Expected Value of the Risk

Going forward, what is the expected value of the risk?

With the Great Recession empirically defining social class by income (the ability to increase net worth), for any investor that is not in the top two quintiles, trying to increase your income is largely a function of protecting it from the "systemic risk."

The strategy will be defensive for all income classes. We all have to protect ourselves from the high accumulation of gamma risk. We are all looking to government to protect us from its overaccumulation.

The more value accumulated (the higher your net worth), the more able to protect yourself from the gamma risk exposure (the ability to "cover" your losses and stay solvent). Too-big-to-fail banks should be insolvent, but the government defended their creditworthiness at the expense of millions of people.

By what standard are The People legitimately deprived of adequate income and housing?

The ontology of the business cycle--the process of free-market mechanics--is argued to be the objective determinant of distributive value (who takes the risk, who accumulates the reward, and why).

So, then, it is absolutely critical to objectively (non-ideologically) answer the question: are we operating with a free market?

Risk that is fully valued in a gamma proportion (relying on government protection) indicates the opposite of a free market.

If the market is not free, what do we have to do to make it free?

If there is one thing we should rely on government to protect and defend in priority, as our founders envisioned and we still regard with both an idealistic and Constitutional measure, is to ensure freedom. That especially includes ensuring a free-and-unconsolidated marketplace in priority--exactly what defending and protecting consolidated, too-big-to-fail, economy-of-scale firms is not.

An economy-of-scale deprivation is not to be politically, legitimately, protected and defended, but that is exactly what We The People have. All that does is consolidate the gamma risk, causing the instability that our founders sought to avoid--causing the need for government (the king, or that is, the consolidation of sovereign power and the consolidation of risk).

The expected value of "the risk" is reduced to a political evaluation--a critique--that formulates a confirmable hypothesis despite all attempts not to. "The risk" of a confirmable hypothesis is improvement, something the socio-economic elite will politically avoid at all cost, including a more progressive tax code.

It is not the progression of the tax code that is the determining variable, but what We expect to do with the value accumulated.

Externalizing the Risk

The formula for maximizing margin is to minimize the risk to that margin.

As an economy consolidates into economies of scale to reduce the alpha risk, the risk accumulates into beta and gamma risk. Since the risk has been detached from the alpha fundament, and it has to go somewhere, the formula for maximizing margin then becomes: internalize the profit and externalize the risk. The result is the economic condition we are in now with large, consolidated corporates accumulating profit and distributing the risk.

Profit is detached from the risk, increasing the marginal profit. The risk is transformed, not reduced, and redistributed without the profit. The risk is transformed into crises that cyclically occur at a depth and frequency of the distribution. Currently, the risk has become so external to the profit we now see the prospect of a lengthy recession and a possible double dip with the threat of deflation.

When the profit does not distribute with the risk, gamma risk accumulates and crisis will occur.

In the form of alpha risk, profit distributes with the risk, providing a disinflationary, distributive, pluralistic benefit to the market.

Accumulation of value, on the other hand, like we see with an economy-of-scale efficiency, provides a non-distributive, non-pluralistic, inflationary benefit (the marginal profit). The accumulated benefit harbors the risk of deflation--negative growth, unemployment and declining prices (general economic crisis that causes the need for authoritarian management of the risk, or The Iron Law of Oligarchy and emergence of The Iron Triangle form of government).

By ensuring an alpha-risk distribution, pursuit of profit not only externalizes as reciprocal value, providing goods and services with good and adequate consideration, but also imparts a distributive value that stabilizes prices with adequate, disinflationary liquidity. The result is positive growth with declining unemployment, debt reduction, and reduction of systemic risk at the unaccumulated fundament.

Alpha management of accumulated (externalized) gamma risk is a strategy that could have been easily employed by the Obama Administration and a Democratic congress.

Instead, the government (The Iron Triangle) engaged an inflationary risk-management program (described as "Keynesian") that has kept the risk external to the profit (thus, the bull market up to now, and the false signal of being descriptively pro-growth).

A top-down, trickle-down Hamiltonian model is to command and control systemic-risk (business cycle volatility), not reduce it.

Employed by the Obama administration and Congress, the Hamiltonian model of finance has supported a recessionary trend and increases the probability of a deflationary dip (lack of demand to support growth). Instead of alpha-risk stability, they achieved beta-risk volatility--exactly what we do not need.

In the alpha form, risk to the profit margin inherently distributes with the benefit. The margin is then at verifiable risk, accountable, to the free choice of market participants. When that choice is minimized by organized consolidation, internalizing the profit by externalizing the risk, the risk goes gamma.

With organized consolidation of the risk, managed in the aggregate (externalized) independant of the profit margin, the present value of the risk goes beta. Its marginal value becomes more dependant on political sentiment. It is more difficult to measure and, with a more uncertain future value, more volatile.

A speculative market (regulatory arbitrage) then emerges to command and control the gamma risk, and the beta volatility, in the guise of reducing it.

The bureaucratic model of power and political economy emerges (The Iron Triangle) to conserve the distributive value of the Hamiltonian model. This neo-conservative, post-industrial innovation of the model, especially after the Great Depression, provides "the risk" with a predictable presence of value.

The purpose of the neo-conservative model is to phenomenologize a legitimacy of internalized risk. It is a false legitimacy with power literally being a top-down "derivative."

The risk to gaining power and keeping it is not a pluralistic ontology, like a free-market legitimacy, derived from the bottom up. It is being imposed from the top down.

Alpha-risk modeling that ensures a free-market mechanism is what genuinely internalizes "the risk" so we are not slaves to the Iron Law.

Conserving the Value of the Risk

Pending financial reform will conserve the present value of the risk in a fractile, chaotic oscillation.

In order to forge order from the chaos, fitting the assumptions of the Hamiltonian model, the fractile dynamic demands an economy-of-scale efficiency. Reform is designed to conserve a financial system with an efficiency for "making markets" to command the risk.

According to lawmakers and the executive, the reform provides protection for everybody. Main Street is protected from Wall Street, and Wall Street is protected from Main Street.

It is assumed that as long as the risk of systemic failure can be controlled, big financial firms will "make the market" so that the consolidation of risk has useful value other than generating profit without growth--the source of the risk.

The reform does not consider hedge-funds and private equity firms a source of systemic risk, but a source of disinflationary capital, providing financing for small businesses.

The assessement is entirely incorrect. Reform, however, protects tax breaks for hedge-funds and private equity, for example, that do most of their business with Goldman Sachs, and will surely cultivate the next crisis reformers correctly predict, but incorrectly support.

Since pro-growth capital is not likely, having no mandate because the risk of failure will supposedly prevent overleveraging, the reform provides a fail-safe mechanism to protect the public from overaccumulated amounts of leveraged risk. At the same time, the accumulated reward of the risk is protected from the accrued retributive value, conserving the value of the risk.

As financial reform nears reconciliation, support for financial equities supports the hypothesis of conserved risk value.

It was an easy call, clearly indicated by an unwillingness to disaggregate the risk. Instead, reform measures will consolidate financial markets further
in the event of an overleveraged crisis of fractile risk that the Senate Banking Committee chairman says will surely happen.

Despite reform that calls for the orderly resolution of fractile risk, the causal factors of accumulated risk are conserved and supported by the resolution authority, which is exacly what we do not need.

The reform buys-in to the use-value of conserving the risk and the too-big-to-fail organizations that both create the risk and value the presence of the risk into a fractile, chaotic volatility. As the risk compounds and accumulates into a crisis proportion, the technical expertise of big-bank executives and staff that get it there will then resolve the risk and consolidate it into a bigger, too-big-to-fail economy of scale. It is the problem offered as the solution and, again, an easy call.

Despite the authority reform will endow to resolve firms that overleverage the capital into crisis, the cost of unemployment, for example, and lost productivity is not included in the concept of not providing a bailout. These costs are just as much a bailout for too-big-to-fail firms because they benefit from it in addition to the big profits made causing them. The value of the "big risk" is every bit conserved.

Investors can expect the risk differentials to be essentially the same. The daily narrative of present value will set up sudden inversions that require a close monitor of massive accumulation and distribution of capital that manipulate future value with an aversive sentiment.

The reform is not risk averse. It is risk prone, which drives market sentiment into sudden and salient oscillations of greed and fear that support the profitability of too-big-to-fail financial firms, hedge-funds, and private equity adjuncts.

