The iron law can be operationalized to deconsolidate the risk proportion. It can be used to deconsolidate the risk just as effectively as being used to cultivate and manage its accumulation and consolidation.
Despite every attempt to cultivate an aristocratic, philosophical predisposition of the risk proportion (technical application of Ayn Rand's philosophy, for example), technical aspects of the iron law do not necessarily tend to a natural, elitist objective. Quite the contrary, actually.
Conservatives have strongly objected to action of the Federal Reserve following economic crises not because it effectively controls the risk proportion (prevents a gamma burst), from which they critically benefit (keeping capitalism from being junked as a brutally inhumane form of social organization), but because there is a natural, pluralistic tendency that does not conserve the consolidated means of power. To counter the tendency to deconsolidate, deliberate measures must be taken to keep power consolidated.
Being sure, for example, the top one percent is co-opted (reward by income-class identity) is a critical measure taken to technically direct the risk. This technique is essentially behavioral psychology--operationalizing technical aspects (expected objective values) with conservative philosophy. Expected values are operantly conditioned with the expected reward, which nihilistically reduces human existence to animals in a Skinner box--or what Rand refers to as our only natural, "objectively" self-interested, moral identity.
It is critical that the risk be technically directed to fit, for example, the Randian "objective" (what objectively measures the ninety-nine percent probability--the real identity--of the risk), which is a fully assumed risk of loss that requires its technical, bureaucratic management. The result is a system that replicates and compounds, rather than prevents, errors, which in effect reinforces the need for its elite, bureaucratic management.
A fractal system promulgates to manage the risk, not reduce it, which promulgates errors (accumulates risk). We see then, for example, solutions looking for problems, then it is difficult to identify, or at least argue, what a real problem is. The system becomes so dysfunctional that the bureaucracy is fallaciously identified, post hoc, to be the problem.
Elite, bureaucratic management of the economy becomes the problem to be solved, and in the case of fully assumed, economic risk, the unabated, post-hoc accumulation of error naturally takes the form of class warfare, like we have now.
Since warfare is inherently bad, conservatives vilify any expression of the post-hoc accumulation as inherently bad (i.e., the cause of the expression is inherently good, but the effect is wrongly considered, as Ayn Rand explains it, to be bad, which causes demonstration of hard power). Not only is occupying Wall Street wrongheaded, but according to conservatives, activities of the central bank to manage the risk causes the risk to be prevented, empirically measured by arousing the rabble.
The central bank (a bureaucratic, technological elite charged with management of a consolidated risk proportion) prevents, they argue, the natural course of events (bankruptcy to the fullest extent of the risk) that clearly signals the end of the cycle and the decision to correct for an over-accumulated crisis proportion. Unfortunately that clear correction, before we started monetizing the risk to prevent the expression of its fullest proportion, too often resulted in the decision to go to war.
War, rather than welfare, achieved full employment and restored the demand needed to reduce "supply-side" overproduction. When the war was over, before we fully monetized the risk proportion, the objective of economic growth resumed to reduce debt (the measurable, accumulated risk, which was paid with a categorical, 90 percent marginal tax rate). Now we monetize the risk, post hoc, and the warfare supplements the welfare program to form a constant, post-hoc, monetary and fiscal management of a proportion no longer considered to be fully assumed, but bureaucratically consumed (operationalized with an objective).
More recently, conservatives say, to prevent huge deficits and the call for a marginal tax rate to the nines (class warfare), the Fed should have let too-big-to-fail banks fail at the outset of the Great Recession...but never mind that they are "too big" to fail.
If this latest example of pragmatic conservativism is supposed to be a rationally objective solution a la Ayn Rand, our confidence in conservative philosophy cannot be anything but completely diminished. This combination of philosophical theory and technical application cannot be recognized as having anything but a completely twisted identity--"A" is definitely, recognizably "A."
In other words, a bureaucratic, technological elite should not be charged with management of a consolidated risk proportion. It interrupts, conservatives say, the natural efficiency (the oligarchical tendency, or the natural order) of the marketplace to naturally select the efficiencies by bankrupting the system to the fullest extent of the risk proportion (the systemic risk we otherwise try, but fail, they argue, to control).
Conservatives contend the Fed prevents a clear signal that a crisis has been stopped and reversed (like we have now). Monetizing the risk causes uncertainty (reprices the risk by fiat) and so prevents the investment necessary to increase demand and cause a recovery. Risk, in other words, bureaucratically consumed (the reprice that redirects it) rather than diffused by objective (the free-market incentive for economic growth) is sitting in Zuccotti Park.
The effect of conflicting indicators, conservatives contend, is war and welfare (budget deficits) to achieve full employment and restore the demand needed to reduce the "supply-side" overproduction. Again, the argument here is post hoc. Conservatives identify monetarism as the cause, and so it is the problem to be solved, but it is really the effect (consolidation of industry and markets causes risk that is monetized through the Federal Reserve system). The system, then, is so loaded with errors that nothing makes sense without a very studied understanding of this complex entanglement of philosophical attributes and technical applications.
Conservatives are critically focused on the effects--managing the consequences--of a consolidated risk proportion. While it simplifies the problem, at the same time, the problem is rendered more complex by transposing cause and effect (up is down and down is up), which avoids the question of deconsolidation and effectively transfers the risk into a bureaucratic, white space. What little time is spent on deconsolidation is to validate how impractical it is with ideological biases that dogmatically determine the technical direction of the risk at odds with its philosophy--its identity--of self-determination.
Let's say we did it Ron Paul's way and let too-big-to-fail fail. The detriment--economic collapse--would have Tea partisans and anarchists occupying Wall Street. This, you see, is the risk of loss fully assumed--the gamma-risk proportion the Fed manages, occupying the policy space that keeps deconsolidation from becoming the objective of the iron law. Instead, the policy space is fully occupied with technically conserving the risk proportion it philosophically purports to resist--war and welfare.
Showing posts with label monetarism. Show all posts
Showing posts with label monetarism. Show all posts
Friday, October 14, 2011
Wednesday, November 10, 2010
Tracking Risk at the Core
The Fed tracks core and headline inflation risks to pick a tool that shapes the trendline. Headline inflation is marginal risk--the kind of risk that has a hedged, or leveraged objective, affecting the core values and the probable direction (the line) of the trend. Monetary policy is used to direct the line (the probability) of the trend, managing the distribution of consolidated risk in the gamma (political) proportion.
One lesson Hamiltonians learned from the American Revolution, and subsequent crises, is that the extent of the risk must be carefully tracked and managed at the core. King George undervalued the extension of the risk, being too alienated to detect the signals at the core. By divine right, he considered the risk to always be of an economically alpha proportion, and at times beta, but the risk went fully gamma (it became politically unavoidable and economically irreversible).
Maximizing the profit margin (tracking costs and limiting liabilities) emerged with market mechanics to provide capitalists with empirical tools to measure risk. The modeling used by liberal, free-marketeers was much more precise than the crown's whose legitimate interest was assumed secure by divine right and tradition.
