in to support a secular, macro recovery instead of supporting the accumulation phase of a classic cycle.

What is new, or neo-classical, is the size of the money supply. It is so large that its consolidation allows just a few large entities (too big to fail) to manipulate, if not command, critical global markets, like energy, and cause the length and breadth of trends (and if you can cause it, you can certainly predict it).

M&A activity will increase in the second dip, indicating the end of the accumulation phase of the business cycle and a secular bull market to give the mergers and acquisitions value.

When the retributive value on so much value accumulated gets so high that the gamma risk becomes critical to profitability, commodities will lose support and a macro distribution will occur. Maintenance of the organizational model, and the big earnings, of being too big to fail gets support. The support will be the "ethic" of the marketplace despite Geithner's call for a "new business ethic" to guide us forward.

Ethics is mere rhetorical legitimacy if the economy is organized for command manipulation. The ethical reality, the legitimacy, is just whatever the outcome is (a false ontological legitimacy of the ends justifies the means as opposed to a true free-market ontology in which the means justifies the ends). The outcome is mitigated by rhetorical artifice and lengthy political processes resulting in apathy and anomie, reducing the gamma risk without reducing the retributive, economic value, which would defeat the value--the purpose--of the practical (predictive) dynamic model.

A distribution phase that reduces the gamma without retributing the value puts tension in the system to be managed. The result will be stagflation into the next crisis as the Fed and Treasury manipulate the neo-classical, Keynesian money supply to accommodate (resolve) low inflation and high employment within a deflationary (accumulative) organizational model of too big to fail.

What ultimately fails, and is resolved, is employment, accumulating the retributive value, strengthening support for the gamma risk, bringing the preferred organizational model into question. The risk is not likely for at least the next four years, and the market trends will be very similar to the last four. Hardly a "new" normal, just new gamma-risk rhetoric to support the norm.

Controlling the Future(s)

Big or small, the investor is looking to predict the future. Big investors, like hedge funds and private equity firms, can control trends--a sure predictor--in spite of the technicals.

The effect, the intended result, is the small investor, the small business, the small income at the mercy of big, consolidated capital, inimical to a free-market economics.

The data generated by the small investor is easy to track by big financial firms. The technicals that the small investor relies on to divine the future are easily manipulated to create "surprising" market valuations that are based on the position of the small investor.

A "surprise" means you missed it and will not share in the wealth. Rather you will have lost value, if not directly, indirectly so that you will not properly associate the cause with the effect, the cost with the benefit, the profit with the loss.

Without a proper correlation of cause and effect there is no proper accountability. There is no legitimacy "demanded" of the outcome, the intended effect that is not supposed to be legitimately commanded.

If you are playing poker, the player that stacks the deck, deals the cards and knows what everyone in the game is holding is always likely to win with the legitimacy of the law of averages. The player in command of the game induces and accumulates a retributive value, a risk, that must be managed which includes keeping the other players in the game with a false legitimacy, like just being lucky.

If the small investor goes long, big money managers go short... and so we have the recent move to limit naked shorts by regulatory decree, for example, to defend a free-market legitimacy of the outcome.

The element of surprise also presents in the irrational valuation of derivatives, like commodity futures, which affects (supports) their "derived" equity valuations in an upward trend while demand is being reduced to support (effect) a deflationary trend. Combined with the ease of monitoring who owns what when, the small investor technically does not stand a chance.

The result of the action of this consolidated capital is, as the evidence of late clearly demonstrates, a massive reduction of net worth and further consolidation. Technical corrections for the result in posteriori by government decree (what conservatives argue is inimical to a free society and economic growth) only serves, as we see, to support the macro trend of consolidation.

For conservatives and the neo-conservative opposition, it is a win-win outcome. The allowable political choice is two types of conservatism that conserves the consolidation of wealth and power by administration of Ivy-League Hamiltonians.

Despite all the "hope" for "change we really need," the future of a consolidated capital is being technically well conserved.

Consolidated capital operates with inequity that naturally causes crisis and dispossession. The massive loss of net worth by the vast majority of Americans has been accumulated (consolidated) and used against them in futures markets to "defend" a command position and support the deflationary trend.

The consolidated value is now being prepared to be resold, distributed, at a profit. This value added will be falsely characterized as economic growth. It is a zero-sum loss (a detriment) shammed as a collective benefit (the accumulated profit). The benefit is not collective if it is accumulated, or exclusive. It must be distributed to be inclusive.

The distribution on the accumulated profit (reducing the surplus of supply that supports the deflationary trend by increasing demand) is the investment that fuels the recovery and provides the false collective benefit of providing for economic growth, which is not growth at all. It is a "recovery" (a distribution) of what had been lost in zero-sum in order to sustain the process of the business cycle in a state of disequilibrium--an inequitable distribution of income that defeats the equilibrity, and collective legitimacy, of the free-market mechanism.

The cycles provide the recurrent crisis and the business transactions necessary to consolidate wealth and power. The transactions, the buying and selling, gives the process a collective legitimacy of market mechanics. Without the demand dimension being the full determinant, however, it is a false collective legitimacy.

Where the command dimension is largely in operation, as it is now, the economy lacks a free-market legitimacy. It is necessary, then, to correct for the lack of legitimate power.

The gamma risk is operationalized with the retributive value that accumulates along with the consolidation of power (the illegitimate means to command the economy). It operates to manage the lack of demand economics--the free market, democratic dimension that provides a genuine, collective legitimacy of the process.

Technically correcting for the retributive value accumulated reduces (manages) the risk inherent to conservation of the command economy and the distribution of income that determines it.

The sacrifice of income that finances the zero-sum accumulation of value gains a collective legitimacy by operation of public process, mitigating the loss with the force and legitimacy of public authority. Without it, the legitimacy of the outcome is at severe (gamma) risk, and the means to the ends is technically corrected to manage the externality of the retributive value.

The retributive value accumulated on the current cycle is immediately about $2 trillion, which is about the value lost in net worth of the average income in the last quarter of 2008. The amount of deficit spending is quickly approaching that nominal value to correct for (mitigate) the accumulated loss to maximize conservation of the accumulated benefit. Thus we have the tension between the interjection, the demand, of the gamma risk and the imposition, the command, of the consolidated capital in a conflicted, volatile trend of deflation and inflation.

The recovery will be considered an inflationary trend by the Ivy-League managers of the consolidated capital. The result will be sustained unemployment and an aggregate effect of defending the value of the accumulation with a deflationary consequence of incurring the gamma risk (a disincentive for capital investment, being crowded out by public finance--deficit spending). The trend is thus in an almost complete command mode with capital moving into commodity futures to "hedge" against the inflating dollar by inflating the profit (the continued accumulation of income) without growth.