Unfortunately, financial reform will give the problem to be solved the legitimacy of deliberative public process toward securing the general welfare. It will force us into adverse choices that economies of scale bundle (oligopolize) into what only appear to be a bargain in the absence of a free-market, alpha-risk ontology.

Transferring Risk: Aversion and Inversion

Transferring risk is a mega industry. Not only are financial markets made to reduce perceived risk, but capital is invested to reduce fundamental, firm risk (the alpha risk).

Aversion to risk has developed into a highly technical means that results in an unexpected inversion of its indicators. The price of gold, for example, has been in an overbought condition despite the risk of inflation being low with a strong recessionary, if not a deflationary, trend.

Buying gold with the massive infusion of liquidity to resist deflation has supported both the recessionary trend and the price of gold into a market (beta-risk) bubble.

If a "market maker" wants to support the recessionary trend (unemployment) and gain capital at the same time, support commodities. The support suggests both a jobless recovery and a recovery indicated by rising commodities prices at the same time.

Rising commodity prices have been a false positive. Now, markets are worried about deflation. How can that be? The global economy is flush with anti-deflationary liquidity. The risk indicators are inverted.

If you are assessing the risk to do business, you will notice that the uncertainty (volatility of markets) does not stem from the public sector. It is doing what is fully expected--averting deflationary risk with inflation (currency devaluation). The source of uncertainty is from a consolidation of capital and risk in the hands of a few corporates in the private sector that far exceeds the monetary muscle of government spending.

According to the CFTC, the futures market is approximately a $34 trillion capital market. So, it is you versus trillions of dollars of market-making risk that can literally turn in a flash, likely determined by whatever position you have--if you are long, they are short...until you are trapped. Thus, for example, a government will protect its public policy position with the application of gamma-risk authority. Like Germany recently protecting (averting the risk to) devaluation of the Euro, by banning naked shorts on its largest financial corporates.

Germany is averse to the risk of infused capital (its devalued currency) being trapped in a speculative bubble rather than being trickled down. While the action is too late, it indicates the source of the uncertainty and instability.

Germany is also acting to invert the risk directed by the big demand for derivative-driven, risk-transfer products. In an effort to cause growth and economic stability, giving real support to the value of European debt, German authorities are doing what derivative markets purport to do.

The public and private sector are at odds (the risk aversion and inversion), struggling over who determines the distribution and timing of value (aversion), and the direction of the risk (inversion), causing a high level of uncertainty.

The aversion to, and inversion of risk (the uncertainty) has been transferred to gold, and will be transferred to other commodities with the assistance of highly technical, difficult to discern risk-transfer vehicles. The market for these aversion/inversion vehicles is made with the derivative/futures markets, which largely exist in the dark.

These denizens of the dark sneak up behind you and... surprise! The risk is suddenly reversed.

Black boxed, with the risk only apparent and available for manipulation to elite insiders who have the most credit-worthy access to the discount window, the market-risk makers command and control the distribution of the risk. Just as important is to control the narrative that explains the shifting patterns of risk, which controls both the direction of the risk and, even more important, mitigates what is otherwise a questionable free-market legitimacy.

The testable hypothesis of a free-market legitimacy is the only remaining liability of the averted (re-directed) alpha risk--the risk of accountability the averted alpha risk would otherwise provide without question, and without lengthy legal process. The more time spent applying accountability in public process, the more disconfirmed the free-market hypothesis.

To mitigate the probable risk of liability, market makers argue the use-value of making markets.

(Keep in mind that legitimacy is a critical function of power, and the exercise of power to a detriment without complaint or fear of reprisal is a measure of power. Use-value is an eristic for reconciling theory with practice; contending, for example, that reduction of alpha risk produces more useable value than the legitimacy of its full, theoretical value.)

Markets are made to hedge shifting patterns of alpha risk (that it averts) and beta risk (that it inverts). If markets are not made to absorb the risk, market makers contend, with trillions of dollars to manipulate the market, capital investment would be sub-optimal because there would be too much risk. They liquify markets by reducing the level of risk (by transferring the risk).

Pending financial reform will do well to redefine the problem by questioning the use-value of transferring risk.

Reform has been so far dominated with negotiating what the problem is, which indicates an aversion for inverting the current risk hypothesis to a more useful form of legitimate risk that distributes the austerity of the debt into a peaceful and prosperous pluralism.

Prosperity comes through retransformation of systemic risk into an alpha risk ontology, giving risk a real and present value that is peacefully verifiable.

Rather than conserving a fractile, geometric progression that appears to be the ontological legitimacy of a random walk, financial reform must consider the deficiency of the use-value eristic that falsely characterizes consolidation of risk being analagous to the legitimacy of an alpha-risk ontology.

Use Value and Financial Reform

Everything we do can be reduced to its use value. Such a utilitarian aspect has moral import. It can provide a legitimacy of power. It can also justify activities that produce a detriment.

Liability for negative consequences can be relieved or mitigated based on use value, and the successful argument of that value can then become the measure (both the means and ends) of power, legitimately accomplished.

Congressman Yarmuth (D-Ky), for example, has proposed cutting the capital gains tax on commercial property from 15 to 5 percent. The property is not producing useful value because of the Great Recession.

According to Yarmuth, apparently, the tax expenditure will cause growth that outweighs the cost to the treasury as speculators churn property to produce a capital gain. Thus, the property gains useful value with more revenue being collected at 5 than at 15 percent.

Yarmuth's proposal is the trickle-down tax theory used to promote the value of the Bush tax cut program, which did not produce growth, it produced the Great Recession. Supporting a recessionary trend apparently has use value... in zero-sum.

Yarmuth identifies value not being used needed to reduce the value of the budget deficit. If the value is not used to produce growth, however, the value is being used in zero-sum with an accumulation of power in zero-sum. The accumulation commands the value of capital used at the lower tax rate or it will not be used with a deflationary effect.

The result of the useful value commanded, of course, however, then presents as the problem--a budget deficit and the need to tax at the higher rate. This "problem" is not a paradoxical trade off--an unsolvable puzzle that presents for philosophical amusement. It is a deliberate accumulation of value that commands the power to define its use and produce the value in zero-sum.

It is a linear accumulation. It is not a paradox of thrift, but a means of producing the power to sustain the zero-sum accumulation over time, to be applied at any time in the form of use value. (It produces the gamma risk which occurs at high frequency with a short wave length; kind of like high frequency trading in financial markets, indicating a critical concentration of power with an explosive tendency--a useful value-- that requires regulatory authority, or the need for government.)

In post-hoc temporal sequence, the anticipated benefit of the value defined as useful "ironically" transforms into the antecedent cost that is supposed to produce the general, distributive benefit. Thus, the constant accumulation in zero-sum (and the accumulative frequency of gamma risk over time).

Anticipating the proposed full-value of the useful benefit that follows and mitigates the cost is why, for example, we spent eight years trying to confirm the Bush tax-cut hypothesis into a miserable disconfirmation.

Now that the trickle-down tax cut hypothesis has been disconfirmed, where is the liability for the consequences?

There is virtually no risk of liability to the benefit accured at such a high cost. Rather, the hypothetical utility of the cost-to-benefit is being reposited as declarative knowledge, and is characteristic of especially bad politics, lacking empirical value.

Goldman Sachs executives provide another example. They claim their activities "liquify" the marketplace. Despite the damaging effect it had to "liquidate" the marketplace (hence the risk of liability), they argue to mitigate the liability, and the damage, with useful value.

While the cost of big-banking activity is huge (encouraged by tax policy Yarmuth is proposing), the benefit is also huge. Goldman Sachs now has more capital than anyone to liquify the marketplace. It literally has the power to pick the winners and losers. It is in command and control, with only the gamma risk.

In order to maximize its margin, a big bank will invest the highest return with the lowest alpha risk, liquifying economies of scale and liquidating anything else into a cyclical crisis.

Thus we have the arguable use value of "making markets" with particular types of trades and business practices that directly correlate with regressive tax policy and consolidation of industry and markets.

Financial reform needs to utilize empirical value: recognizing correlations, identifying causal relationships, formulating hypthotheses, and testing hypotheses with a new policy and program that disaggregates risk instead of recycling the old program, and the risk, post hoc.

The empirical measure of value will not be limited to public policy if financial reform ensures proliferation of alpha risk.