The interest of the crown was assumed endowed by the creator and enforced by the accumulated power of the sovereign (increasing the rate of its interest by mere extension of the rents). Its naturally endowed interest became the collective power of The People with a model of risk that always assumes the risk of loss (thus, for example, insisting a bill of rights be written into a constitutional from of government--core values that delimit the political extent of the risk).
The post-Revolutionary model is more precisely designed to prevent risk of loss to the sovereign which, after the Revolution, became The People. The power elite is beyond and above the sovereign. It is supra-sovereign. Its power is demonstrated by a consolidated management of the risk so that, for example, when the dollar and the price of oil suddenly tracks directly instead of inversely, value is derived from the signals that serve to indicate the direction of the risk. While The People (the non-elite) are at a loss to explain the seemingly random signals, the extent of the risk has been determined by fiat, like the crown did, through consolidation of wealth and power. That consolidation includes all the risk that comes with the reward, the extent of which eventually demonstrates at the political core with the risk of loss fully assumed.
The risk of loss fully assumed is at the core of social contract theory that is the dominant feature of revolutionary philosophy. Rousseau's fantasy of the "noble savage" is merely an ideal expression that measures the natural extent of the risk (the freedom to choose). Of course, there are perennial attempts to renegotiate the contract (novation of the risk), giving renewed legitimate value to the fully assumed risk of loss in the form of popular consent. We had "The Contract With America" that, when fully applied, gave us the Great Recession, and that agenda has been subsequently renewed in the form of "The Pledge" following "Change We Can Believe In." These elite-negotiated political settlements are a means of extending the value of the risk which can never be reduced, only avoided, accumulated, and inevitably redistributed.
The wealth of the English crown, for example, continues to decline to this day; and instead of economic catastrophe, the Revolution produced wealth of unprecedented proportion without the divine direction of the crown. We have more people now with a royal-size sense of self-proportion than Hamilton himself could have ever imagined or, perhaps, would care for, suggesting that wealth tends to be progressively pluralistic when the risk becomes progressively more extensive (overleveraged) from multiple sources. Thus, in order to conserve the concentration of wealth and protect it from political risk, it is necessary to keep the extent of the risk in close account. It is necessary to keep the risk consolidated and centrally controlled, like with a central banking system.
The tendency to pluralistically avoid accumulated risk is demonstrated, for example, when investors diversify portfolios. Ironically, while the more pluralistic the economy is the less risk accumulated, there is still a tendency to organize for consolidation (too big to fail). To accommodate this contradiction of values, the extent of the risk is closely accounted for at the margin to measure the effect at the core, formulating the working hypothesis that the number of jobs, for example, directly correlates with the marginal profit which if reduced (i.e., taxed or in any way disinflated or deconsolidated) causes unemployment or deflation. This is a false hypothesis that must be maintained with a centralized authority that keeps the risk from naturally deconsolidating.
The Federal Reserve's accounts are now brimming with both qualitative and quantitative easing. Its current account reflects an extent of liability (overleveraging) not seen since the Great Depression. In order to prevent the liability extending into an unmanageable, inevitable distribution that pluralizes (deconsolidates) the system with political authority, the central bank must act to reduce the liability. The bank takes action so the risk is politically manageable, resisting the pluralistic tendency of power over time and political space.
Following the Great Depression it was decided market stability is best accomplished by closely controlling and accounting for the distribution of risk from a centralized authority. Since risk is a conserved quantity, however, having a constant value of coefficiency, a philosophical risk occurs with the distributive value. The legitimacy of the coefficiency must also be interpretatively managed.
Monetizing market stability from a central authority means it is not a free market unless, of course, the authority intends monetizing to pluralize and expand a competitive marketplace with disinflationary tendencies at full employment. Since that would be detrimental to the accumulation and consolidation of wealth, markets are monetized to "ease" the risk of consolidated capital and markets so that when crises occur there is not a punctuated political leap into a more pluralistic marketplace (a more free and unconsolidated marketplace) to add supply, increase employment and avoid crises.
Instead of pluralism, the marketplace is monetized to allow for economy-of-scale efficiencies (maximum margin with minimum employment, like we have now). Monetizing accommodates the crises that result without economic collapse, creating what is "too big to fail." These large-scale firms can horde cash and deflate the economy, and the more the economy deflates, the more valuable their cash reserves become. If the cash is put in commodity futures, for example, prices rise and extends the risk (raises the economic rent). The risk becomes so consolidated that it is unstable. To prevent the beta volatility going gamma, it is monetized to lower the rent (QE), but not without increasing the debt, which overextends the risk. Overextension of consolidated risk re-distributes wealth by credit default, reducing the net worth of average payers as the value of cash reserves increases.
Consolidation of risk is evident in sudden trend reversals (implied uncertainty that tends to panic the marketplace). These trends (impulsive and corrective waves) are postulated to track the extent of the risk. Saying, for example, that a weak dollar causes oil to rise is a hypothesis that, oops, is sometimes expostulated to demonstrate a highly consolidated extension (a demonstration of power) that is of questionable, legitimate value. (Keep in mind that trying to rig the market is, in fact, a criminal activity. It can hardly be considered, as one Goldman Sachs employee put it, "doing God's work" if The People are expected to lose by means of credit defaults swapped in free-and-open exchange by entities with the power to manage its fullest extent with an economy-of-scale efficiency.)
At this point, the free-market legitimacy of accumulated wealth and power is so far gone that expressing the need for a more pluralistic legitimacy is reduced to a perfidious left-wing ideology that endeavors to destroy the productive efficiency (the economy of scale) that is the "natural" course of capitalism (the trendline to be managed).
Rather than being applied to confirm a free-market legitimacy, monetarism is being applied to confirm the efficiency of large, economies of scale (firms that survive the business cycles that consolidation causes). Essentially, monetarism is used to resist the effects of a disconfirmed hypothesis, easing the burden of risk that is cyclically overextended into a crisis (gamma-risk) proportion.
The time, effort, and resources spent easing the effects of accommodating consolidation would be better spent deconsolidating the risk. Instead of monetizing deflationary debt, we should be accommodating disinflationary growth and let free-market economics manage the risk without a centralized authority.
Risk that is deconsolidated and pluralistically managed in priority ensures that no one component is too big to fail the system, or even cause a large spike in unemployment with a deflationary effect.
Ensuring free-market economics ontologically provides in priority (with a naturally occuring empirical, consensual legitimacy) what central banking badly approximates in posteriori--market stability.
Forcing the trendline is more like a vector analysis that tracks the velocity of opposing forces. While the Fed, for example, is being accommodative, it is also trying to encourage (vector) capital into employment, but without disinflation (growth). We see then that the central bank is serving two agendums--to achieve employment without growth.