Administering this process of deprivation, of course, according to Hamiltonians, deserves a bonus because it provides for the public good (the sacrifice necessary for the consolidation of capital that finances the investment for economic growth).

Administration from the public sector in combination with the private sector, like the Federal Reserve, is to give the command a "demand" dimension.

The Federal Reserve saved us from financial firms that were allowed (a choice) to be too big to fail. The intended effect is coercion--extortion, racketeering--characteristic of a criminal element.

A free-market economy is supposed to be dominated by the element of choice (demand), not the element of having no choice (command). It is the very essence of freedom, or the lack of it--the legitimacy of power.

According to the Fed, we have no choice but to bail out the agents that caused the crisis and pay them bonuses to continue to use the bailout money in a manner that caused it, reinforcing the behavior because it is profitable. The consequences are fully intended to support the command structure of the economy and resist the democratic element of demand to form an elitist model of power: a bureaucratic model of power and political economy in which the public and private sectors are effectively merged to command and control, to resist, pluralistic, democratic tendencies.

If the economy is allowed to be in a demand mode, the consumer (the vast non-elite of "unbonused" if not unemployed) is the primary determinant of economic trend.

Instead, the sacrifice required to surplus the capital for investment is really being used to reward (bonus) the administration of the command mode. It is being used to conserve the consolidation of value in a neo-classical, neo-conservative manner.

The distribution by the public sector on the value accumulated is being operationally accumulated by the MBA, "bonus" bureaucrats in the private sector. The result is a stagflationary trend, keeping the economy out of a demand mode.

With each indication of recovery is a spike in energy prices. The data confirms that consumers are spending more than they make with these steep oscillations in price. (The short, sharp oscillations keep the profit high and the rate of substitution, as well as demand destruction, low, rigging the market for stagflation.) Continued erosion of net worth, and consolidation of that value, is the aggregate, intended result, always supporting the deflationary trend with a reduction of demand.

That reduction of the "demand" dimension results in a spike in bankruptcies, which has also been confirmed by the most recent data, further reducing the "choice" dimension of the economy with fewer small businesses and a reduced ability to pay, or to choose.

The unemployed sacrifice, suffering the deflationary demand reduction to provide, or finance, the benefit. The unbonused employed sacrifice as costs rise while their incomes decline, continuing to erode their net worth, financing the so-called collective benefit of consolidating the capital to achieve maximum economic efficiency (the economy of scale and networked externalities by horizontal and vertical organizational integration).

The collective benefit of the sacrifice is false. It is a zero-sum distribution. It is a loss with the vast majority of individual incomes incurring the detriment without fully participating in the benefit, rendered by a process of exclusion.

The growth, the purported benefit, is really not growth at all following negative growth with the supply having been "conserved" by the sacrifice of the excluded non-elite (the unsophisticated masses who willingly sacrifice without fully sharing in the benefit).

Conservation of the supply is critical to understanding the indirect scheme of consolidating value so that it looks legitimately unconnected and "uncommanded." This is where our Ivy-League economists tell us the value is forever lost, and not a zero-sum consolidation.

Supporting the deflationary trend by controlling the future(s), along with extracting the value by such incremental means as flash trading (which also manipulates the technical data), means the value of the existing supply is in cantango.

The value of the existing supply, because the investment to expand it is being invested to conserve it (the liquidity crisis), is realized, or consolidated, when the recovery finally includes the unemployed who must bid up a limited existing supply. The intended effect is to mitigate the cyclical decline in the rate of profit described by all classical economists; and so, neo-classically, we now hear pop analysts heralding the coming cyclical bull market with better-than-expected profits despite increasing unemployment...suprise!

Rising employment will be the fully expected (fully intended) unexpected, surprise premium (the zero-sum loss/gain) that the Ivy-League economists say does not exist.

The rate of profit is neo-clasically supported through the deflationary phase while resisting employment (demand). The inflation is not supposed to happen, classically, in the deflation phase because the demand is not there to support it.

Keynesian stagflation is the neo-classical result, allowing for profit margins that are to be unexpected without the demand (employment). It is really value that has been surplused and later consolidated so that it is not readily, immediately, clear where the profit is coming from. That inflation, that profit, is explained away as the capital formation necessary for growth, rather than the means of limiting growth (limiting demand) to increase the marginal profit.

The inflation will be deemed "fundamental." However, it will have been caused (commanded) by elite control of the economy, and that command and control will be extended to the Fed to control these "market forces" (the cyclical trend) toward a so-called collective benefit by increasing the interest rate, which supports the deflationary trend.

Increasing the interest rate is a regressive burden on incomes. People that must borrow to pay the cost of living (to demand in the marketplace) receive the debtor assignment on the public debt. By default they pay the debt held by those with the ability to buy the debt (to command in the marketplace).

Those with the greatest ability to pay are then, by legal process, those who are the exclusive beneficiaries of The People's collective sacrifice (Hamiltonianism).

The value of the recessionary trend was not lost. Consolidation of the value (the sacrifice) was just timed to appear disconnected with the benefit in the recovery phase of the cycle. That value is also expressed by conserving the ability to command who sacrifices to achieve the efficient formation of the capital.

After the sacrifice (the accumulation of the capital--the loss of net worth by the vast majority), the next phase of the business cycle is deflation. It is the phase the economy is in now.

In the deflationary phase, prices are pressured to fall due to the reduced demand (the sacrifice). Falling prices reduces the surplus, but does not eliminate it. Growth goes from negative to positive. The surplus (the sacrifice) is conserved and the process for expropriating the benefit is maintained to achieve the so-called collective benefit of so-called economic growth.

The recovery phase of the business cycle is then achieved in zero sum. The diminished surplus is replaced, not really adding supply.

Adding supply controls inflation. Disinflation provides the purchasing power necessary for sustained, positive growth, actually adding supply, improving choice, adding demand, reducing the command dimension of the economy.

Disinflation creates savings, which is turned into capital that finances growth and innovation in the pursuit of profit (the return on investment). Deflation is financed by negative growth--the sacrifice that reduces net worth in zero-sum. The value is accumulated to consolidate the wealth and power into an elitist organizational form that is to be systemically self sustaining, but not without risk of having to repay some of the benefit to its source (the retributive value).

The sacrifice necessary to keep the elitist form self-sustaining is what is currently referred to as the systemic risk. It is the risk of systematically incurring more cost than benefit with the legitimacy--the free will--of a collective process of self-determination, like a market system in which individuals choose to participate.