Instead of accumulating gamma risk, alpha distribution of risk extends empirical value into the private sector. The valuation of risk (and reward) can then be usefully measured with a confirmed accountability indicated by the margin of profit (the limited liability of risk) and less need for government.

Instead of relying on the eristic reasoning of use value, forever encumbered with the implication of every possible moral hazard, the financial reform we both want and need will rely on simple, verifiable hypotheses as the primary measure of value in use.

Financial reform that maximizes alpha-risk accountability coefficiently reduces systemic risk and the need for government. It is an easily verifiable hypothesis, for example, that could prove to be of highly useful value.

Reduction of the budget deficit and the public debt can be a veritable, positive measure of efficiency, rather than the absolute value of an accumulating deficiency.

Risk Reduction and Financial Reform: Ensuring the Measure of Popular Consent

The best way for a bank to maximize its margin is to be so big that it has virtually no risk. The risk is most fully reduced with an economy-of-scale efficiency so that it accumulates in the space of public policy (the gamma risk).

Within a public policy space, the-economy-of-scale efficiency is organizationally extended so that the risk can be managed in aggregate. The specific types of transactions that accure the gamma risk are largely lost in macro-reform measures, like raising capital requirements (increasing the economy of scale), to manage the "big" risk. The space is then defined as mitigating the damage of the accumulated risk, not preventing it. Government is then operatonalized into the economy-of-scale efficiency, effectively being organized to support the problem as it acts to resolve it, giving the accumulation of risk an element of presumption that can then be considered an assumed risk (an exculpatory ontology) of economic participation.

The reason aggregation of risk results in crisis is because the accumulation requires a distribution to be sustainable. Value becomes so accumulated that it collapses under its own weight. The solution is, obviously, to prevent gamma accumulation of risk deliberately aggregated into an economy-of-scale. The too-big-to-fail proportion results in public policy designed to alleviate crisis rather than prevent it. We then get the deliberative policy we need (the elitist model), within a defined policy space and time, rather than the policy we want (the pluralist model of popular consent).

This is not an ethical problem, per se, but an organizational problem. The firms are allowed to be so big they can rig the market to maximize income, and so they do by popular consent. Maximizing margin is what shareholders want. The crisis that always results from accumulation of gamma risk, however, tests the legitimacy of popular consent and the intelligence required to correct "the problem" independant of a moral capacity.

Either organizing firms to accumulate gamma risk is not considered to be wrong, as Lloyd Blankfein maintains, because it provides liquidity to markets by "making markets," or a deliberate fraud and deception operating with the legitimate consent of those that are harmed. The problem is then a function of ignorance and stupidity and not a moral deficiency.

Considering the operation of an economy-of-scale efficiency to maximize liquidity of markets resulted in liquidity crisis of monumental proportion, a considerable amount of intellectual deficiency is presumed by the "market makers" and now the "policy makers."

Since hypotheses have been clearly tested and disconfirmed, measures that resist the problem have gained an empirically generated moral imperative, however. The activity of policymakers within the policy space now squarely faces the legitimate consent of the governed, naturally endowed by inalienable right and Constitutionally protected by government authority. Its verification will be a categorical measure of both intellectual capacity and moral character that avoids catastrohic accumulation of risk.

It is possible to ensure a genuine consent of the governed in priority. It requires deconsolidating the risk rather than letting it accumulate to a gamma risk proportion.

Ensuring the measure of a popular consent is absolutely critical to risk reduction. That is why economy-of-scale organizations extend into the public space. It is necessary to gain this critical legitimacy of power and reduce the only remaining risk--the risk of liability determined by the consent of the governed, or the gamma risk.

All means to reduce the liability by raising the requirements to accumulate the risk supports the causal factor--consolidation of industry and markets. Resolving to such measures cultivates the problem.

An economy-of-scale cultivates to afford transfering the risk (maximizing the marginal efficiency). Capital then accumulates into the value that supports the risk (regulatory arbitrage). The value accumulates more capital seeking the value that affords more risk, accumulating the liability into a crisis proportion. Thus the need to avoid the risk of liability with an indivisible aggregation into a public space over time (accumulating the gamma risk). It instills the false belief (the policy) that avoiding the liability (the crisis) reduces the risk that causes it.

Avoiding liability, however, does not reduce gamma risk. It allows it to continue accumulating, recycling into a crisis proportion. The only way to actually reduce gamma risk is its disaggregation.

Organizing for Ontology

The change we need, that we have expected with a realignment, has to be organized. Realignment is empirically not enough. Nor is realignment logically sufficient considering it is a largely binomial (conservative) variable.

We do not need to wait for an ontology of change. We need to organize for ontology. (See the article, "Organized Ontologies: Waiting for Godot").

As we progress with an empirical ethic of thinking in the pursuit of knowlege and predicitve utility in a post-industrial age, the classic conflict between teleological and ontological truth diminshes. Induction does not exclude the deductive method of reasoning but supports it. The two methods of reasoning are not anymore in conflict than confirming the hypothesis of evolutionary development of life disproves the existence of God. It is not an inverese relationship but a directly positive one. Like Einstein observed, we are always confirming the existence of God by always trying to disprove it. The result is knowlege.

Pursuit of ontological truth supports the teleological hypothesis. Teleology is not cognitively outmoded. We have cognitively evolved to recognize it as much an article of truth (knowlege) as of faith (superstition). Ignorance becomes the only evil and responsibility becomes the probability of error in reduction of teleological possibility.

Politics and economics, as I have pointed out in previous articles, tends to lag the other natural sciences in recognizing the efficacy of embracing the empirical ethic.

The distinction between natural science and social science is false. It is intended to preserve the means for creating, rather than confirming, causal relationships and the legitimacy of power. Political-economy is especially isolated because it is infused with teleological expression afforded legal, constitutional protection.

Elit scientists that deliberately create false causal relationships are considered by their peers to be frauds. Elit business people that create false relationships, like selling CDO's both long and short at the same time, are considered shrewdly intellectual and the reward accumulated is private property that cannot be confiscated without due process of the law.

Saying, for example, a person must have a job to secure income, but businesses do not exist to employ people; or to say, for example, ensuring the welfare of the rich in priority systematically causes the fullest employment while handing out pink slips is an ignorance that is no longer an article of faith. It only exists with the force and legitimacy of a public authority, giving it the character of an ontological truth that cannot be denied. The ontology is really a gamma risk created with a character of inevitability that can be easily reduced to a teleological deduction and an article of faith rather than the force and legitimacy of a truly empirical ontology.

Someone is going to take the means of power to manage the accumulation of gamma risk, it may as well be "We The People."

Instead of opposing the conservative model with one big imposing choice that becomes painfully imperative (which is really no choice at all considering it mainly relies on an ontological, dialectical shift that conserves the elitist model), we can decide to ensure pluralism (an organized ontology for the maximum probability for freedom) in priority as the primary function of government authority. Ensuring a plurality of firms ensures the plurality of small choices necessary to apply an empirical ethic of continuous, verifiable improvement that avoids the punctuated pain of accumulated retributive value.

Maintaining a plurality of firms, rather than encouraging consolidation, allows the sanctity of privacy and property to operate toward the general welfare. Consolidation perverts that sanctity into a tyranny of tastes and preferences that demonstrates power and dictates the value of organizing private enterpise as a public utility without the distributive benefit.

Despite the need to prevent consolidation into firms that are so big they can dictate the marketplace ("too big to fail" being one, but not the only, dimension), there is still sentiment within all branches of government to allow it. Instead, allowing firms to grow "organically" is considered to be the solution, not the problem, despite the overwhelming evidence.

Slow-to-no-growth, inflation, unemployment and a dangerous accumulation of systemic risk (gamma risk) are not attributes of the general welfare. Size of the firm, despite the verifiable detriment, is still considered to be the measure of success because it is the model of "organic growth" that enables big profits with the least amount of alpha and beta risk. It is also where the legitimacy of economy-of-scale modeling gets complicated.

If the size of a firm determines the size of its profit rather than a competitive multiplicity of the marketplace (an organized ontology),
the profit then becomes a measure of the ability to command the marketplace rather than the consumer to demand it. The profit margin can then exceed the reliable measure of customer satisfaction and results in the accumulation of a retributive value. Accumulation of that value presents too-big firms with a gamma risk since the only remedy left to consumers is big-government authority.

The gamma-risk accumulation is not the cause, it is the effect of organizational size. The accumulation represents the benefit (consolidation of wealth and power) that causes crises (illiquidity, the need for government and deficit spending).