If, for example, capital seeks employment, less capital is being applied to bid-up commodity futures, signaling a core recovery and the risk of core inflation. With capital consolidated in oversupply (the consolidation of the risk), supply is not being added relative to prices, and commodity prices are again pressured with headline risk. As that risk consolidates, the trendline retraces the deflationary track, resulting in a stall (a double dip). The risk of core inflation is then forestalled with an economy-of-scale-efficiency accommodated by the central bank.
The frequency of expansion and contraction renders QE policy an ex nihilo addition to the public debt. It becomes a component of a perpetual debt machine that perfectly fits the Hamiltonian model. If we want balanced budgets (no budget deficits and less need for government spending), this model must be thrown out.
The copious amounts of added liquidity required to maintain a deflationary, debt model rather than a disinflationary, equity model supports clever invention and use of capital that makes "taking risk" not a function of growth, but creating risk and shifting it to the uninitiated. Options markets, for example, are a mechanism for "making the market."
Making markets means creating and transferring risk. It is a means of controlling risk, but creating something does not mean it is in control (thus the need for the central bank's authority to headline the risk). Pressuring commodity prices without adding supply, for example, arbitrages the risk and sets up trades (call-put options) that indicate, or headline, the extent of the risk.
(Keep in mind that risk is not created from nothing. Risk, like capital, is a coefficient constant with accumulative and distributive value. Leverage schemes "create" the opportunity for capital gain by manipulating the coefficiency. For example, a 30-1 leverage ratio does not increase the amount of risk, it extends it, pushing it into a gamma--political risk--proportion. The extensive ratio induces a philosophical risk of legitimacy--the kind of risk that manifests the accumulation of revolutionary attributes demanding a corrective wave that distributes value. The choice, then, is nature or nurture. We can peacefully nurture the value--continuously monetizing the debt into a pluralistic extent, for example--or let nature take its ontological course and realize the dystopian ideal of the "noble savage." Pluralism is the ontology to be opted for here. A free and unconsolidated marketplace ensured in priority prevents the impulse to savage the meek in the name of nobility.)
Otherwise known as hedging schemes, "making markets" (rather than adding supply and the employment--the demand--it requires) magnifies the margin with an over-extension of the risk (risk without growth resulting in a net loss, or deflation caused by an overaccumulation at the margin). If that margin is not distributed to add supply, the risk tracks an inflationary trend at the core which, according to the Fed, signals a recovery. Unfortunately, if that false signal is used to indicate less need for government spending (deficit reduction), we will be tracking a depressionary trend and a political, gamma-risk proportion that will not be monetized (hedged) into the future with any credibility.
The time will have arrived for the Hamiltonian model to be abandoned, but that is not going to happen. The deficit will never be reduced enough because the demand (the gamma risk accumulated at the core value) will be too high.
The political will to shape the trendline (to shape the probability of the future), and the tools to shape it are well in hand. It is time, however, to switch to a more pluarlistic model that ensures (accommodates) growth rather than arbitraging the risk in priority. It does not mean that arbitrageurs are put out of business. It means the risk is arbitraged into deconsolidation instead of consolidation.
Growth (added supply rather than an inflated rate of interest in a declining supply) is a reward that distributes with the risk rather than consolidated into a crisis proportion.
One lesson Hamiltonians learned from the American Revolution, and subsequent crises, is that the extent of the risk must be carefully tracked and managed at the core. King George undervalued the extension of the risk, being too alienated to detect the signals at the core. By divine right, he considered the risk to always be of an economically alpha proportion, and at times beta, but the risk went fully gamma (it became politically unavoidable and economically irreversible).
Maximizing the profit margin (tracking costs and limiting liabilities) emerged with market mechanics to provide capitalists with empirical tools to measure risk. The modeling used by liberal, free-marketeers was much more precise than the crown's whose legitimate interest was assumed secure by divine right and tradition.
The interest of the crown was assumed endowed by the creator and enforced by the accumulated power of the sovereign (increasing the rate of its interest by mere extension of the rents). Its naturally endowed interest became the collective power of The People with a model of risk that always assumes the risk of loss (thus, for example, insisting a bill of rights be written into a constitutional from of government--core values that delimit the political extent of the risk).
The post-Revolutionary model is more precisely designed to prevent risk of loss to the sovereign which, after the Revolution, became The People. The power elite is beyond and above the sovereign. It is supra-sovereign. Its power is demonstrated by a consolidated management of the risk so that, for example, when the dollar and the price of oil suddenly tracks directly instead of inversely, value is derived from the signals that serve to indicate the direction of the risk. While The People (the non-elite) are at a loss to explain the seemingly random signals, the extent of the risk has been determined by fiat, like the crown did, through consolidation of wealth and power. That consolidation includes all the risk that comes with the reward, the extent of which eventually demonstrates at the political core with the risk of loss fully assumed.
The risk of loss fully assumed is at the core of social contract theory that is the dominant feature of revolutionary philosophy. Rousseau's fantasy of the "noble savage" is merely an ideal expression that measures the natural extent of the risk (the freedom to choose). Of course, there are perennial attempts to renegotiate the contract (novation of the risk), giving renewed legitimate value to the fully assumed risk of loss in the form of popular consent. We had "The Contract With America" that, when fully applied, gave us the Great Recession, and that agenda has been subsequently renewed in the form of "The Pledge" following "Change We Can Believe In." These elite-negotiated political settlements are a means of extending the value of the risk which can never be reduced, only avoided, accumulated, and inevitably redistributed.
The wealth of the English crown, for example, continues to decline to this day; and instead of economic catastrophe, the Revolution produced wealth of unprecedented proportion without the divine direction of the crown. We have more people now with a royal-size sense of self-proportion than Hamilton himself could have ever imagined or, perhaps, would care for, suggesting that wealth tends to be progressively pluralistic when the risk becomes progressively more extensive (overleveraged) from multiple sources. Thus, in order to conserve the concentration of wealth and protect it from political risk, it is necessary to keep the extent of the risk in close account. It is necessary to keep the risk consolidated and centrally controlled, like with a central banking system.
The tendency to pluralistically avoid accumulated risk is demonstrated, for example, when investors diversify portfolios. Ironically, while the more pluralistic the economy is the less risk accumulated, there is still a tendency to organize for consolidation (too big to fail). To accommodate this contradiction of values, the extent of the risk is closely accounted for at the margin to measure the effect at the core, formulating the working hypothesis that the number of jobs, for example, directly correlates with the marginal profit which if reduced (i.e., taxed or in any way disinflated or deconsolidated) causes unemployment or deflation. This is a false hypothesis that must be maintained with a centralized authority that keeps the risk from naturally deconsolidating.
The Federal Reserve's accounts are now brimming with both qualitative and quantitative easing. Its current account reflects an extent of liability (overleveraging) not seen since the Great Depression. In order to prevent the liability extending into an unmanageable, inevitable distribution that pluralizes (deconsolidates) the system with political authority, the central bank must act to reduce the liability. The bank takes action so the risk is politically manageable, resisting the pluralistic tendency of power over time and political space.