If by the necessity of participating in the marketplace to survive means having to be the one to sacrifice, or to be a non-elit, the pluralistic legitimacy is empirically failed. That incurs a "risk" to the value that finances the elite and conserves the surplus. There could be a "demand" for the illegitimately gained value to be retributed if it is not successfully organized, timed, and argued legitimate on the basis of economic efficiency.

The systemic risk is commanded and controlled by the elite of power through the market system and the business cycle in the name of achieving the highest economic efficiency--consolidated economies of scale that minimizes risk and maximizes the profit (the surplus of capital) for reinvestment. That organized largeness of scale also includes the co-operation of the public sector.

The non-elit participant, who pays the debt (borrowed from the surplus) and suffers the deflationary reduction of net worth that finances (conserves) the surplus, is greatful, relieved, that the value surplused is trickled down enough in the recovery phase to survive by the good grace, the noblese oblige, of the elite.

Relief of some of the sacrificial burden is systematically substituted for retribution of the accumulated value. It is just enough income to sufficiently pay down the debt, according to an arbitrary credit score, allowing for enough demand to reduce the surplus inventory (the sacrifice and the value to be retributed).

Suffering the deflatonary phase of the business cycle not only elicits an increased demand (a distribution on the accumulation) to support the value of the surplused inventory (matching demand with supply without disinflation), but solicits a demand to retribute the entire value of the sacrifice.

The demand for more participation, for more purchasing power (for more democracy), is a risk to conserving the distributional value of the system.

The systemic risk is controlled by substituting it with a gamma risk that is easily co-opted.

The latent demand elicited to retribute the value is transformed into a demand for elitist command and control. Congress responds with a technocratic delegation of extended representative authority who manage the risk without direct accountability to the electorate.

A lack of full accountability succesfully co-opts the demand for full retribution of the value into a technocracy for managing the risk and conserving the structure that commands the distribution of power and authority.

The bureaucratic model of power and political economy successfully displaces the natural demand for full retribution of equilibriating value. It is placed into the elitist realm of esoteric knowledge so that we must suffer deprivations for reasons we cannot begin to fully understand. This systemic induction of ignorance condemns us to a deductive systemic legitimacy of command and control for our own good; for the general welfare.

We are paying the people that act to reduce our net worth to continue doing it with our tax money because it is for our own good? Despite what behavioral economists say, this can only happen by force and legitimacy of public authority; by a process of command, not demand!

Critical to the cyclical command of the process is the legitimacy of the outcome: being defined as elit or not by process of surviving the business cycle, and whether you are a buyer or a seller within the recovery phase of the cycle. At this point the commanders are merely sellers in the marketplace; the commanded, merely buyers, freely engaged in the process of doing business, being retailed lost value and property.

Merely containing the elements of freedom (choosing whether to participate in the economic process or not) and market mechanics, the organized processes of consolidating capital and the business cycle is argued to be proof of a free-market system and not a command economy in operation. The necessary legitimacy is merely deduced from the elements being semantically present in the argument, not verified, or induced, from the evidence which, of course, tells quite a different story.

Timing the market (controlling the cyclical trend) is essential to the false legitimacy of a consolidated capital as a free-market system freely participated in toward a legitimate, collective outcome.

The longer the slope of the recovery phase, the more the consolidation of value and wealth looks like a "natural," undeliberate process with a free-market legitimacy of collective action.

It is necessary for the market process and the cyclical effects to appear legitimately free. The process must appear to be a product of self-determination instead of a tyrannical command and control and expropriation of ownership that can only be reacquired by borrowing from the accumulated value (being resold) by incurring a debt and the emblem of subordination.

The vast majority of Americans do not have to be slaves to the command and control, the tyranny, of a consolidated capital.

Deconsolidate it!

A highly progressive tax code and reinvestment of the capital to pluralize the marketplace without a huge debt either public or private will achieve "real" economic growth and a real freedom that conservatives argue is an evil tyranny to be resisted.

We hear all the time in pop media that the way to freedom and prosperity is the well-trodden path...the old, or conservative, way of doing things (toggling between Democrats and Republicans).

Believing the solution is the old way that always results in crisis is irrational. The only way to evade the fundamental simplicity of this truth is to convince The People they lack the elitist, secret knowledge necessary to fully understand that the best way to solve a problem is to ensure its recurrence.

The conservative argument is, then, reduced to this plausible absurdity: the problem is not really a problem at all, but a collective benefit that is erroneously perceived by the ignorant masses to be a problem because they must be made to sacrifice to achieve the general welfare.

The public good will not be achieved unless we are forced to do it, as the behavioral economists argue. So, for example, the best way to achieve the public good of providing healthcare for all is to force a public option--a simple dummy variable that will consolidate the market into no choice.

Pluralism is abandoned for the unaccountable better judgement of elite authority in which application of the irrational becomes a measure of power (success); like cutting healthcare costs by ensuring medicare doctors get a pay increase.

A free market does not tolerate the irrational. It is the consolidation of power that tolerates the irrational. It is an emblem of power to be "conserved" by its confirmed application (like toggling between dummy variables).

Consolidation is argued to be the empirical model, the natural tendency, of efficiency because the pluralistic, free-market model tends to be "irrationally exuberant." The exuberance, however, is caused by mass momentum of consolidated capital following organized economies of scale (large size of horizontal and vertical integration) in every case since the dawn of what we now call capitalism and the crises of boom and bust we needlessly experience to this day.

The free market is not the natural problem, it is the natural solution.

Free-market economics is resisted by being organized into a consolidated capital not because it does not work, but because it does.

The economic problems we look to solve are organizational. Allowing the economy to organize into economies of scale that are too big to fail is the problem, not the solution. It is nevertheless being applied as the solution in the name of The General Welfare.

While networked externalities (organized consolidation) hedged the risk and caused the formation of capital at the inception of capital markets, it "naturally" led to boom-and-bust cyclical trends--crises in which eager small investors became the willing, dispossessed dupes of consolidated wealth and power.

Two hundred years later, the small investor is still being duped into believing the wealth was lost, evaporated, not consolidated. The risk is "freely" taken, but the reward is to be found in the loss of value resold as a profit, bought with a debtor's share of the wealth. Thus was borne the credit economy and liquidity crisis we now endure as free-market economics.

The small investor must now identify where the consolidated capital moves next--where the next bubble will occur. (The bubble never really "bursts," it just "moves" around. Deflation in one area inflates another. The result is the cyclical trend.)