The overwhelming size of the deficit measures the size of the problem, it is not the problem itself. In other words, reducing the size of the deficit does not solve the problem (reduce the risk). The size of the deficit (the size of the firms) measures the amount of risk accumulated rather than, as the economy-of-scale argument purports, the amount of risk reduced. It is a symptom, like a fever is a symptom of a cold or flu, and we are being told relieving the fever or, alternatively, increasing the fever will cure what, metaphorically, must be the flu.

While increasing a fever (the deficit) creates an inhospitable environment for a virus, it is also likely to cause brain damage if it does not kill the host. So, continuing with the infectious disease analogy, it is best to just let the disease cycle through, kind of like we do politically and economically. However, we can "choose" to ignore the natural immunity to the disease (pluralism) and cultivate the cause (the elitist "organic" model of growth). This "organic growth" is not growth at all, but contraction--consolidation into organizations so big that they are irrational (accounting for the bad choice) and a threat to the host society being starved of the resources for a healthy, peaceful and prosperous pluralism.

With pressure from independents, the Obama administration has come up with a new slogan: "Organizing for America."

While the adminstration is at least recognizing that the problem is organizational, it still wants to support the hypothesis that the bigger firms are the more efficient they are for managing risk.

Politics is being applied to change the organized teleology rather than organize for ontology (a means of accountability in the form of a systemic risk). The "hope" is being expressed that large corporates will realign their mission (the organic telos that has been identified as beneficial "organic growth") with the ultility of the public good to reduce the gamma risk.

Large corporate conglomerates cannot reasonably expect to operate as private enterprise with the benefit of a public utility without massive risk and government support. Organizing to command the marketplace from the top down is antithetical to, the opposite of, a free-market organizational technology, and accumulates gamma risk. The legitimate utility (the benefit) of private property and enterprise is inverted: instead of production and the cost of production being demanded by the consumer from the bottom up (democracy), it is dictated from the top down in priority (trickle-down economics).

The amount of financing that did not trickle down (the amount of gamma risk) can be empirically measured by the amount being applied by government authority. It is the budget deficit. Over time, the accumulative deficit (the accumulated gamma risk) is the public debt.

The distributon of costs and benefits is the empirical, categorical evidence, the test, of legitimate power. As long as the test is organized into a micro means of resolution in which tastes and preferences are activley participated in daily practice by means of multiple choices in the marketplace (which requires the income, the distribution, to make those choices), value, including the plurality of moral values, is conserved in a legitimately non-retributive state with low (unaccumulated) gamma risk.

If, for example, a person values abortion as morally wrong, being able to do business with healthcare enterprises that do not perform abortions is highly valued. Whether anti-abortion, or not, the value is conserved yet retributed (tested) in the form of voting in the marketplace, or not, with income (discretionary spending). The discretionary value, the self-determination, including the dimension of choice essential to a moral existence, is disallowed or diminished in either case, if not dictated, if income is allowed to accumulate and consolidate.

Performing abortions is a viable enterprise if the demand is there to support it regardless of whether it is legal or not. Without the demand for it, the supply tends to be low and the price prohibitively high in a free-market environment. The consumer is much more likely to avoid the need for the service, to avoid the risk, in a free-market environment because the cost and the benefit is a readily apparent and facile calculus.

In a free-market environment, demand for a service with a highly negative value, like abortion, is also much more unlikely because it provides a much higher probability for an adequate distribution of income; and with the discretion of an adequate income, along with an added sense of responsibility, there is less probable need for the service.

If healthcare is provided as a public utility without first providing adequate income, a retributive value accumulates and is likely to present as a gamma risk with unintended consequences. People may resent being provided healthcare without adequate income to otherwise enjoy life, or may not get needed healthcare, or the care they want, because they cannot afford to pay for it, or the system will not pay for it, at any price. The public utility is, then, for the provision of the service without addressing why people cannot afford to pay for it which, contrary to the theory of free-market economics, supports the price without adequate demand. (Notice, for example, how the cost of healthcare continues to rise despite the massive decline in demand in the current deflationary macro trend.)

The Democratic plan for universal coverage did not pass muster because it does not make economic sense.

If incomes are not adequate to pay for healthcare because the wealth is too consolidated from, for example, what healthcare providers charge, and hire lobbyists to legislate in their interest if not retire and become legislators themselves, what organized power in the marketplace does the consumer have to ontologically demand the bid? The only alternative left is to command the bid by government authority (or use that authority to ensure a pluralistic ontology--free market economics--in priority, as I continously suggest).

If all that obtains is the ability to command the bid, what is left is a huge accumulation of funds retributively valued, a huge gamma-risk overhang, and an attempt to reinvent, or innovate, the perception of the risk as a public utility--to turn it into a systemic risk (like the public debt), and we all know what that does! The result is a huge tax liability that the wealthy have much more power to resist than all other classes, supporting the gamma risk.

Universal healthcare has failed because it supports the gamma risk. There is little if no resistance, on the cost or benefit side, to the distribution of income at the heart of the problem. Instead, the program largely supports the phenomenon of supply meeting demand only by the non-market dictate (the public utility) of taste and preference.

Dictating the marketplace is an emblem of power that varies directly with income and its probable accumulation, which becomes a measureable quantity of value to be retributed. When progressives (people with middle-class incomes), for example, decided that eliminating child labor was morally imperative, the families that relied on the child's income literally starved from lack of income. Instead of attacking the source of the problem--lack of income which decidely makes them less powerful, they attacked the effect--child labor. These are the same people that want to dictate tastes and preferences in the marketplace in the public interest which, again, is as much a demonstration of power (feeling powerful) with the virtue (the strength) of doing the right thing in spite of the empirical evidence (the categorical calculus of empirical values).

Keep in mind that progressive philosophy and activism emerged from the conservative element of American bivariate politics.

At the turn of the 20th Century, the Republican party bifurcated into "stand-patters" (the more conservative wing) and "progressives" (the more liberal wing of largely professional, middle-class incomes). We see then, historically, how bivariation has evolved to conserve the stakes in an organized ontology. The distribution of rewards and deprivations is conserved with "change" being operationalized into an automatic legitimacy of both disproportion and social security.

Progressivism is a conservative legacy. The struggle between liberals and conservatives is handed down to sham an elitist model of power with democratic process. It is a bifurcation into conservative and neo-conservative elements that safely conserves the distribution of power.

With just enough pluralism applied that a bivariation provides, conservativism, just as it was during the progressive era, is prevented from risking the stakes with a more equitable distribution of wealth and power (a more natural and stable distribution of gamma risk).

(Remember that gamma risk cannot be avoided. It accumulates with measures to avoid it. The correlation is direct when it is expected to be inverse: the more risk avoided the more risk accumulated. The relationship is confounding for analysts who expect a predicitive utlity to follow from what only appears to be a practical pluralistic model in the real world.)

The often bitter rivalry between what is essentially one party operates to conserve the essential category of imperative value--income. It is absolutely essential the value of class distinction be conserved so that measures like a progressive income tax to stabilize the gamma risk does not progress into a middle-class distribution of income, and power.

Within an elitist model of power, expansion of the middle class reduces class distinction to elite and non-elite. What defines the elite is the ability to dictate tastes and preferences in the marketplace and, along the way, accumulation of wealth, the income, that demonstrates and sustains the power of the ruling class.

As long as the market can decide (as long as income is adequately distributed), the virtue, the strength, of one preference over another is categorically verifiable by demand in the marketplace (income). Supply will not meet demand and choice never universally imperative if obstructed, for example, by a single payer. Not only does the price inflate, but the market, both qualitatively and quantitatively, becomes retributively valued. The disproportion is the empirical measure of power--who categorically has it (the elite), and who does not (the non-elite). People that have power seek wealth to demonstrate that power, and people that have wealth seek power to empirically confirm it if not enhance it.

There is no better way to confirm and enhance one's power than to dictate tastes and preferences in the marketplace with the deviant to be punitively taxed into the category of imperatively clean, healthy, righteous living (what progressives support and stand-patters resist with the difference, historically, being income and claiming the role of the ruling class). The moral imperative is really just a pious fraud, a scheme to accumulate income to consolidate and exercise power without obstruction or liability in the guise of righteous, authoritarian superiority (with the force and legitimacy, the primacy, of government authority).