Following the Great Depression it was decided market stability is best accomplished by closely controlling and accounting for the distribution of risk from a centralized authority. Since risk is a conserved quantity, however, having a constant value of coefficiency, a philosophical risk occurs with the distributive value. The legitimacy of the coefficiency must also be interpretatively managed.
Monetizing market stability from a central authority means it is not a free market unless, of course, the authority intends monetizing to pluralize and expand a competitive marketplace with disinflationary tendencies at full employment. Since that would be detrimental to the accumulation and consolidation of wealth, markets are monetized to "ease" the risk of consolidated capital and markets so that when crises occur there is not a punctuated political leap into a more pluralistic marketplace (a more free and unconsolidated marketplace) to add supply, increase employment and avoid crises.
Instead of pluralism, the marketplace is monetized to allow for economy-of-scale efficiencies (maximum margin with minimum employment, like we have now). Monetizing accommodates the crises that result without economic collapse, creating what is "too big to fail." These large-scale firms can horde cash and deflate the economy, and the more the economy deflates, the more valuable their cash reserves become. If the cash is put in commodity futures, for example, prices rise and extends the risk (raises the economic rent). The risk becomes so consolidated that it is unstable. To prevent the beta volatility going gamma, it is monetized to lower the rent (QE), but not without increasing the debt, which overextends the risk. Overextension of consolidated risk re-distributes wealth by credit default, reducing the net worth of average payers as the value of cash reserves increases.
Consolidation of risk is evident in sudden trend reversals (implied uncertainty that tends to panic the marketplace). These trends (impulsive and corrective waves) are postulated to track the extent of the risk. Saying, for example, that a weak dollar causes oil to rise is a hypothesis that, oops, is sometimes expostulated to demonstrate a highly consolidated extension (a demonstration of power) that is of questionable, legitimate value. (Keep in mind that trying to rig the market is, in fact, a criminal activity. It can hardly be considered, as one Goldman Sachs employee put it, "doing God's work" if The People are expected to lose by means of credit defaults swapped in free-and-open exchange by entities with the power to manage its fullest extent with an economy-of-scale efficiency.)
At this point, the free-market legitimacy of accumulated wealth and power is so far gone that expressing the need for a more pluralistic legitimacy is reduced to a perfidious left-wing ideology that endeavors to destroy the productive efficiency (the economy of scale) that is the "natural" course of capitalism (the trendline to be managed).
Rather than being applied to confirm a free-market legitimacy, monetarism is being applied to confirm the efficiency of large, economies of scale (firms that survive the business cycles that consolidation causes). Essentially, monetarism is used to resist the effects of a disconfirmed hypothesis, easing the burden of risk that is cyclically overextended into a crisis (gamma-risk) proportion.
The time, effort, and resources spent easing the effects of accommodating consolidation would be better spent deconsolidating the risk. Instead of monetizing deflationary debt, we should be accommodating disinflationary growth and let free-market economics manage the risk without a centralized authority.
Risk that is deconsolidated and pluralistically managed in priority ensures that no one component is too big to fail the system, or even cause a large spike in unemployment with a deflationary effect.
Ensuring free-market economics ontologically provides in priority (with a naturally occuring empirical, consensual legitimacy) what central banking badly approximates in posteriori--market stability.
Forcing the trendline is more like a vector analysis that tracks the velocity of opposing forces. While the Fed, for example, is being accommodative, it is also trying to encourage (vector) capital into employment, but without disinflation (growth). We see then that the central bank is serving two agendums--to achieve employment without growth.
If, for example, capital seeks employment, less capital is being applied to bid-up commodity futures, signaling a core recovery and the risk of core inflation. With capital consolidated in oversupply (the consolidation of the risk), supply is not being added relative to prices, and commodity prices are again pressured with headline risk. As that risk consolidates, the trendline retraces the deflationary track, resulting in a stall (a double dip). The risk of core inflation is then forestalled with an economy-of-scale-efficiency accommodated by the central bank.
The frequency of expansion and contraction renders QE policy an ex nihilo addition to the public debt. It becomes a component of a perpetual debt machine that perfectly fits the Hamiltonian model. If we want balanced budgets (no budget deficits and less need for government spending), this model must be thrown out.
The copious amounts of added liquidity required to maintain a deflationary, debt model rather than a disinflationary, equity model supports clever invention and use of capital that makes "taking risk" not a function of growth, but creating risk and shifting it to the uninitiated. Options markets, for example, are a mechanism for "making the market."
Making markets means creating and transferring risk. It is a means of controlling risk, but creating something does not mean it is in control (thus the need for the central bank's authority to headline the risk). Pressuring commodity prices without adding supply, for example, arbitrages the risk and sets up trades (call-put options) that indicate, or headline, the extent of the risk.
(Keep in mind that risk is not created from nothing. Risk, like capital, is a coefficient constant with accumulative and distributive value. Leverage schemes "create" the opportunity for capital gain by manipulating the coefficiency. For example, a 30-1 leverage ratio does not increase the amount of risk, it extends it, pushing it into a gamma--political risk--proportion. The extensive ratio induces a philosophical risk of legitimacy--the kind of risk that manifests the accumulation of revolutionary attributes demanding a corrective wave that distributes value. The choice, then, is nature or nurture. We can peacefully nurture the value--continuously monetizing the debt into a pluralistic extent, for example--or let nature take its ontological course and realize the dystopian ideal of the "noble savage." Pluralism is the ontology to be opted for here. A free and unconsolidated marketplace ensured in priority prevents the impulse to savage the meek in the name of nobility.)
Otherwise known as hedging schemes, "making markets" (rather than adding supply and the employment--the demand--it requires) magnifies the margin with an over-extension of the risk (risk without growth resulting in a net loss, or deflation caused by an overaccumulation at the margin). If that margin is not distributed to add supply, the risk tracks an inflationary trend at the core which, according to the Fed, signals a recovery. Unfortunately, if that false signal is used to indicate less need for government spending (deficit reduction), we will be tracking a depressionary trend and a political, gamma-risk proportion that will not be monetized (hedged) into the future with any credibility.
The time will have arrived for the Hamiltonian model to be abandoned, but that is not going to happen. The deficit will never be reduced enough because the demand (the gamma risk accumulated at the core value) will be too high.
The political will to shape the trendline (to shape the probability of the future), and the tools to shape it are well in hand. It is time, however, to switch to a more pluarlistic model that ensures (accommodates) growth rather than arbitraging the risk in priority. It does not mean that arbitrageurs are put out of business. It means the risk is arbitraged into deconsolidation instead of consolidation.
Growth (added supply rather than an inflated rate of interest in a declining supply) is a reward that distributes with the risk rather than consolidated into a crisis proportion.
Saturday, October 25, 2008
Keynesian Crisis
Keynesian economics was an innovation for organizing production so that growth, success in the marketplace, could still be measured by the profit margin in the classical economic sense.
