Tricks that Get the Fix

With tricks and spin the fix is in.

To lock-in the value accumulated into the upper class that resulted in the Great Recession (and a high level of deficit spending) without liability (without paying down the accumulated debt from the accumulated equity) requires effective techniques for negotiation and rhetorical devices. These techniques and devices are necessary to provide a descriptive legitimacy of the outcome and a prescription for conserving the value to avert crises it is sure to cause in the future.

It is necessary to arrive at a political settlement that does not assume the risk is a function of the accumulated reward. Instead, the reward is offset to the future. It is identified with an impending crisis that theoretically assumes measures are modeled to avert the crisis but, instead, cause it in practice.

These are psychological tricks that fix errors into the system and accumulate into an unavoidable gamma-risk proportion. Despite the rhetoric (whether Democratic or Republican) that policy measures are to avoid if not eliminate the risk, these measures are designed and predictably administered to consolidate and conserve the value of its accumulation, and anchor success to that proportion.

Democrats measure a successful accumulation by the level of deficit spending, Republicans by the extent of its reduction. In either case, the detriment the accumulative reward assumes (the inherent risk of loss fully assumed) is effectively offset. It is politically settled by anchoring it to the probable event of two detrimental alternatives, overtly derived by either bi-partisan conflict or cooperation that appears to be both legitimately pluralistic and, if need be, selflessly combined to administer the general welfare.

Operationalizing the concept of the general welfare as a collective, non-zero-sum consolidation of the risk (rather than a risk-averse, zero-sum deconsolidation that will avert the impending crisis that Republicans say we now inevitably face, for example, without Democratic support), allows bi-partisanship to falsely appear non-partisan (and risk-averse). It is a political trick that has structurally evolved to control the political extent of the risk assumed in the face of recurrent crises. It is a trick independents do not willingly fall for without the structural extortion of a two-party system subsequently translated as a genuine mandate derived by means of legitimate, popular consent.

Unfortunately, independents are only about 20 percent of the electorate. While a swing vote occasionally combines to indicate a non-partisan sentiment, it is never enough to deconsolidate the risk proportion. It is never enough to break the organized tautology of a binomial, political structure into the empirical, corrective value of a genuinely pluralistic, and legitimate, popular consent. The bag of tricks and rhetorical devices that dominate the political settlement stubbornly persist.


The fix is in with tricks and spin,
The devil's due through thick and thin.
The path to prosperity is a selfish lust
If not to boom we'll surely bust.

One thing's for sure,
We'll fix the budget
With a cup of tea
And a lot of fudge it!

Quantitative Leveraging

To turn "the risk" into a discrete, manageable quantity, it is the Fed's job to conserve the value of the accumulated risk in addition to keeping inflation low at full employment, (i.e., manage the extent of the risk).

Since managing the risk is modeled with the Phillips Curve, which assumes full employment only at the risk of high inflation, it reasonably follows that increasing inflation will cause employment. Thus, inflation distributes the risk through the Fed's open-market accounts, keeping close account of its distribution to effect economic activity.

Supposedly, monetarism is a tool for economic expansion--to monetize (leverage) growth, not to cover the debt. One unit of monetary expansion is supposed to yield one or more units of growth to cover the debt. However, what we have is money leveraged ex nihilo to pay the debt in the absence of sufficient growth (employment) to pay the debt.

What is being monetized is the ability to make a profit without domestic employment or growth. Unemployment is projected to be high long term while we prepare to reduce government spending and increase the age of retirement. This presents a tremendous risk to the resulting accumulation of the capital. If it belongs to the wealthy, then they have the liberty to distribute it any way they want. Their property cannot be deprived without due process--the tax code, for example; and if the distribution is determined by one-person-one-vote, the top two percent of income distribution don't have a chance. The top will assume the risk by force and legitimacy of public authority, so there has to be a way to leverage this quantity of accumulated risk into the lower classes.