Rather than government operating to protect the dictates of want-to-be tyrants, our constitution is designed to prevent their ascendancy to power with an inherently pluralistic organizational form. The Constitution provides for continuous application of the empirical ethic of power to be decided by democratic means, not the dictates of those who seek either wealth or power be it in the guise of providing for the public health or otherwise.

Democracy, whether the empirical proof of the popular vote is political or economic, provides the organized mechanism for applying the empirical ethic of power. Maintaining its categorical measure--the verifiable and accountable truth--of legitimate power is imperative for a peaceful and prosperous historical progression.

Empiricism, of course, challenges the old way of thinking, and in the old days when science was coming to the fore, an empiric was synonymous with a charlatan. Verifying the truth was considered to be perpetration of a fraud.

While today's conceptual modeling of political economy looks dynamic and organically pluralistic, it actually operates to reliably achieve stasis (disequilibrium) with minimal gamma risk (with a maximum legitimacy of power). Continuously trending from deflation to inflation conserves the distribution of wealth and power in a state of consolidation with an arguably plausible dynamic of legitimately pluralistic process.

The relationship between the variables of the process are complex and deliberately manipulated to be unpredictable without technical expertise. If you found the previous discussion about direct and inverse relationships to be confusing, it is a useful source of complexity. It is a variable, differential calculus that technical analysts engage to track and predict probable trends, intended to mask consequences and manufacture legitimacies, (legal justifications) for retributive values.

Complexity of the process is mistaken as evidence of pluralism, and successfully reducing the inherent alpha risk is mistaken as the reward for surviving a free market. Technical analysts then, of course, do not consider if the system is pluralistic or not. The model is assumed to be verifiably pluralistic when it is not and is a source of predictive error, with conflicted signals and indicators, easily reduced with proper analytical modeling that they are not trained to identify.

The means and ends are inverted to falsely suggest the legitimacy of the process. Instead of the means (pluralism) producing the reward, the reward (consolidation of market share) is used as the means of determining it. Self-determinism is then mistaken for the legitimate process of self-determination in which choice (the means) determines the reward (the ends).

With the ends determining the means, rather than the means determining the ends, instead of an ontology of means to ends, there is just the teleology of determined ends. It is a political, economic, and philosophical complexity that gives the inequality of rewards and deprivations a plausible propriety levergaed into legal justification.

For example, AIG says its current round of bonuses are legally binding obligations pre-dating the systemic failure the contracts were signed to compensate. Despite the materially altered circumstances, AIG averted the risk to its reward and shifted it to the accumulated, systemic, gamma risk to be managed by legal, administrative process where the reward gains plausible legal justification by due process. The probability of a reversal of fortunes is so predictably low using the elitist model that it is virtually zero in sum.

For the market analyst the results are highly stable and easily predictable until there is a discrepancy between theory and practice that is resolved with proper modeling. In the AIG example, it is the bureaucratic model.

While the bureaucratic model has both elitist and pluralist properties, with an overarching, elitist macro bias in operation, the elitist model is the better predictor with the element of pluralism retained to give the reward the "authoritative" force and legitimacy of public process. A conservative distribution of risk, despite seeming unlikely with a high populist sentiment, is not likely to fail expectation.

Recognizing the source of unexpected inversions at the fundament, the analyst is then likely to always be more dismayed than shocked by political-economic events and their ramifications, always expecting the unexpected with little expectation left to be surprised.

Whether on the left or right of the political spectrum, expecting the rewards of free-market mechanics to always default into a consolidation of power is not the logical conclusion.

Expecting pluralism to always naturally consolidate (grow) into an organized (organic) scale of efficiency to control risk is likely to always result in an efficient means of increasing the organized span of control and dystopically diminish the probability of a self-determination. A natural tendency to pluralize to achieve an efficient means of self-determination, rather than diminish it, is just as likely.

With just as much encouragement, freedom, and a truly categorical, and peaceful, legitimacy of the outcome, is just as observable as the tendency to consolidate wealth and power. Pluralism, as we progress, becomes not only more desireable but evermore imperative as well.

The strongest tendency of organizational technologies is the tendency to ontologize goals into an autonomic legitimacy of process. Pluralism is the most natural form of this process with both the means and ends of power structured in legitimate agreement.

We do not organize only to secure reliable results that agree with our goals, but we organize for ontologies that produce dependable outcomes without sacrificing the freedom to choose one's own destination.

Organized Ontologies ("Waiting for Godot")

Unexpected Inversions and Predictable Trends


Weird, unpredictable, inversions are fully intended consequences providing a level of predictable uncertainty (managed risk) that solicits the need for command-and-control organizational modeling.

A strangely inverted quality immediately presents itself. "Predictable uncertainty" is an oxymoron. The descriptive elements are inverted yet accurately describe the antinomies built into our political economy, rendering it the analytical domain of highly trained elits prepared to make sense of deliberate inscrutibility.

While the reason for, or the cause of, conflicting indicators can be inferred, the causal factors are deliberately black boxed to attain an elitist quality to manage what appear to be unintended consequences, or organizational ontologies.

When the analyst attempts to gauge market sentiment to predict price direction, for example, there is an attempt to turn teleological consequences into a predictable ontology. Strange inversions are then to be explained as unintended consequences--an analytical error to be back tested and regressed into a predictable, algorythmic ontology that reduces to an organizational typology.

From the inside, the inscrutible inversions appear logically consistent with intended strategies within some tolerance of error that produces unintended consequences. Error reduction is the domain of the specialist so that the bonused employee of a too-big-to-fail bank, for example, very narrowly, analytically, applies the derivatives desk without regard to the big-picture, wholistic, consequences, which will appear to be unintended and exculpatory. Both the bonused employee and the employer can disclaim any intention to cause a systemic-risk detriment by applying the self-interest of the firm and cannot, therefore, justifiably suffer punitive damages either legislatively (by means of the tax code) or judicially (by determination of civil or criminal liability). The goal (the telos) of legitmately accumulating wealth and power and keeping it is organizationally applied with highly predictable consequences.

It is critical for risk to be systematically organized to suggest an ontology: so that the legitimacy of the outcome (the cause-effect relatonship) has not been rigged to produce a benefit from an intended detriment.

Financing the declining rate of profit, for example. The decline is a detriment to capital gained in a free market system and a benefit to labor. Reversing the detriment by overleveraging the capital accumulated into a deflationary trend of unemployment cannot be legitimately considered intentional if it is an ontological consequence (the inherent risk) of the system that cannot be transcended. Resisting the natural, ontological tendency toward organized consolidation to hedge the risk, like a declining rate of profit, is considered a fool's task by both the left and the right. Politically, the result is a spectral fusion--a convergence of divergent elements--that is an observable, empirically predictable, historical dialectic, or a predictable, macro-dynamic ontology.

On the left, the dialectic presents a synthesis of the benefit for both capital and labor as the organized convergence of public and private enterprise is formed into a legitimate public benefit, or the general welfare. State capitalism eventually evolves into a purer, more genuine form of legitimacy--state socialism--in which labor is not at all alienated from the value it produces in the form of capital. Competition--the micro-motive (the telos) that causes the systematic-risk ontology of a declining rate of profit--is converged, transformed, into the ontological benefit of full cooperation with the risk having been intentionally, teleologically, organized out of the system.

Remember that if the systematic, competitive-risk ontology is removed, there is less incentive to innovate to control costs or improve quality, performance and efficiency with the profit margin being the measure (the reward) of that success. If capital, industry and markets are allowed to consolidate (converge) to eliminate all the competitive market risk (the alpha risk converted to a mostly beta and gamma risk), the capacity to innovate has already been organizationally diminished. Socialists then, of course, argue that diminshed innovative capacity is a moot argument, as it well is.

The argument for maintaining an organized pluralism in priority over a false organized efficiency of consolidation has both theoretical and demonstrated practical strength. The argument, however, does not advance from the right wing of the political spectrum. It is more an independent, non-partisan argument that favors pragmatism over ideology.

A non-ideological pragmatism is more likely to minimize the probable dystopian results (the unintended consequences?) of hopeful utopian visionaries that invariably tend to fascist, practical models of bureaucratic power (the slogan over the gate at Auschwitz is, for example, "Work Will Set You Free"). Practical reduction to elitist models renders the masses ("We The People") incapable of sovereignty. It becomes a self-fulfilling prophecy of fully intended consequences (an organized ontology that produces stable, predictable, routine tasks).