Monetarism allows the measure of legitimate success of the classical model into the neo-classical world of managing cyclical crisis that does not necessarilly produce legitimately pluralistic, free-market results measured by the profit. It allows for maximum profit with minimal growth, and a way to "successfully" manage the instability that causes.
The promise of the new technique for stabilizing the economy was to calibrate the money supply as needed to control inflation with growth, what a free market will achieve on its own if the capital, industry and markets are not allowed to consolidate.
If capital is always available for investment in profitable markets (buying the greed), the economy can grow with adequate supply to control inflation, and that added supply requires full employment, thus, full employment with low inflation. The effect is a declining rate of profits and return on investment that minimizes an accumulation of wealth and an income-class distinction. Aspiring to the "ruling class" requires a return on investment ensuring a free-market economic through the monetary system denies.
Monetarism was invented to largely stabilize the business cycle of a consolidated capital. It was not invented to finance the competition, but to provide liquidity (interbank lending) when the capital becomes so consolidated that it locks up and has nowhere else to go but to be redistributed to the consumer (spreading the wealth around) to reduce the inventory of overproduction. Rather than finance the competition, causing full employment with low inflation, the recovery is monetized (trickled down) through the central bank system and the treasury, allowing the consolidated capital--the problem--to persist.
The process of economic stimulation and stabilization we have now is the "monetizing of the debt" so that it is not quite as obvious that the business cycle operates to consolidate the capital. Consolidation is antithetical to a free-market legitimacy in which power is sufficiently pluralized to be self-correcting and requires little need for government regulatory authority.
Since monetarism is not used to pluralize, but stabilize the marketplace, there is a big demand for government. That demand has evolved in favor of consolidation of the marketplace, so we have The People's tax money being given to a healthy bank (PNC Bank) to buy an unhealthy bank (National City Bank). Public finance, and the power of legitimacy it represents, is used to consolidate, and not just the accumulated capital. The return on the investment comes in the form of the interest paid on the public debt which, you may have noticed, is a perpetual-debt (leveraging) machine that grows infinitely if it is paid with a regressive tax code.
Keynesian monetarism is easily switched to finance a genuine free-market economic system. The way it is being used now to keep the capital, industry and markets consolidated through an unstable business cycle, "the switch" will eventually become the socialist alternative.
Avoiding a global liquidity crisis, and general instability, is entirely possible. It is time for the political will to do it.
Obama/Biden 2008!
Monetarism allows the measure of legitimate success of the classical model into the neo-classical world of managing cyclical crisis that does not necessarilly produce legitimately pluralistic, free-market results measured by the profit. It allows for maximum profit with minimal growth, and a way to "successfully" manage the instability that causes.
The promise of the new technique for stabilizing the economy was to calibrate the money supply as needed to control inflation with growth, what a free market will achieve on its own if the capital, industry and markets are not allowed to consolidate.
If capital is always available for investment in profitable markets (buying the greed), the economy can grow with adequate supply to control inflation, and that added supply requires full employment, thus, full employment with low inflation. The effect is a declining rate of profits and return on investment that minimizes an accumulation of wealth and an income-class distinction. Aspiring to the "ruling class" requires a return on investment ensuring a free-market economic through the monetary system denies.
Monetarism was invented to largely stabilize the business cycle of a consolidated capital. It was not invented to finance the competition, but to provide liquidity (interbank lending) when the capital becomes so consolidated that it locks up and has nowhere else to go but to be redistributed to the consumer (spreading the wealth around) to reduce the inventory of overproduction. Rather than finance the competition, causing full employment with low inflation, the recovery is monetized (trickled down) through the central bank system and the treasury, allowing the consolidated capital--the problem--to persist.
The process of economic stimulation and stabilization we have now is the "monetizing of the debt" so that it is not quite as obvious that the business cycle operates to consolidate the capital. Consolidation is antithetical to a free-market legitimacy in which power is sufficiently pluralized to be self-correcting and requires little need for government regulatory authority.
Since monetarism is not used to pluralize, but stabilize the marketplace, there is a big demand for government. That demand has evolved in favor of consolidation of the marketplace, so we have The People's tax money being given to a healthy bank (PNC Bank) to buy an unhealthy bank (National City Bank). Public finance, and the power of legitimacy it represents, is used to consolidate, and not just the accumulated capital. The return on the investment comes in the form of the interest paid on the public debt which, you may have noticed, is a perpetual-debt (leveraging) machine that grows infinitely if it is paid with a regressive tax code.
Keynesian monetarism is easily switched to finance a genuine free-market economic system. The way it is being used now to keep the capital, industry and markets consolidated through an unstable business cycle, "the switch" will eventually become the socialist alternative.
Avoiding a global liquidity crisis, and general instability, is entirely possible. It is time for the political will to do it.
Obama/Biden 2008!
Tuesday, October 7, 2008
The Great Recession?
We are hearing that the economic crisis we are now experiencing is unprecedented.
No.
What we are experiencing is classical economic crisis, easily predictable, entirely preventable.
If we do not take preventive measures that treat the causes and not the effects, we are looking at a Great Recession, not a depression.
While The Great Depression brought the value, the legitimacy, of capitalism into questionable verification, the organizational means of consolidated capital and markets to the ends of consolidating wealth, and power, has been maintained as an economic efficiency that just needs technocratic adjustment (adjusting for the externalities, like our current "toxic debt" that needs to be managed into a detriment for The People by "socializing" it).
This is where the "unprecedented" attributes are to be found. The treatments we see being implemented are symptomatic and neo-classical--they are new, reinventions of the problem in the form of new solutions and mired in complexity to "appear" innovative and thus effective.
For example, the Fed's decision to buy commercial paper is unprecedented, but it does not solve the problem. Rather, it makes the problem--leveraging financials (clogging the credit market) possible by indirectly buying the bad debt it produces and replacing the loss (the consolidated gain receiving the lowest tax burden) with newly printed money (electronic credits). This is called, monetizing the debt, and in the current case is just an extension of the leveraging scheme (the problem). It is a neo-classical economic technology that keeps the organized means of power from being verified as inefficient by indirectly expropriating value from The People and make it look like they are being "rescued." It is, in keeping with the conservative modus operandi, a fraud.
Fraud is a crime against a civil society, and because the problem is a lack of a free and unconsolidated marketplace that sanctions the frauds by denying them access by operation of collective action, collective will, without threatening economic collapse, these criminals must be prosecuted in a political forum of legislative and judicial procedure.
We need a strong executive that will apply corrective policy directly to the causal factors.
Many economists incorrectly evaluate Obama's advocacy of a more progressive tax code as deficit prone. It is not. A more progressive tax code is deficit averse because it taxes the wealth where it is idled (illiquidity) and puts it to work where it is needed, with The People. The result is both economic stimulus and less need for government, and less spending these economists say Obama is not accounting for, from a reliably robust revenue base that will benefit the rich, but without the all-important deprivation of The People that makes them feel powerful, causes the need for government, and that is nothing but a complete lack of moral intelligence.