The system of buying and selling, the market system, is the means by which consolidation is "freely" transacted, making it look like the public needs to be saved from itself, and the conservative argument that elite command and control (consolidation) is a necessary condition to ensure the efficiency of markets. The efforts of the Obama administration are, then, perfectly rational, and consistent with conservative philosophy--a confirmed belief in the efficiency of free markets and the need to command and control its irrational exuberance (the gamma risk).

The action of the private sector to avoid the gamma risk requires being in the dark.

Hiding in the dark, the phenomenon of "dark markets," is what a free market definably is not. It is nevertheless what the dark marketeers say they are doing as long as government does not interfere with their freedom to pursue it.

A dark market is a complex maze of seemingly disconnected cause-effect relationships. It is a scheme of buy and sell transactions across market sectors and segments that includes time sequencing and quick, flash transactions that are nearly imperceptible. The more the cause of an effect cannot be detected, the less confirmable liability for illegitmate gains; specifically, gains acquired by means of rigging the market through a system of timed buy and sell transactions of various contractual classes, like options and futures contracts.

Happily hiding in the dark where dirty deeds are not clearly identifiable is the pursuit of not being accountable to either a democratic process of free-market economics or government oversight (avoiding the risk). It is a pursuit that effectively minimizes freedom, not maximizes it, which is the ultimate, Constitutional, measure of success.

As places to hide become fewer at this point, big money will move into a traditional, classical mode of consolidation of real assets, buying distressed businesses and investing in businesses that the recesson had put out of business.
Economic entities will be merged and acquired satisfying the traditional model of maximimum value that draws the most investment (a bubble). This will be a move into cyclicals and will confirm an economic recovery phase of the cycle indicated by the increased gama risk in dark financial markets and a retrace on the value of those assets to an oversold condition, gaining support more at the the fundamental. A secular bull market will then occur.

Controlling the future(s) has become the philosopher's stone of neo-classically managing the risk inherent to the consolidation of the capital. It conserves an organizational modality despite the tendencies to subject it to the risk demanded by The People in an evolving modern world of constitutional legitimacy.

Control of futures will innovate ahead of the gamma risk. Trends will be indicated not only by the path consolidated capital takes, but how it is reorganized into modalities.

Identifying organizational modes will indicate the future of trend analysis by identifying the means of not just profitably predicting the future, but commanding it; not by means of managing the risk, but by virtually eliminating it.

Energy Futures, Healthcare and Controlling Deflation: Recognizing Trend Indicators in the Gamma Risk

The stated primary mission of the new congress and administration is to control the deflationary trend. Control of macro trends requires command measures that produce a gamma risk. It is a risk that is purely political with economic consequences.

Not only are trends reliably indicated by identifying the gamma risk, but practical solutions to macro-economic problems are also indicated as the risk factor is created and managed with the public demand for resolution.

Americans need to fully recognize that the source of the nation's economic crisis is a massive redistribution of income into upper income classes. Deflation is the persistent, verifiable result.

Consolidation of capital, industry, markets, and income, always results in crisis. Unwillingness to accept this fact condemns us to suffering the effect of economic crisis both now and in the future.

Solutions that allow the capital to remain consolidated and managed by the determination of elits applies the problem as the solution.

Without treating the cause, the effect will persist. "Change we really need" will just be a perpetual mantra of self-inflicted suffering.

The redistribution of income that has resulted in a massive reduction of the average income and household net worth is by indirect, systemic means. No one came to your door and robbed you directly. No one's wealth was directly plundered by marauders of the moyenage.
The means of accumulation has evolved into the elegance of indirect systematic process--the systemic risk we hear so much about to be managed.

Using futures to control and plan our economy, oil futures mainly, is incurring a gamma risk as the CFTC begins shining light on this "dark" (unregulated) market.

The slope of the economic recovery is determined by the flow of a consolidation of capital of unprecedented proportion. The effect is the deflatonary trend that dominates the current economic landscape and that the public sector is to reverse without dictating the marketplace, or destroying the pluralistic legitimacy of free-market economics.

Since a high concentration of capital is a blatant indicator of the ability to command and control economic trends, the activity must be hidden, or dark, in order to maintain a free-market legitimacy.

The Obama administration has found taking control of the economy requires creating a gamma risk, forcing capital into pro-growth investment. The private sector is leading. The public sector is reacting, or following. The effect of a slow recovery will then be falsely blamed on government intervention "causing" (in reference to a time-series that is not a causal relationship) the long, slow slope of the trend, deflating the wages and salaries that make for a quick recovery.

While the CFTC's action appears to be adversarial (protecting the public in lieu of free-market economics), the gamma risk is really a complete organizational model operationalized to minimize that risk. It is the bureaucratic model of power and political ecnomy. It is a command and control (elitist) model, not a free-market (pluralist) model.

As the consolidated capital moves out of dark, defensive positions, it moves to support a cyclical trend. Private equity and hedge funds are now organizing holding companies for distressed properties, for example, that will complete the consolidation of property by means of classical capitalism and resell it to the dispossessed in economic recovery. The recovery is thus indicated.

Neo-classical measures, like Keynesian stimulus and regulatory reform, are props to secure a free-market legitimacy for the practical operation of an organized command and control. It is a fraud, a systematic tyranny that needs to see the light of day.

There is no distinction of public and private sectors. The gamma risk is created and operationalized to secure a legitimate means of command and control, and mired in complexity to shield the tyranny from the light of day.

The amorphous distinction between what is public and private naturally evolves into a practical recognition of non-distinction.

The tendency for public function to be operationalized with private enterprise is not necessarily adversarial.

Operating in priority, the public sector can operate to maximize economic efficiencies by ensuring a free and unconsolidated marketplace. It is just as well accomplished as conserving the inefficiencies and crises of consolidated capital, industry, and markets with technical corrections in posteriori.

While not difficult to administer, government that ensures a free and unconsolidated marketplace in priority is strongly resisted because it will maximize growth through a more equitable distribution of income and wealth rather than "conserving" supply by reducing demand.

The reduction of demand reduces growth by causing a surplus. The surplus is created through high prices. The result is high profit margins with slow-to-no growth. This stagflation is contrary to the legitimacy theory that high profits indicate the impending investment for growth (adding supply and controlling inflation).

In practice, the high-margin accumulation (the surplus that deflates growth) is invested in the organized means of achieving a high margin with little or no growth (consolidation of capital, industry and markets). CIT, if allowed to fail, for example, will not be rendered merely dissolute, its business will be consolidated.

The practice of organized consolidation is contrary to the theoretical economic efficiency (the legitimacy) it purports to maintain.

Allowing industry and markets to consolidate is supposed to achieve an economy of scale that promotes growth (investment) on a "scale" that would not be likely without it. Big profits, supposedly, minimize the risk and maximize return, thus causing investment.