While the cyclical trend we are experiencing now is described as systemic instability, it is a stable, routine outcome. It has been organized to do exactly what we have by elitist, consolidated control; and while you may not have lost your job this time around, you may in the next cycle.

That a pluralistic market system legitimately determining tastes and preferences (freedom) must be traded off for risk reduction (stability) is a false argument. Reducing the alpha risk (the freedom to choose) encourages investment, and without the trade off, so the argument goes, investment will be sub-optimal.

The efficiency argument is false. Reduction of alpha risk by consolidation of industry and markets does not allow for more risk to be taken, thereby providing the incentive for optimal economic growth, as the argument purports, but less.

The hypothesis contained in the efficiency argument is not only logically inconsistent, but as a basis for public policy it is an empirical failure as well.

Encouraging consolidation of industry and markets through the tax code and regulatory reform in conformity with the hypothesis of ensuring market efficiency resulted in The Great Recession. Not only did slow growth to no growth result in negative growth, but we face the high risk of it several years out, being strangely referred to as "a jobless recovery" (another one of those weird, logical inversions). That the efficiency hypothesis is disconfirmed is the only reasonable conclusion.

While the right wing of the spectrum argues being the champion of free markets maintaining a system of maximizing tastes and preferences, losing your job to a cyclical, supposedly legitimate, ontological trend does little to maximize preference. It maximizes the profit margin without growth (what we have now). The effect is to trade off what a free-market system is to ensure (freedom to choose) for maximizing the profit (i.e., to finance the declining rate of profit inherent to a highly innovative free-market pluralism that wins market share and makes a profit).

The "trick" of the large, modern corporate is to gain market share without "winning" it. Share is gained by capital investment to gain capital without economic growth (remember that growth increases supply and disinflates prices, causing a declining rate of the profit). The resulting, reliably predictable, cyclical trend (recession--deflation--like we have now) gains (wins by organized default) the market share and capital (the recovery--inflation--sure to follow), not by expanding the pie, which is the legitimacy of capital formation (accumulation) for investment, but by contracting (consolidating) it.

We hear pop analysts at this point of the cycle saying, for example, that the reduction of inventory will result in jobs created to replace the supply. No, quite the contrary (inversely), the recovery will be "jobless." It will be inflationary with strangely low interest rates because of joblessness.

Understanding the nature of the inversions is kind of like understanding the concept of gravity. Like Einstein said and Newton suspected, instead of gravity pulling us to the mass of the earth, space is really pushing us into it, and we call the effect gravity. The concept of the model--of the way things work (from a strong, localized attractive force to a more pervasive, universally expansive force)--has changed.

Newton realized his concept of gravity did not quite make sense although the mathematical expression of his physical "laws" had high predictive utility. Even his own descriptive law of motion inverted his hypothesis: objects do not move unless something is pushing them.

In the natural world of political-economy, steeped in telological reasoning, the discrepancy between theory and observation is much more pronounced. The stakes are the telos of gaining wealth and power and keepimg it by means of one's own devices. Extreme complexity is the result with strange inversions of logic to be resolved by a combination of narrative and mathematical modeling much like the natural sciences in which things are only what they appear to be until the empirical evidence is re-cognized with fits of Kantian imagination. The complexity surrounding the mystery of unknown causes and unintended, supposedly unexpected, effects are suddenly rendered simple, predictable, and verifiable by a casual sense of conventional wisdom that is less about what we believe, but what we know as a guide for public policy.

For example, if an economic sector becomes so consolidated in a free marketplace that the consumer has no choice but to do business with it, maximizing the firm's individual, private utility has become the public interest. Application of the firm's self-utility has become a function of public utility much like we have experienced with the financial sector in which firms were allowed to become too big to fail.

There is a direct relationship between the elasticity of the demand curve, the tendency to consolidate into entities too big to fail, and the gamma risk of being considered a public utility. The gamma risk is minimized, rather than maximized, if these markets are not allowed to consolidate. Despite, for example, healthcare providers thinking consolidation of its provision into a government mandate renders an inelastic demand, and therefore an inelastic price, it also increases the gamma risk. The price can be just as easily mandated so that the providers wished it were a free-market economics.

Instead of a direct relationship, free-market economics allows the relationship between demand elasticity and the tendency to consolidate a market to be beneficially inverted for everyone (the more inelastic, the less consolidated). The benefit includes a market's providers whose gamma--if the price can be arbitrated at a non-market value either higher or, maybe, lower--is minimized and the risk of investment (labor or capital) reliably predictable. With the free-market inversion, reduction of the gamma risk then becomes an end in itself which is the pursuit of power (self-determination) and the categorical demonstration (the empirical measure) of success.

Keeping markets unconsolidated spreads the risk. What is lost is the accumulation of power that always verifiably results in crises--a quantifiable gamma risk that presents as inflation, unemployment, and high profit margins, just like what we have now.

There is no "disconnect" between Wall Street and Main Street. The relationship is organized into a detrimental reliance (an inverse relationship) in which one's loss is the other's gain. That is why bailing out the system from the top down was "necessary to prevent economic collapse."

Now that the would-be (unverified) collapse has been averted (and so we will always be bailing out financial "fat cats" first as the successful business model that averts crises), the Fed and Treasury will focus on consolidating and enhancing the profit margin by applying funds to Main Street. Recovery will be the source of funds to both support the profit margin (finance the declining rate of profit) and pay the public debt.

Bailing out Main Street first, allowing financial firms that are "toxic" to fail instead of the intoxicated public-at-large, would have provided the funds the financial sector needed to sober up their troubled assets, declaring bankruptcy protection if necessary, until the benefit trickles up. That prevents a lot of public suffering (a retributive value that measures power and categorizes status into those that sacrifice and suffer and those who accumulate the benefit in the form of that value).

The reason the call was not for Main Street first is because that would have inverted the working, practical means of the Hamiltonian model (the hierarchical "trickle-down" effect that validates who "should be" the elite of power by determining it from the top down rather than confirming it from the bottom up).

The Hamilitonian model of finance from the top down hypothesizes a direct, positive relationship: the more benefit the elite at the top receive, the more benefit "The People" at the bottom receive. Inverting the relationship, supposedly, causes crises, like the financial instability we have recently experienced.

According to Hamiltonians, the crash of 2008 is the result of public-sector programs, government intrusion in the free marketplace, like welfare and social security, that finance (inflate) the system from the bottom up. Therefore, the technical correction for the crisis is to finance the recovery from the top down, and that action was taken with the predictable and fully intended benefit of a jobless recovery.

While Main Streeters bankrupted by the crash of of 2008 are literally left hungry and homeless, Wall Streeters are receiving bonuses. Just exactly where did the bonus value come from? Where in the popular media do you find an accounting that identifies the source of the benefit?

The direct relationship between the cost and the benefit (the more cost, the more benefit) is not clearly identified because it is considered destabilizing (retributive in value). It would empirically challenge the legitimacy (the distributive justice) of the outcome.

Inverting the money flow to finance the recovery from the crash of 2008 from the bottom up would invert the relationship of the cost-to-benefit (the mode, or model, of finance). Financing the recovery from the top down both obfuscates ("a disconnect" as pop media describes it) the direct relationship and validates inversion of the model as a moral hazard.

Validation of the moral hazard is a false empiric: not financing the recovery from the bottom up did not prevent another Great Depression. Recovery from the top down (the jobless recovery) allows firms to succeed that, without bottom-up financing, would be confirmed failures.

Financing from the bottom up provides the distribution required on the accumulation that otherwise presents as a retributive value. An indignant public sentiment about the bonus value, the practice of saving wealthy corporates while letting everyone else fail, and regression of the cost so that the victims are literally paying the perpetrators to victimize them is the political will for converting to a public utility. It empirically represents both the value to be retributed and a genuine moral hazard.

For example, if BIB (Bigger Is Better) Bank forecloses your home and charges usurious overdraft fees after losing your job to The Great Recession, the retributive value is a product of your losses. So you sanction BIB in the marketplace by doing business with SIB (Smaller Is Better) Bank. BIB experiences the alpha risk associated with the retributive value distribution in the marketplace. However, you notice SIB, influenced by the bigness of BIB, is just as usurious, and because smaller banks are progressively more scarce due to The Great Recession, the alpha risk is diminishing.