Conservatives argue, of course, "we can't keep spending money we don't have" which, of course, means we are going to have to spend the money we do have (at the top), or monetize the debt. It is the Fed's job to do the latter and redistribute the risk with a leveraging scheme (with the risk of loss fully assumed) called quantitative easing.

QE maintains the debt without the risk of equity distribution, that is: it pays the debt by extending the risk. The risk of loss is extended to treasury debt and average incomes that are fixed into low-risk returns.

Keep in mind that the very means of QE as a macro-leveraging scheme is via treasury bonds. That means that the low-risk return is transformed into a higher risk of depreciation, making them assets with a high risk of low return (which is accomplished by "making the market"). The bank is using the depositors funds against them, setting them up as the counterparty to take the risk hedged into a counterparty detriment. This is the leveraging scheme that caused the Great Recession; and if we keep it up, without paying the debt from money that has been accumulated in the private accounts of the rich, it only gets Greater.

Since a Great-Great Recession accumulates more risk, the leveraging scheme has to be equally Great. So, some conservatives suggest the Fed drop its dual mandate and concentrate on economic stability. If we don't, our nation will go bankrupt.

Alexander Hamilton, America's first treasury secretary, devised a leveraging scheme that would perpetually keep our nation from default. Cleverly, the trick is to never be solvent. It does not matter if there is not enough revenue to pay the national debt as long as the debt is paid when it comes due. While, technically, the nation is bankrupt, it never defaults.

Of course, there is a significant amount of austerity (inherent risk) built into Hamilton's leveraging scheme. There has to be a scheme (a model) for determining who takes the risk of loss, fully assumed.

Since the lower classes benefit disproportionate to the amount of capital they invest, and risk, with a wage earned and paid in full, it is more important to conserve the means of their employment (the capital) and tax the lower classes to pay the debt as it comes due. Thus, the more capital accumulated, the more security extended to the lower classes to pay the debt without default.

Hence, paying taxes is lower class; and as it was with the crown, the upper class determines the rate of interest (the extent of the risk), and the lower classes, especially the middle class, pays it.

Thomas Jefferson, strongly opposed to Hamilton's Model, branded Hamilton and the Federalists "monarchists." Jefferson said Hamilton's scheme had a whole lot of room for abuse that the Revolution was intended to prevent, and Hamilton's conservative philosophy survives to this day having accumulated a whole lot of abuse, but without the risk of default.

QE is an extension of Hamiltonian modeling, providing a lever for extracting austerity from the least able to pay. The value is extracted from the masses in their own self-interest which, according to Hamiltonians, The People are not capable of knowing.

Who understands QE, MBS's, SDO's, CDO's, CDS's, or SIV's anyway? Apparently, the rich don't have to know how it all works, just that it works, and then it is on to mitigating the risk... playing the game of politics and figuring prominently on the social registry of popular culture which now includes schemes to get rich quick with all that fast-and-easy money out there. One of those pop schemes flipped housing prices into a catastrophic detriment, leaving homeowners with liabilities that far exceed their assets in true Hamiltonian fashion.

Jefferson was right, the Hamiltonian model provides more than enough incentive for abuse with less than enough ability to check it if we let wealth and power consolidate into the hands of the people driven by the animal spirits of greed and domination.

Politically ensuring a free-market system ensures both economic stability and productive capacity.

Keeping industry and markets from consolidating protects us from the tyrannical, extortionist tendencies of too big to fail and operationalizes animal spirits into an incentive for productive capacity (employment with low inflation) rather than operationalizing customers into a counterparty risk and detriment.

The Fed and the Treasury will serve us ALL well by ensuring pluralism first instead of conserving and protecting the accumulated value of the risk. Conserving a fully assumed risk of loss ensures liquidity crises and a continuous accumulation of debt that fits the Hamiltonian model of political-economy.

It is time to employ a model that does not operationalize with the risk of loss fully assumed, but the general welfare ontologically expected and verifiably legitimate with the risk assumed to the fullest extent.