Why, then, if consolidation of the capital is so efficient, is there so much systemic risk to be controlled? Why is there $4 trillion on the sidelines when the risk has been minimized by allowing the capital to consolidate for investment and economic growth? Why is the economy contracting and not expanding at a high rate of efficiency, and how can an investment bank have record profit (the measureable effect of growth) without economic expansion?

The result of consolidation, rather, is slow-to-no-growth, and the lack of economic expansion is the source (the cause) of the profit. The profit, then, is not the measure (the effect) of growth, and the profit without growth must be explained away as "a jobless recovery."

A jobless recovery is no recovery at all. It is a deliberate control of the deflationary trend (causing a risk that demands management and produces indicators), redistribiting wealth and income from the bottom to the top, indicative of a command, not a free-market, economy.

A gamma risk must be created to gain the legitimacy of "organized consolidation equals optimal growth." It is necessary to cause a distribution, the incentive, that produces growth. The profit may then function more like a measure of, as well as the incentive for, achieving growth rather than a means of restricting it to enhance the marginal profit. The profit will not merely be a measure of the efficiency to extract value without growth, or as Obama's chief economist describes it, "suffering the effects of an overleveraged economy for some time to come."

The "suffering" (the sacrifice) is the extraction of value without growth, consolidating the value into the upper class of incomes (an accumulated cost with an equal accumulated benefit). The current congress and administration has done nothing to relieve that inequitable burden, and everything to support it, with regressive tax and subsidy measures.

The proposal to fund healthcare with a progressive tax, for example, will do little if nothing to control costs, which will keep income consolidated in the upper income class. It is the problem offered as the solution. It is deflationary just like the SCHIP, redistributing income to the upper income class.

The legitimacy of the general, collective benefit--increased healthcare coverage--is more than offset by the increased cost due to more money being made available for price increases. It is a reliable means of delivering the price, and the profit, the healthcare system commands. It will be made so unaffordable that government finance is the only option.

The healthcare plan now being offered will force the market into the public option where the price, and lifestyle choices, are more in command and control of elite authority. It is a raketeering scheme: a means of rigging the market with the legitimacy of public (collective) process, gaining a false legitimacy, claiming the consolidation is by free market forces. The force is from the top down (by elite authority), however, not the bottom up (by The People).

The profit is forced into a gamma risk that must be politically managed, or determined; and within that elitist process of self-determination (the freedom of choice) will be complex schemes of tax and subsidy with a regressive burden--maintenance of the cost-benefit structure--largely conserved.

Talking about the total political-economic effect is taboo, not because healthcare professionals only have the good intention of providing for the public good, but because it provides a zero-sum gain to their income at the expense of the public good. It exposes a racketeering scheme of consolidating the means to command the price as well as dictate tastes and preferences (exactly the opposite of freedom and what a free market is) to accumulate a benefit that far exceeds the public good.

The benefit is extorted with the threat that healthcare, the public good, will not be adequately provided without the accumulation of the benefit (without supporting a deflationary trend that bankrupts the average income, making healthcare even more unaffordable, along with everything else).

We see then, for example, the unwillingness to cut payments to Medicare doctors despite the overwhelming public demand for reducing the cost of healthcare. Controlling the cost incurs a substantial gamma risk (a risk that is both political and economic).

The doctors will not deliver the healthcare without commanding the price which, of course, makes it less affordable unless it is paid by a third party payer--monetized by the government--in which the sky is the limit. The scheme is less to do with providing healthcare than to maximize the accumulation of income (the measure of success). It is an extortionist command and control that has nothing to do with a free market, but the distribution of costs and benefits by decree, successfully managing the gamma risk by operationalizing it with the concept of providing the public good.

The argument is that maximizing the accumulated benefit (and the associated cost, like a budget deficit) maximizes the public good. It is the Hamiltonian argument that policies and programs benefiting the accumulation of wealth and power in priority is the greatest good, or the general welfare.

The consolidation of power is for our own good, so the Hamiltonian argument goes. Healthcare that is so expensive to crowd out discretionary spending choices (which includes the effect of sin taxes), or in command of limiting other market, lifestyle choices in order to be affordable is nothing but an abject tyranny! It will not improve health, it will make life less affordable, be a restraint of economic activity (limiting the economic activity to black markets, facilitating a criminal element), and give a false legitimacy to tyrannical organizational tendencies inimical to a free society.

It creates a society of elite control in which freedom is less an inalienable right than the anachronistic privilege of a few self-satisfied autocrats to deliver the ignorant masses into the torment of their righteous ways and subject them to the means of ensuring the consolidation of their power.

The elegant means that has evolved to command and control is to support a deflationary economic tendency by allowing, with a false but plausible, pluralistic legitimacy, the accumulation of income in an upper class of incomes (like our healthcare system does and will, apparently, continue to do); by means of cyclical macro-economic trends to support the Hamiltonian model of power and political economy.

The allowable direction of healthcare policies and programs, combined with the scheme to manipulate the price of energy and other commodities through futures markets, clearly indicates a determination for a long, slow deflationary trend.

The healthcare plan offered by the new congress and administration is not the change we need. It is an innovative way to again offer the problem as the solution by clothing it with progressive taxation.

The progressive tax policy is specifically identified to fund healthcare, not reverse the deflationary trend. That would be to admit that a more progressive tax code can effectively reverse a deflationary trend.

The progressive tax to fund healthcare will, rather, support the deflationary trend by providing the funding for highly inflated costs. The cost is supported (monetized) by means of public finance and regressive tax burdens like the SCHIP, providing the funding for price increases, which is why the AMA endorsed the proposed plan.

With so much deflationary pressure, it is necessary to induce a gamma risk to temper the deflationary trend (the lack of purchasing power, or liquidity crisis).

Where a distribution on the accumulation of income in the upper income class does not sufficiently occur, it will be induced to "trickle down" by government intervention to control the depth and breadth of the crisis without defeating the effect of consolidating the wealth. The result will be the so-called "jobless recovery."

By inducing the gamma risk, the profit (the accumulation of income) is rendered more like an effect (the measure of effectiveness) rather than the cause of economic growth (like providing healthcare) in a positive or negative trend.

Inducing a regulatory reform like regulation of derivatives, or as in the case of healthcare, the public sector competing with the private sector in a duopoly (a dummy variable, a tyranny, not to be confused with a free-market pluralism), is intended to induce a free-market effect, or a credible legitimacy of the process.