Rather than being diminished, the retributive value accumulates under the organized, ontological influence of BIB Bank et. al.. The "invisible hand" is a macro ontology falsely argued to be free-market economics, or pluralism, and the outcome is, therefore, legitimate and exculpatory--not worthy of sanction.

Cumulative resistance to the alpha risk also affords resistance to beta risk, but supports the gamma risk, which continues to accumulate, and is "toxic."

What is "toxic" about the troubled assets of The Great Recession is that they have a huge gamma risk associated with them that are retributively valued. Instead of the value being retributed (inverted), the value has been attributed (directed) to the source of the risk and consolidated as a benefit with the source of the benefit holding the risk. Instead of being pluralistically shared, the retributive value accumulates into a gamma risk with firms holding the accumulated benefit inversely facing the accumulated risk of being regulated as a public utility based on that empirical value.

Thus we have, as in the example of BIB and SIB banks, the need for growth. Not to just expand the pie so that the rich can be rich wthout a zero-sum inverse relationship of accumulated value, but to keep the system pluralized. Displeased customers are only likely to do business with BIB or SIB because they have to, not because they want to. A firm can be as greedy, selfish and narcissistic as it wants as long as it pleases the customer.

Economic growth in a free-market environment is less about the impetus to plunder the planet of its resources than to ensure sufficient plurality of the marketplace so that we do business with who we want to (choice) and not who we have to (tyranny). As long as income is sufficiently distributed to demand (alpha risk), rather than command (gamma risk) the bid, the probability for successful innovation to increase supply, rather than to innovate the organized means of creating scarcity and inelasticity of demand in the name of an economy-of-scale efficiency, approaches 100 percent. The profit, and the declining rate of profit, is, then, a measure of who is innovative enough to survive the alpha risk rather than always consolidating to avoid the beta and gamma risks (the extortionist behavior of being too big to fail--the "command" function of the elitist model).

Consolidating industry and markets only avoids the beta and gamma risks, it does not eliminate them. They accumulate in a directly positive relationship: the more consolidated the more potential beta and gamma risk accumulated until the probability of being considered a public utility approaches 100 percent. While the firm's beta is stable throughout consolidation, it becomes highly unstable as its risk-status becomes evermore gamma.

It would be in a firm's best interest to never become too big to fail if it means being a categorical public utility with the firm's self-interest subordinate to the public's interest like, maybe, controlling both inflation and unemployment without inversely trading them off. The only resistance to the clear and convincing, categorically empirical confirmation of a public utility would be the ideology, the belief, that conserving the accumulation of the benefit to the elite and distribution of the cost to the non-elite (what the modern, corporate conglomerate is organized to routinely do) is in the public's best interest. We then have two competing models, elitist and pluralist, competing for an empirical proof that will, by nature, resolve into a nulled hypothesis in which one alternative is so logically absurd (disconfirmed) that the only thing left for practical application is a conceptual model yet to be tested. The change is the next best step by default and it is critical to keep a binary system of choice in place, like a two-party system, to ensure conservation of the stakes is always the next best step in the historical dialectic.

Despite the resistance to pluralism with organizational technologies like a two-party system, there is an empirical ethic at work, a method of continuous improvement that can be deliberately applied or ignored. We can choose to ontologically improve or teleologically retrench. The political will to choose an organized ontology of pluralism will avoid the lengthy and painful process of what nature will ontologically provide as categorical truth always potentially imperative by the freedom to choose.

The morality we do not freely choose nature will technically correct. On the one hand, for example, firms in business to consolidate the marketplace, like private equity firms that buy companies to merge and sell for a capital gain, create a big payoff that is proportionate to the cost (inflation and unemployment). The agents of consolidation, the beneficiaries, however, describe the gain as disproportionate and is reported as an asset with no liability on the balance sheet. The liability (the cost) is latent and categorically imperative. It will empirically present off the balance sheet in the form of a gamma risk that must be constantly managed to retain the value accumulated without bearing the cost, which is what the corporate is organized to do.

Ivy-League economists (the elite of society whose analyses are valued the most) are claiming that their profession has failed to understand how the economy works on a macro scale. (In other words, now that their hypothesis that consolidated industry and markets achieves a macro-efficiency of scale is one huge, glaring empirical failure, the liability is being reduced to a misfeasance and not a malfeasance. In effect, these economists are saying they do not understand economics.... Hmmm...something I've been saying all along.) They claim they have not properly understood how the economy is integrated, or equilibriates; that is, they were not trained or hired to identify or present analyses indicating that consolidation of industry and markets is good for the integrators and bad for everyone else (an inverse, zero-sum relationship instead of the direct, positive relationship they espouse), and where you "know" something, there is culpability that leads to punitive (gamma risk) measures that are more difficult to avoid.

Managing the latent cost (be it deliberately hidden or ignored) without retributing the value is the source for all manner of descriptive and predictive complexity. It produces strangely inverted technical relationships that require the highest expertise to divine (like Tyco Brahe's theory and mathematical model of retrograde motion). The cause is disassociated with the effect so that empirical failure is not failure at all but a natural ontology of unintended consequence that cannot be corrected. The only thing that can be realistically done (what is categorically imperative) is constant management of the empirical effect and all manner of complexity that pluralistically presents as a relative truth that can be neither categorical (identifiable) or imperative (a necessary condition). Empirical truth--the unrecognized but managed cost--is strangely inverted into uncategorical and unimperative. Truth is, then, reduced to the power, the virtue, to impose it. Natural processes are what is left to retribute the value--the cost-to-benefit always conserved.

Global warming, for example, is dismissed by much of the right wing as empirical nonsense because it empirically correlates the cost with the benefit. The hypothesis presents a retributive value that can be categorically acted on with an imperatively empirical measure. It presents a level of certainty (knowlege) that cannot be ignored without clear culpability and consequence.

On the other hand of the political-economic spectrum, ideological, rather than an organizational, opposition to conservatism presents as a spectral fusion. The expected opposition, upon closer inspection, presents a strange inversion with the opposing hands joined to agree on the means to the ends of power--the gamma-risk distribution, which is an end unto itself. The opposition stands to determine who is going to be categorically powerful by imperative.

On the one hand, the gamma-risk distribution is accumulatively managed into cylical distributions that conserves the distribution of power. On the other hand, the gamma risk is accumulatively managed to conserve the distribution of power by managing the effects of cyclical trends in order to eliminate the cause. The alternatives (the thesis and antithesis) are organizationally fused.

In addition to the practice of managing the effects toward eliminating causal factors of accumulated gamma risk being empirical nonsense, conservation of the elitist model suggests the distribution of risk and reward will also be conserved. Who is powerful is defined by a willingness to manage the effects, which tends to conserve the problem the affected seek to cure by popular demand and consent. While an observable evolution of power occurs--from survival of the fittest being legally free of gamma risk to applying that risk by popular consent of the governed--the crisis accumulation of risk is nevertheless conserved.

The accumulation is not necessary and we need not be always "Waiting for Godot" or some ontological change of state that disparages our freedom to choose. The means to ends we are all looking for is well in hand.

Organizing to Control Costs: Healthcare and Energy Markets

The tendency to organize into horizontally and vertically integrated, monopolistic entities to distort valuations into the realm of the irrational was strongly argued against and identified as inimical to free markets by Adam Smith, founder of classical economic theory.

Smith argues that organizing into ever larger entities consolidates power in the marketplace and creates false indicators (the irrationality). Smith's solution is to be sure capital, industry and markets are deconsolidated. The profit margin is then a more accurate measure of future expectation (the trend) that is less likely to become a failed expectation and a sudden shock (the crisis) that further consolidates the wealth and power (systemic risk management).

According to Adam Smith, it is the job of government in priority to ensure the marketplace is free and unconsolidated. That, according to his theory, will effectively manage the systemic risk we are now grappling with. The government, then, according to classical theory, is in the business of creating jobs and wealth by ensuring it in priority despite the rhetoric of neo-conservative propagandists.

Notice that there is little to no evidence of government operating to apply Smith's prescription of deconsolidation.

Healthcare relies on the "public option." Energy relies on the regulation of derivative markets, like futures, which will innovate to avoid the gamma risk. Both elicit the need for progressive taxation to keep capital from the overaccumaltion that causes a deflationary trend with inflationary, monetarist counter-measures (stagflation).