A Great Recession is no one's self-interest. Neo-classicism is in means, not ends.
Obama/Biden, 2008.
No.
What we are experiencing is classical economic crisis, easily predictable, entirely preventable.
If we do not take preventive measures that treat the causes and not the effects, we are looking at a Great Recession, not a depression.
While The Great Depression brought the value, the legitimacy, of capitalism into questionable verification, the organizational means of consolidated capital and markets to the ends of consolidating wealth, and power, has been maintained as an economic efficiency that just needs technocratic adjustment (adjusting for the externalities, like our current "toxic debt" that needs to be managed into a detriment for The People by "socializing" it).
This is where the "unprecedented" attributes are to be found. The treatments we see being implemented are symptomatic and neo-classical--they are new, reinventions of the problem in the form of new solutions and mired in complexity to "appear" innovative and thus effective.
For example, the Fed's decision to buy commercial paper is unprecedented, but it does not solve the problem. Rather, it makes the problem--leveraging financials (clogging the credit market) possible by indirectly buying the bad debt it produces and replacing the loss (the consolidated gain receiving the lowest tax burden) with newly printed money (electronic credits). This is called, monetizing the debt, and in the current case is just an extension of the leveraging scheme (the problem). It is a neo-classical economic technology that keeps the organized means of power from being verified as inefficient by indirectly expropriating value from The People and make it look like they are being "rescued." It is, in keeping with the conservative modus operandi, a fraud.
Fraud is a crime against a civil society, and because the problem is a lack of a free and unconsolidated marketplace that sanctions the frauds by denying them access by operation of collective action, collective will, without threatening economic collapse, these criminals must be prosecuted in a political forum of legislative and judicial procedure.
We need a strong executive that will apply corrective policy directly to the causal factors.
Many economists incorrectly evaluate Obama's advocacy of a more progressive tax code as deficit prone. It is not. A more progressive tax code is deficit averse because it taxes the wealth where it is idled (illiquidity) and puts it to work where it is needed, with The People. The result is both economic stimulus and less need for government, and less spending these economists say Obama is not accounting for, from a reliably robust revenue base that will benefit the rich, but without the all-important deprivation of The People that makes them feel powerful, causes the need for government, and that is nothing but a complete lack of moral intelligence.
A Great Recession is no one's self-interest. Neo-classicism is in means, not ends.
Obama/Biden, 2008.
Thursday, July 3, 2008
Stock in Trade
To be arbitrary and capricious. To be unpredictable is the stock in trade of a consolidated capital. It is a hallmark of power: something is, or is not, just because you command it. Economically, that would be a command economy.
So we have a current macro-technical in which the relationship of a giant budget deficit and the interest rate has been improperly reversed into an ad hoc deflation of our economy in which nothing seems to make sense, cause-effect is a matter of an ideological opinion, and the uncertainty causes a high risk factor, and trepidation, of acting contrary to convention. Will raising the interest rate reverse the deflationary trend or deepen it?
Rather than rely on what we don't know, let's rely on what we do!
Consolidated capital distorts markets. The technicals just reflect an arbitrary and capricious market behavior. Things that should have value do not, things that don't do, things that have value are irrationally overvalued...valuations are entirely at the mercy of a consolidated command of capital. It is the antithesis of a free market economics.
Thus, both the problem of our economic woes has been properly identified and the solution properly induced in priority.
All we need to do now is act on it in priority.
Build the coalition for Barack Obama, 2008!
Very best wishes.
So we have a current macro-technical in which the relationship of a giant budget deficit and the interest rate has been improperly reversed into an ad hoc deflation of our economy in which nothing seems to make sense, cause-effect is a matter of an ideological opinion, and the uncertainty causes a high risk factor, and trepidation, of acting contrary to convention. Will raising the interest rate reverse the deflationary trend or deepen it?
Rather than rely on what we don't know, let's rely on what we do!
Consolidated capital distorts markets. The technicals just reflect an arbitrary and capricious market behavior. Things that should have value do not, things that don't do, things that have value are irrationally overvalued...valuations are entirely at the mercy of a consolidated command of capital. It is the antithesis of a free market economics.
Thus, both the problem of our economic woes has been properly identified and the solution properly induced in priority.
All we need to do now is act on it in priority.
Build the coalition for Barack Obama, 2008!
Very best wishes.
Monday, June 30, 2008
What Freedom is Not
Elits disagree over the direction, the control, of our economy, on the surface at least.
Ben Bernanke, federal reserve chief, a quasi-public bureaucrat who must choose the clientele he serves--the private financial sector that funds the agency or the general public, favors the Hamiltonian model.
The federal reserve now faces another potential bailout with a combine of public and private funds as another big investment bank flounders. It could be that Bernanke may let it fail to demonstrate the effects of not supporting the Hamiltonian model of political economy.
The public administration of a consolidated capital does not mean it is not misfeasant or malfeasant. No, it can be just as irresponsible, like most central planners of a consolidated power, because the central authority (the central bank) will not allow it to fail. If the federal reserve does allow an oversized horizontally and vertically integrated financial entity to fail, the integration of which should have been illegal and the scenario prevented in priority, the assets of this company will be consolidated, further centralized, into a command and control economy.
Berkshire Hathaway will be there to consolidate the assets, with Warren Buffet standing in opposition to the federal reserve's Hamiltonian modeling. It will be the pot calling the kettle black, but Buffet will claim it is not a taxpayer bailout, and "the public" will not be paying to keep a private institution of power solvent without sharing in the profits (shareholder class status), just the losses, to be shared by the class of "little people."
The "little people" are not the stupid masses to be taken advantage of by a more clever Hamiltonian elite. No. They are commanded to be the shareholders of detriment by the indirect means of the political-economic process of power, protected by the force and legitimacy of public authority. It is the product of a "command" economy, not free market economics.
The legitimacy must be by force of public authority because command and control by an elite is not Constitutional (publicly legitimate) and the command of the economy (organized consolidation of assets) is not, by definition, a free market mechanism (private legitimacy).
The model is entirely illegitimate.
The illegitimacy must not be managed with overt force in priority, but only as a consequence, like not allowing for consolidation of your assets as a result of the business cycle, which will earn you a forceful visit from the local constabulary.
Extending from the macro level, command and control is by a central planning authority of public/private means to form a bureaucratic model of power and political economy. The private sector operates with a false free-market legitimacy, and the public sector operates to adjust for the externalities, the consequences, mostly in the form of value in demand to be retributed as disposable income. That value, however, is accumulated as capital to deprive demand to increase the supply and maximize the profit on that limited supply.
Ensuring a true free-market legitimacy will cure this problem by organizing to produce the supply to produce the profit, and not its deprivation, or supply-side economics.