Introduction of the gamma risk renders both the desired effect (the profit) and the interpretation of the effect (as a measure of effectiveness, or success) with the means-to-ends legitimacy required of a collective process be it deemed public, private, or both. It reconciles the cause with the effect by adjusting for the externalities (the retributive value) to maintain, or to conserve, the overall distributive value that causes the problem, the crisis, to be solved.

The proposed progressive tax to fund healthcare, then, for example, will not effect the provision of healthcare by increasing income and reducing costs, but by providing the funding through tax and subsidy. The gamma (political) risk is then shifted back to the consumer where the distribution of income (the determinant of the ability to pay) is converted into being dictated preferences and the distribution of costs and benefits by a not always easily visible and directly accountable ways and means (by command and not demand).

In the case of American healthcare, the way it is now, the profit is more a measure of accumulating wealth and power by maximizing the cost and securing the means to pay for it without sacrificing the accumulated income to lower income classes. It is organized to efficiently provide a profit (the measure of effectiveness), not necessarily to "effectively" deliver healthcare, which is what the profit margin is supposed to be effectively measuring.

The high cost and the number of Americans that are priced out of the market (rationing) or go bankrupt participating supports the pro-profit hypothesis of healthcare policies and programs. Nor is there any evidence to suggest it being nulled any time soon with the latest proposals designed to assure the maintenance of healthcare incomes at the expense of consumers, which supports the deflationary trend.

The reason the recession continues to track a broad and deep trend is not because of a technical error, a miscalculation of how bad it really is, but because the policies and programs of the congress and the administration have supported it, and that support is to continue.

With, for example, a general progressive tax burden on the consumer, rather than a specific value-added burden on providers, financing the healthcare system will continue to be deflationary because the income, the ability to pay, will be retained at the top, which requires a regressive scheme to keep it there. It will not satisfy the requirement for a more progressive tax code to reverse the deflationary trend any time soon and provide the distribution of income necessary for consumers to decide what they want, at what price, with the profit properly being the measure of that success or failure--more like what a free-market economic model really looks like.

Taxing the value (the increased price) as it is added, discourages the behavior that increases the cost, just like taxing tobacco reduces smoking.

A tax that increases with the unit of value added will collect revenue and control costs at the same time by directly taxing the accumulated benefit where it is added without any misdirection or misattribution--where the price is marginally increased as determined by the provider on command.

Even if an excess of value added is not discouraged by the tax, the value is nevertheless recycled to pay it. Even better, the value is redirected to the consumer (retributed) to reward or deprive as they see fit, in a free market fashion, so that the price (the cost) is demanded rather than merely commanded by the provider. This will provide the income necessary for free-market mechanics to occur with a disinflationary, rather than a deflationary, effect; increasing the income needed to control the cost rather than pulling it up at a high rate each year like we have now.

The way it is now, America's healthcare system reduces the income necessary for the consumer to demand cost control. Rather, the cost (the margin) is commanded by the provider and paid largely by government finance. Controlling the cost is a function of the gamma risk (a command function): providing the income--the value added--that is redistributed into upper income classes and deflates the economy.

Disinflation requires the value be credited the consumer, not retained by the government because the large pool of public money will be misdirected through political process, resulting in an indirect means of collecting the deflationary value added by operation of tax and subsidy.

Redirecting the value added to the consumer--giving the consumer the power to control (choose) the cost by increasing "discretionary" income--will be more in keeping with a free-market model, a direct democratic process, in which the legitimate collective outcome is directly supported (caused by) the choice of individual action, unlike the decision to tax tobacco.

Taxing tobacco use minimizes choice (income) to maximize the revenue. Like a "command" rather than a market "demand" price, it pays the cost to excess without any competitive incentive to reduce it. The result is a deflationary rather than a disinflationary, "discretionary" income effect that very clearly indicates (causes) stop and reversal of a recessionary trend.

With the consumer's dollar vote available to be used in any other sector (increasing income through the tax on the value added), the healthcare sector must compete for that dollar by reducing the cost; something healthcare will not do as long as the funding is readily available by means of tax and subsidy (public finance) and by rigging prices through the AMA's price schedules.

Mandating insurance just rigs the price. It acts to support the price because it eliminates the discretionary, disinflationary value of free-market choice, making it less affordable. There is nothing more efficient than redirecting (retributing) the value to the consumer.

The tobacco tax, for example, increases healthcare costs with evermore anticipation of more funds always being made available for price increases (the value added), which provides evermore power to finance political campaigns that will provide the regressive tax and subsidy schemes to finance it.

The tax and subsidy scheme to finance healthcare, even as it is now being shrewdly presented with the element of a progressive tax by the Obama game masters, is inflationary. The cost is pulled up with available funding, which in turn pushes the need to tax, allowing for a deflationary accumulation of income. The deflationary spiral is easily defeated by the tax on the value--the price increase--as it is added.

Without reversing the trend, the final result of the upward redistribution of income is stagflation. It is an economic condition that is also accompanied with a financial volatility caused by conflicting trends driven by short-term accumulations (deflation) and distributions (inflation) of a consolidated capital (stagflation). These are the short term oscillations that the CFTC is now identifying as excessive speculative demand that deflated the economy, and continues to control the trend.

While wealthy speculators (hedge and private equity funds) were engineering the deflationary trend, the CFTC attributed the cause to fundamentals. Now the CFTC says it was speculation in commodity futures, indicating a gamma risk that will vector the slope to a more positive trend, indicating a long, slow recovery.

As the accumulation of income is largely invested in speculative demand instruments, like commodity futures, a high return with a low risk is ensured, provided by the mere mass movement in and out of the markets. The dynamic is the means by which the net worth of the average income is consolidated, supporting the volatility and the ability to command the direction of the economy and duration of its cyclical trends. It is not a free-market dynamic and solicits the demand for a gamma risk to ensure a technical correction.

In the case of healthcare, the consumer is being offered a "healthcare exchange." Something that resembles a free market without relinquishing "control" of it, most importantly the distribution of income (the cost control) that determines the ability to command economic trends.

Since the demand for healthcare is relatively inelastic, like the demand for energy, allowing for its consolidation allows for the command and control of income distribution and, thereby, the means to command and control the economy.

The demand dimension (the need) determines the ability to command the supply, and thus the price and quality. Here, if a free market mechanism is not assured in priority, is where the demand for government intervention (the gamma risk) is the greatest. It is where there is the greatest potential for command and control by consolidated organizations instead of the individual in the marketplace.

The command and control is achieved with the ability to determine the flow of income, or the ability to pay. The means of rewards and deprivations is the determinng variable.

The ability to pay, the means test, is the typical criterion for participation in government programs with the biggest cost (and benefit). Income is the determining variable, and the demand, the need, is not limited to the needy. It also controls the slope of deflationary trends and protects the benefit (the income distribution) from the accumulation of a retributive value. Distribution of that value over time is the larger part of creating and managing the gamma risk.