The "need" for the progressive tax is obviated by organizing for a free-market system in priority. The need for a more progressive tax code is an accurate measure of extant free-market (democratic-economic) modality: the more the economy is organized for free-market mechanics, the less need for progressive taxation to technically correct for over-accumulation (liquidity crisis, or the systemic risk).

Government has operated largely to encourage and protect the organization of consolidated entities to the point of absurdity, irrationality, we have now: economic entities that are too big to fail and paying outrageous bonuses to business elits that have clearly managed the system into what is considered an illegitimate failure by the vast majority of Americans.

(The ultimate ignominy is to pay the devil a bonus for making you miserable! Is that the ultimate con game or what? The con is systematically organized to convert and consolidate value without legal liability. The liability is purely political. It is the gamma risk with a retributive, economic value.)

Current econmic policy clearly indicates a strong tendency to support state capitalism--a command economy with private consolidation of the wealth bureaucratically managed to protect the interests of the wealthy elite in "the public interest." Just enough pluralism is allowed, like a "public option," to give the consolidation of power a popular legitimacy.

The pluralistic legitimacy is really false. It is a Hamiltonian trick that keeps being reapplied in the name of democracy and self-determination.

Despite the freedom to pursue success and fully enjoy its reward without taxation, according to the conservative argument, the accumulation of wealth and power is nevertheless endowed. It is a legitimately necessary condition endowed by the god in which We all trust. The outcome is ontological--it just "naturally" happens. Thus we have the conservative concept of the Rights of Man: the utilitarian free pursuit of happiness with a naturally endowed outcome that if technically corrected for is contrary to the natural order of things.

Any attempt to correct for the accumulation of power and wealth that causes crises is considered to be an unnatural tyranny imposed on the natural order of things. That, according to the conservative argument, is the cause of perennial, systemic crises, like the deflationary trend we are experiencing now.

Not allowing for the naturally endowed tyranny of those with the secret, elite knowledge (the noble character to rule which, as far as I can tell, is merely the capacity to be corrupt and self-seeking in the name of the public interest) is an unnatural tyranny that causes crises. It is a self-fulfilled, teleological argument masqueraded as an ontology. It is a lie, a polemic, a lawyers trick, a sanctimonious, self-serving profanity that keeps the wealth, and power, legally consolidated as an act of God. Deconsolidation, then, is considered not only illegal, but a constitutional deprivation of the Rights of Man that is fundamentally evil.

Yes, deprivation of the Rights of Man is fundamentally bad. It results in crises and all manner of humanity's inhumanity to itself. It is an illogical, irrational, condition. It is an irrationality that mirrors the Hamiltonian ontological argument.

The Hamiltonian ontology is nothing but sophistry, later in history embraced as a moral ontology (an objective, untranscendable truth to be scientifically acknowledged) "beyond good and evil," as Nietzche described it.

The power elite is fallaciuosly argued to be a breed beyond the masses with a secret knowledge that is the public good...the general welfare. Why does Goldman Sachs give exclusive information, "tips," to its most privileged clients? (Recognize that the word "privilege" is a combination of the words private and legal).

The masses can never know, then, what the public good is because...it's a secret! It is entirely antithetical to a popular (pluralistic) legitimacy. The contradiction is not reconcilable, but historically it is ontologically played out in the natural order of things in which the truth naturally prevails over the lies.

The need for a progressive tax code to correct for an over-accumulation is considered by conservatives to be inimical to the public's best interest. It is therefore necessary to hide the wealth with innovative investment vehicles that are only accessible by the wealthiest clients (the consolidated capital).

The consolidated capital cannot be progressively taxed to correct for the over-accumulation if it is hidden. It's a secret. Can't tax what you can't see. All in the public interest.

It is then up to the Ben Bernankes of the world to save us all from the ontology of ourselves; from the mindless consolidation of power beyond good and evil, armed with the philosophy that conserving, rather than preventing, what is too big to fail will "reliably" effect the crises. If the effect is predictable, the risk can be "effectively" managed and predictably trended, which is what Keynesian economics does.

If the element of uncertainty is eliminated, the systemic risk can be effectively managed to keep the patient alive while we ontologically play out the proper diagnoses.

Rather than deconsolidation, government operates to regulate and technically correct for the lack of free-market mechanics (collective, direct democratic legitimacy).

The technical corrections (the gamma risk) plagues small investor analysts with a complexity that suckers them into following trends rather than predicting them. It is a furtive, systemic racketeering (yielding a privileged--a legally secret or private--benefit) that, as small investors found out, will result in reduction (consolidation) of net worth that supports a long deflationary trend, like we have now.

Until the means of deconsolidation is applied--a progressive tax code and reinvestment to pluralize consolidated markets and entities--small investors must always be on the defensive. They must protect themselves from trends commanded and controlled by entities too large to fail by applying an effective counter-tyranny in the marketplace.

Always being opposite the big money momentum (predicting the trend) is essential for capital preservation (to keep assets from being consolidated). It is a lesson to well be learned by the Obama administration and the current congressional delegation as we watch the stimulus money being consolidated into paying state debt and overpriced medicare bills, but that its leadership is unwilling to learn, much less apply. Changing that would be change we really need.

It is important to understand that, for example, what the Obama administration is recognizing as a necessary command and control of the futures markets by regulating the purpose of its participation is to control the ability to command the deflationary trend. Understand that both the problem and the solution are the same thing--command and control, not free-market economics.

At the same time, understand that the objection to the proposed action by the CFTC to remove the buyers (the speculators) dark marketeers say is needed to make futures markets operate with optimal efficiency to hedge the risk is not in any way supported by the evidence.

Physical users of the futures markets are penalized by the mass movement of private equity and hedge funds into futures contracts, driving up their costs and deflating the economy--the consequence (the trend) in command, and "the risk" to be controlled in "the public interest" (We, the ignorant mass of The People, can't be sure what that is, of course, because it's secret, privileged, knowledge).

We cannot legitimately measure the success of managing the risk by the depreciation or appreciation of income because it all happens by the secret knowledge of elite authority. All we supposedly know is challenging that elite authority, like allegorically realizing what causes the shadows on the cave wall, is inimical to our self, the public, interest.

Medical professionals, for example, have the esoteric knowledge of what drives the unlimited cost of healthcare. Talking about what a particular medical procedure costs is an uncivil questioning of authority (questioning the legitimacy of commanding the price).

Demanding the price is considered by the elite to be an ignorant act of defying civil authority. The equilibriating effect of a democratic, free-market economics on income will destroy the natural ability of the best and the brightest to protect the public's interest. Of course, it will not. The protection will be best afforded by not impoverishing the protected.

Controlling costs will be a function of ensuring economic democracy--free-market economics--in priority. As long as the price is commanded, either by public or private means, fair value is not empirically, legitimately, verifiable for either producers or consumers.
Incomes as well are not measurably fair and equitable without ensuring a free-market economics in priority.

We often hear conservatives say it is no one's business what their income is, and conspicuous consumption distributes the wealth fairly and equitably. The crisis that ensues from overaccumulation is falsely attributed to government intervention (the gamma risk) that distorts the free market. The cure, according to conservatives, is laissez-faire.

The reason income is a desireable "secret" is because it is an empirical measure of inequity. That inequity is retributive in value that must be protected. It is a risk that must be managed to be conserved (...sshhh... that's supposed to be an analytical secret well hidden within the dirty bowels of academe where obsequious conformists fear to tread). If the value was not retributive, no one would care what your income is, and you wouldn't care if it was a secret.

Empiricism is by definition to know, not to not know. It is antithetical to the privilege of the elite and why they resist free-market, demand economics for command economy. It is why income should be secretive and should not be considered the object of public policy to distribute it by free market means or any other means, but to conserve it.

Focusing on controlling costs is to focus on incomes and the legitimacy of those incomes. Costs have less to do with the esoteric knowledge of doctors, lawyers, business professionals... than with having the organized, systematic ability to command prices, and economic trends.

Controlling costs is a function of controlling the ability to command the price (ensuring a free-market mechanism in priority).

Controlling the ability to command the price is not accomplished with the ability to command the cost, like the public option does, or like the big box-store model does in which the provider commands the price and the consumer picks the quantity, but by The People having the power, the income, to democratically demand the price and thereby legitimately control the cost unless, of course, there is some secret knowledge I am unaware of.

Ensuring in priority a free and unconsolidated marketplace is to organize to control costs, and policy focused on income, rather than reorganizing the effects like a public option, is essential to ensuring it.

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.