John McCain and his neo-conservative company are not supply-side, free marketeers. They are command and control Hamiltonians masquerading the mere mechanics of buying and selling as proof of free market economics. It is a fraud that must be managed and applied by central authority.
At the heart of this central authority is the means of finance through the treasury department and the federal reserve system (the bureaucratic model of power).
The federal reserve system largely functions to manage the volatility of the business cycle, and along with treasury operates to attenuate the negative externalities of illiquidity (an overaccumulation, consolidation, of wealth). The Economic Stimulus Package of 2008, for example, was distributed through treasury and financed by the federal reserve (the public debt).
The volatility we experience now manifests with shorter terms and less depth. Capital, however, becomes so consolidated it literally dictates the economy, but within the limits of fail-safe mechanisms, like limits on trage programme trading (the SEC). Both hedge-fund money and programme trading accounts for at least half the volume of the NYSE every day, more than enough to dictate the direction of prices with an inequity on the bid (a suboptimal distribution of capital wealth).
While the power of a consolidated capital is contrary to the legitimacy of free markets, the choice since the trauma of the Great Depression has been monetarism or socialism. The federal reserve maintains a system of monetarism with a consolidated capital. Socialism decidely does not obtain, but as the economy becomes evermore centralized and power consolidated, all it takes is a political decision to make the switch, but it may well be just a change of legitimacy that reinvents, revolutionizes, the inequity it purports to eliminate.
As many political economists have observed, the switch of legitimacy is just a tragicomedy of a change of elites. This is something to be avoided with insistence for a free and unconsolidated marketplace. Otherwise, despite whatever "ism" you brand it, it is still central authority, a consolidated power--the problem!
The complexity, the confusion, associated with identifying the problem is avoided not by identifying what it is, but by what it is not. If it is not the design of a free and unconsolidated market mechanism, then whatever "it" is, is not sufficient to pluralistically check the elements of power toward a peacefully and prosperous, verifiable legitimacy. Anything other than freedom is just an arbitration of what that is.
Discussions always philosophically reduce to legitimacies and attempts to identify or label the means to ends. It is entirely unresolvable and left to the arbitration and caprice of the powerful. It is much easier and effective to identify what freedom is not.
I can most assuredly identify John McCain and the neo-conservative coaltion as what freedom is not!
Barack Obama, on the other hand, is a skilled pragmatist of a high moral intelligence capable of helping us realize what freedom really is.
Don't forge the chains that bind you. Forge the tools to break them.
Build the coaltion for Obama!
Very best wishes.
Copyright 2008 by Griffith Lighton.
Ben Bernanke, federal reserve chief, a quasi-public bureaucrat who must choose the clientele he serves--the private financial sector that funds the agency or the general public, favors the Hamiltonian model.
The federal reserve now faces another potential bailout with a combine of public and private funds as another big investment bank flounders. It could be that Bernanke may let it fail to demonstrate the effects of not supporting the Hamiltonian model of political economy.
The public administration of a consolidated capital does not mean it is not misfeasant or malfeasant. No, it can be just as irresponsible, like most central planners of a consolidated power, because the central authority (the central bank) will not allow it to fail. If the federal reserve does allow an oversized horizontally and vertically integrated financial entity to fail, the integration of which should have been illegal and the scenario prevented in priority, the assets of this company will be consolidated, further centralized, into a command and control economy.
Berkshire Hathaway will be there to consolidate the assets, with Warren Buffet standing in opposition to the federal reserve's Hamiltonian modeling. It will be the pot calling the kettle black, but Buffet will claim it is not a taxpayer bailout, and "the public" will not be paying to keep a private institution of power solvent without sharing in the profits (shareholder class status), just the losses, to be shared by the class of "little people."
The "little people" are not the stupid masses to be taken advantage of by a more clever Hamiltonian elite. No. They are commanded to be the shareholders of detriment by the indirect means of the political-economic process of power, protected by the force and legitimacy of public authority. It is the product of a "command" economy, not free market economics.
The legitimacy must be by force of public authority because command and control by an elite is not Constitutional (publicly legitimate) and the command of the economy (organized consolidation of assets) is not, by definition, a free market mechanism (private legitimacy).
The model is entirely illegitimate.
The illegitimacy must not be managed with overt force in priority, but only as a consequence, like not allowing for consolidation of your assets as a result of the business cycle, which will earn you a forceful visit from the local constabulary.
Extending from the macro level, command and control is by a central planning authority of public/private means to form a bureaucratic model of power and political economy. The private sector operates with a false free-market legitimacy, and the public sector operates to adjust for the externalities, the consequences, mostly in the form of value in demand to be retributed as disposable income. That value, however, is accumulated as capital to deprive demand to increase the supply and maximize the profit on that limited supply.
Ensuring a true free-market legitimacy will cure this problem by organizing to produce the supply to produce the profit, and not its deprivation, or supply-side economics.
John McCain and his neo-conservative company are not supply-side, free marketeers. They are command and control Hamiltonians masquerading the mere mechanics of buying and selling as proof of free market economics. It is a fraud that must be managed and applied by central authority.
At the heart of this central authority is the means of finance through the treasury department and the federal reserve system (the bureaucratic model of power).
The federal reserve system largely functions to manage the volatility of the business cycle, and along with treasury operates to attenuate the negative externalities of illiquidity (an overaccumulation, consolidation, of wealth). The Economic Stimulus Package of 2008, for example, was distributed through treasury and financed by the federal reserve (the public debt).
The volatility we experience now manifests with shorter terms and less depth. Capital, however, becomes so consolidated it literally dictates the economy, but within the limits of fail-safe mechanisms, like limits on trage programme trading (the SEC). Both hedge-fund money and programme trading accounts for at least half the volume of the NYSE every day, more than enough to dictate the direction of prices with an inequity on the bid (a suboptimal distribution of capital wealth).
While the power of a consolidated capital is contrary to the legitimacy of free markets, the choice since the trauma of the Great Depression has been monetarism or socialism. The federal reserve maintains a system of monetarism with a consolidated capital. Socialism decidely does not obtain, but as the economy becomes evermore centralized and power consolidated, all it takes is a political decision to make the switch, but it may well be just a change of legitimacy that reinvents, revolutionizes, the inequity it purports to eliminate.
As many political economists have observed, the switch of legitimacy is just a tragicomedy of a change of elites. This is something to be avoided with insistence for a free and unconsolidated marketplace. Otherwise, despite whatever "ism" you brand it, it is still central authority, a consolidated power--the problem!
The complexity, the confusion, associated with identifying the problem is avoided not by identifying what it is, but by what it is not. If it is not the design of a free and unconsolidated market mechanism, then whatever "it" is, is not sufficient to pluralistically check the elements of power toward a peacefully and prosperous, verifiable legitimacy. Anything other than freedom is just an arbitration of what that is.
Discussions always philosophically reduce to legitimacies and attempts to identify or label the means to ends. It is entirely unresolvable and left to the arbitration and caprice of the powerful. It is much easier and effective to identify what freedom is not.