In order to maintain the determining causal variable (income distribution), it is necessary to maintain it on the effect side of the equation. Programs tend to be reactive, providing relief without a cure.

A proactive measure requires a redistribution of income; what the conservative element says is inimical to a free and productive society and the new congress and administration apparently relucts, advancing largely remedial, relief-oriented measures.

Where the free market does not properly obtain there is a big demand for government, and we see a big demand for government intervention in the healthcare space.

Government intervention (the gamma risk) should be limited to providing what the demand for it indicates is fundamentally lacking--the free market mechanism. That will limit the risk to curative measures. Remedial measures provide relief, not solutions, and condemn us to an endless sea of reformative rhetoric that tends to anomie and skullduggery.

A more free-market model, with the profit being the measure of effective healthcare, provides the reward (the measure) of effectiveness as determined by the consumer. Otherwise, the price, preferences and distribution of rewards and sanctions (the profit measure of effectiveness and satisfaction) are dictated by elits in lieu of free-market mechanics.

The AMA argues, of course, that healthcare professionals must exercise a tyranny in the marketplace to secure the public health. The argument for an authoritarian, if not totalitarian, model is not to be mistaken for the adequate provision of public health or a necessary condition for the adequate provision of any public good!

With a gama-risk intervention, the profit is rendered more like the legitimate effect of a free-market, pluralistic model rather than the means of restricting growth or rigging prices. The profit margin (the distribution of costs and benefits, or income) seems less an act of deliberate deprivation, like pricing consumers out of the market or bankrupting them. Whether it is by the cost being solely determined by the provider/producer or a tax on lifestyle choices, or both, the benefit has a deflationary cost (a lack of purchasing power). Maintaining the benefit supports the deflationary trend and elicits the gamma risk.

According to the Obama administration's chief economic advisory, the lack of purchasing power (the over-accumulation of income in the upper class--the liquidity crisis) will result in a long deflationary trend because average income classes will be saving and paying down accumulated debt for some years to come (the paradox of thrift). Accordingly, the solution to this "problem" (the sacrifice, the deprivation) is to let it play out. Eventually the capital will be so over-accumulated that the only thing left for it to do is to be distributed to reverse the trend. It is the classic model of consolidated capitalism that elicits the risk.

If we were expecting something like "change we really need," the expectation is suffering a miserable failure.

Reversing the trend can be accomplished without waiting for the wealth to "trickle down," facilitated only by a gamma risk intervention that will keep the wealth consolidated and conserve the Hamiltonian model in Ivy League fashion.

Ensuring a free and unconsolidated marketplace in priority renders the paradox of thrift and liquidity crisis a public/private enterprise of capital formation that is not a function of dispossession, but possession; not of depriving, but providing; not as a means of a "natural," unavoidable tendency to inequality, but the deliberate ethic of a rationally righteous pursuit of liberty and happiness that is an easily verifiable General Welfare, Constitutionally endowed.

What's the Difference?

Small investors need to recognize the differences between today's economics and the past. Identifying false indicators is key to successful investing and preservation of net worth.

The economy undergoes innovation to maintain control over the determinants (the indicators) of value and the distribution of the value. The innovation is largely driven by gamma risk--public sector intervention that affects value and its distribution (see the article, "Assessing the Value," and "Indications of Recovery" at griffithlighton.blogspot.com).

Gamma risk innovation occurs mainly to avoid and recapture payment of the retributive value (the distribution of capital that relieves liquidity crisis and reverses a deflationary trend). For example, the dip in the price of crude oil, oversold to nearly $30/bl signaled a recovery. The recent spike in the price, overbought over $50/bl reverses the trend.

The causal relationship between the price of the energy benchmark and the directional trend of the economy is quite clear. In spite of political measures to infuse liquidity to cause a sustained distribution that will stop and reverse the deflationary trend, the price of crude is being used to effect (command) the trend posteriori. The gamma risk is being effectively managed by the private sector.

As the retributive value is politically infused, energy prices increase, consolidating the infusion and reversing the trend. The portion of the capital infusion that does trickle down inches the economy toward recovery with a highly measured pace determined by the private sector.

The political element of the political economy can claim being in control to satisfy the demand for public action while, at the same time, the private sector commands the pace of recovery. The gamma risk has then been successfully managed and the distribution of value (the retributive value) legitimately conserved both publicly and privately. It is an ingenius application of the Hamiltonian model of power and political economy that maintains a strict class distinction as the result of the naturally endowed freedom of each individual to equally pursue life, liberty, and happiness without intervention of the sovereign (government).

Equal pursuit does not ensure equal results, thus the need to manage the retributive value and the gamma risk to the reward.

Self-determination of "The People" (the legal sovereign) obtains by a long and complex process of illusion in which both wealth and power are consolidated and conserved with the force and legitimacy of public authority.

The Hamiltonian model survives by innovative means. The main threat to its success is a progressive tax code that will not allow the capital infused to pluralize the economy to be consolidated and the elitist model conserved. Changing the model is not mere normative sentiment, but a descriptive analysis that accouchers the practical understanding of trend indicators and predictive utility.

Identifying what the difference is, the innovation, that gives meaning to the old adage, "past performance is no indication of future performance," and why economic data and trends are too often reported as "unexpected" by analysts, allows the small investor to manage the risk with the certainty of current means to ends that must predictably conform to old legitimacies (normative legal parameters).

Buying an oil futures contract is certainly not illegal, but if capital is allowed to consolidate and massively move into futures contracts, the effect determines the direction of the economy. The cause-effect relationship lacks the normative pluralistic legitimacy of free market economics. Technically correcting for it (the gamma risk) is where the innovation occurs and the predictive utility of the difference obtains.

Notice that the recent rise in the price of crude correlates with the "unexpected" trend back to deflation. It is a causal relationship that will keep the economy in a stagnant state (see the previous article, "Crude Indicator" at griffithlighton.blogspot.com).

Until there is a more progressive tax code in place, rising energy prices will falsely indicate a definitive SAR recovery point as long as it is a speculative means of directing it by reversing the trend.
A more progressive code will make pluralism more profitable. Energy prices will then rise on the health and wealth at the fundament (on demand and not command). The recovery phase will otherwise be weak and stagflationary with a strong deflationary tendency that will appear unexpectedly only by those that do not know the difference.

The precipitous drop in the price of crude late last year signaled the beginning of the recovery phase of the current business cycle. Recovery will be expressed with a positive, long and linear slope when the noise (the deflationary tendency: the short-term effect of the recovery indicator) is regressed from the oscillation.