I can most assuredly identify John McCain and the neo-conservative coaltion as what freedom is not!
Barack Obama, on the other hand, is a skilled pragmatist of a high moral intelligence capable of helping us realize what freedom really is.
Don't forge the chains that bind you. Forge the tools to break them.
Build the coaltion for Obama!
Very best wishes.
Copyright 2008 by Griffith Lighton.
Sunday, June 29, 2008
Can We Have a Depression?
Another Black Monday certainly can happen. It is a post-monetarist event.
Monetarism is a technology invented to stabilize, or predictably manage, the business cycle. It allows for cyclical oscillation without bringing the model of legitimacy--consolidated market capitalism--into question enough to throw it out for another model to be tested for legitimacy (the scientific method).
The current model of political economy in operation, the Hamiltonian model, maintains a hyopthetical legitimacy of regressive taxation (a trickle-down tax burden) to produce economic growth and the general welfare. This regressive tax structure is the fundament that guides and predicts the direction, the cyclical dimensions, of our economy, now in a command mode of stagflation to deflation. Thus, the hypothetical legitimacy of the model is strong-negative, meaning that the model (according to the scientific method) is to be thrown out for a model that will test positive for the general welfare.
The logical remedy is to reverse the fundament; that is, progress the tax code for a progressive tax burden, but that does not happen. Instead, we always have risk-management technologies in place to bureaucratically manage the demand, the need, for change into a cyclical technical correction of managing the supply of money.
Management of the money supply is a demand-side measure. It is adjusting the demand, not increasing supply. In fact, it is designed to reduce supply.
Supply is determined by organization of the markets to allow or disallow the investment to produce supply (economic growth). The added liquidity largely functions to reduce the perennial crisis of overproduction (a lack of disposable income, or demand--a regressive tax burden). This substitutes for the needed progressive tax code by adding liquidity from the central bank in the form of a public debt, to be paid for by a regressive code, and thus ensuring a predictably recurrent cycle of boom and bust (the crisis of overproduction, or insufficient demand).
The deflation we face now is an innovation to "the cycle" by peak-pricing commodities so that it looks like demand is exceeding supply, and so it looks like the crisis of overproduction is not a lack of disposable income due to the regressive tax code (the trickle-down economics), but a fundamental lack of supply.
The problem, however, is fundamentally the same: a Hamiltonian model of political economy in which markets are allowed to consolidate to limit supply on a monetized demand. The investment being made, public and private, is to increase demand, not add supply. The result are unaffordable prices, or a lack of disposable income which eventuates into deflation and an exponetiating public debt to perpetuate "the cycle."
Monetarism was invented to make the severity of the cyclical oscillation manageable; in other words, so that the retributive value does not overaccumulate enough to call for the rejection of the Hamiltonian model. The retributive value is borrowed and stored in the form of a public debt as government programs substitute for a lack of a free market legitimacy.
Hamiltonians falsely argue that government causes the public debt. That, in turn, effects remedies that just cause more debt to be regressively paid. The result is a gigantic accumulation of retributive value to be manifested in a deep cyclical compression.
At this point, the retributive value is demanding to be paid, but argued by Hamiltonians as just being a "natural" swing in the business cycle. It is the job of the monetarist to manage this accumulated debt so that it does not result in rejection of the falsely legitimate model.
Hamiltonians argue that rejection of their model is to reject the free market model of economics. Quit the contrary. Rejecting Hamiltonianism allows for acceptance of the free market model.
It is time to accept your freedom, your right to self-determination and stop being slave to a bunch of feudalistic, want-to-be overlords.
Join the coalition for Barack Obama and declare your natural right to be free from a continuously failed legitimacy of power.
Very best wishes.
Copyright 2008 by Griffith Lighton.
Monetarism is a technology invented to stabilize, or predictably manage, the business cycle. It allows for cyclical oscillation without bringing the model of legitimacy--consolidated market capitalism--into question enough to throw it out for another model to be tested for legitimacy (the scientific method).
The current model of political economy in operation, the Hamiltonian model, maintains a hyopthetical legitimacy of regressive taxation (a trickle-down tax burden) to produce economic growth and the general welfare. This regressive tax structure is the fundament that guides and predicts the direction, the cyclical dimensions, of our economy, now in a command mode of stagflation to deflation. Thus, the hypothetical legitimacy of the model is strong-negative, meaning that the model (according to the scientific method) is to be thrown out for a model that will test positive for the general welfare.
The logical remedy is to reverse the fundament; that is, progress the tax code for a progressive tax burden, but that does not happen. Instead, we always have risk-management technologies in place to bureaucratically manage the demand, the need, for change into a cyclical technical correction of managing the supply of money.
Management of the money supply is a demand-side measure. It is adjusting the demand, not increasing supply. In fact, it is designed to reduce supply.
Supply is determined by organization of the markets to allow or disallow the investment to produce supply (economic growth). The added liquidity largely functions to reduce the perennial crisis of overproduction (a lack of disposable income, or demand--a regressive tax burden). This substitutes for the needed progressive tax code by adding liquidity from the central bank in the form of a public debt, to be paid for by a regressive code, and thus ensuring a predictably recurrent cycle of boom and bust (the crisis of overproduction, or insufficient demand).
The deflation we face now is an innovation to "the cycle" by peak-pricing commodities so that it looks like demand is exceeding supply, and so it looks like the crisis of overproduction is not a lack of disposable income due to the regressive tax code (the trickle-down economics), but a fundamental lack of supply.
The problem, however, is fundamentally the same: a Hamiltonian model of political economy in which markets are allowed to consolidate to limit supply on a monetized demand. The investment being made, public and private, is to increase demand, not add supply. The result are unaffordable prices, or a lack of disposable income which eventuates into deflation and an exponetiating public debt to perpetuate "the cycle."
Monetarism was invented to make the severity of the cyclical oscillation manageable; in other words, so that the retributive value does not overaccumulate enough to call for the rejection of the Hamiltonian model. The retributive value is borrowed and stored in the form of a public debt as government programs substitute for a lack of a free market legitimacy.
Hamiltonians falsely argue that government causes the public debt. That, in turn, effects remedies that just cause more debt to be regressively paid. The result is a gigantic accumulation of retributive value to be manifested in a deep cyclical compression.
At this point, the retributive value is demanding to be paid, but argued by Hamiltonians as just being a "natural" swing in the business cycle. It is the job of the monetarist to manage this accumulated debt so that it does not result in rejection of the falsely legitimate model.
Hamiltonians argue that rejection of their model is to reject the free market model of economics. Quit the contrary. Rejecting Hamiltonianism allows for acceptance of the free market model.
It is time to accept your freedom, your right to self-determination and stop being slave to a bunch of feudalistic, want-to-be overlords.
Join the coalition for Barack Obama and declare your natural right to be free from a continuously failed legitimacy of power.
Very best wishes.
Copyright 2008 by Griffith Lighton.
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