At this point, falling energy prices is a means of controlling the depth and breadth of the deflationary trend and the amount of retributive value accrued, manageably spreading the gamma risk on that value over time. Each peak above or below $50/bl is a short term accumulation and distribution within a stagflationary macro model.

The cycle of boom and bust is innovated into more frequent, short-term events favorable for arbitrage and leverage finance that cultivates a take-the-money-and-run mentality. A more progressive tax code is a sure cure with a level of certainty that can be measured by the level of resistance to it if not the carefully deliberate ignorance of it.

Fear or Loathing: Do Economists and Business Leaders Lack Expertise to Manage the Economy?

There has been criticism that our technocratic elite have shown considerable incompetence to predict, prevent, and now control and abate the economic crisis.

The criticism, getting a loud voice from a wealthy class of new rich who are now being branded in the media as "less rich," is incorrect. The economy has and continues to be managed with competence to define class distinction, or the measure of "success" that occurs with the deflationary phase of the macro-economic business cycle.

The "class" dimension is absolutely critical to understanding the measure of success or failure. What appears as a political failure--a maldistribution of wealth to the upper class--is an economic success. That is what the Hamiltonian (elitist) model of power and political economy is supposed to do: operate to clearly confirm class distinction, defining just exactly who the elite are. At this point within this elitist model, there is, of course, the impetus for a political solution to catalyze a recovery phase of the cycle that is the antithesis of deflation, or inflation (an economic metric).

As long as the recovery phase is managed within the Hamiltonian model, the political measures taken will be inflationary: monetizing the debt with a regressive tax code that produces a budget deficit. The alternative to the budget deficit (inflation) is an equally massive economic detriment, like people starving in the streets, that no one can tolerate, not even the elite because it accumulates too much retributive value to be managed at one time.

At this phase of the political-economic cycle we can choose to finance the recovery with a regressive tax burden that confirms operation of the practical elitist model, or we can choose to progress the tax code and modify the working model to a more pluralistic effect.

Progressing the tax code will not destroy our nation or the free market as all the conservative rhetoricians, that have all the access to media form the margin because the elite can afford to own it, say it will. The fearmongering is an expression of this marginal disproportion of power that the elitist model produces and is designed to maintain with a level of competence that is the best money can buy.

The experts are busy telling us that the prospect of progressing the tax code is keeping the economy in a deflationary trend. We should be afraid of that prospect. It will spoil recovery by discouraging the reinvestment needed to trickle down to the masses and overcome their fear of having no income to spend. Nevermind, of course, that expert implementation of this theory led to their having less income to spend, record depreciation of household net worth, and the fear (the prospect) that it will get worse. What is bad about the economy, what is to be loathed, is being expertly attributed to the fear the elite have of probable change that occurs with the depth and breadth of the cyclical trend and the unequal distribution of wealth and power it is intended to conserve. What the elite fear is, by the absurd reduction of the 18th Century collective utilitarian argument, what we all really fear in our collective self-interest.

What is the elite's fear is the non-elite's triumph of a constitutionally endowed pluralism. The fear that our technocrats are telling us is driving our economy into the ground is a misattribution. The fear factor is the political will to switch to a more pluralistic model that threatens the status quo of power a la Thomas Jefferson.

Our economy is not continuing to trend deflationary out of fear of the largely non-elite consumer who is not spending. The spending is inadequate because the income is not there to support it. It has been consolidated as per the elitist model in operation, and being very competently applied. The trick is now to fool us into believing that choosing the means for a more pluralistic model of power--a more progressive tax burden that will enhance non-elite spending--is antithetical to the basis of our constitutional form of government that protects our freedom. The argument is, of course, absurd.

Operating with the elitist, Hamiltonian model causes the lack of income because it has been accumulated in the upper class to now be consolidated through political process of a regressive tax burden so that the recovery will be financed by borrowing from the consolidated wealth with interest (a budget deficit) instead of taxing it.

The elite of power are afraid, they fear The People will realize that the practical model can be easily changed so that instead of financing the means of consolidating power, We finance the means of real freedom we are all endowed.

Instead of financing the means to defeat free-market economics, We finance the means to allow for it in the fullest measure. We may then confirm what it is we have to fear: a free market or the lack of it?

The expertise being used is being mistaken for the lack of it because the complexity of the problem is being used to convince us all that the cure for our loathing is to be feared: that the problem is the solution; to identify the fear of the elite--the solution--as the object of the loathing, or a fundamental error of attribution. It is a deliberate error, a fallacy, being detected but erroneously interpreted as, attributed to, incompetence of the technocrats instead of the successful operation of the organizational technology--the elitist model of power and political economy.

The bad economics we all loathe is not the result of free-market economics, merely the lack of it. Realizing that is what the elite fear and will do whatever it takes to turn what We loathe into what they fear with the highest level of expertise.

Economic Stimulus: What To Do, What Not To Do

The depth and breadth of the current macro-economic cyclical trend has everyone's attention. Its saliency is marked by a spreading economic detriment that reaches into the upper middle class. The current economic trend defines the distinction between being middle and upper class--the degree to which you sacrifice your net worth to the capital owned, consolidated, by the upper class.

Since the effect of the boom-to-bust trend is to define class distinction, there is a tendency to trickle down the demonstration of power by the middle class with regressive tax policies to address burgeoning budget deficits. Exacting a regressive tax burden is a demonstration of power that gives a sense of parity with upper class status. The financing for the SCHIP program recently legislated is highly regressive, for example, providing a source of revenue for members of the upper middle class along with a sense of being powerful enough to politically apply their economic self-interest (regressive tax policy) in the name of the public good or the general welfare, just like the upper class does.

Regressive tax poicy is highly deflationary. It is the first thing NOT to do if we are to stimulate the economy out of the deflationary phase of the business cycle, yet it was the first thing to do once a new administration took power and a new congress sworn in.

Where regressive tax policy thrusts us into the depths of recession, a progressive policy will effectively pull us out. If, as a practical example, we want to fund health care for those that cannot afford it, a progressive burden is the pragmatic measure, but the cohort that is to shoulder the brunt of the burden do not occupy legislative seats at any jurisdictional level of government.

For the middle class cohort seeking to demonstrate power in the throws of class distinction, a regressive tax burden is not in its self-interest. Rather, it sustains and validates a tax policy that is the source of its detriment, giving false confirmation to economic policy that is otherwise not confirmed in the most salient way, becoming the willing tool of the upper class and its confirmably disreputable mode of systematic operation by pragmatic means of a regressive tax burden.