Quantum Mechanics and the Zen of Beta Volatility

Intuitively, as Kant, for example, explained it, our mind is pre-occupied. It is pre-enlightened, or as Plato explained it, the Socratic method demonstrates we already know what the truth is but don't realize it until we ask the right questions.

A practical example of asking the right question is the problem of falling Wall Street bonuses and declining tax revenue. As these bonuses decline (overproduction), the wealth does not trickle down as much, which leads to the conclusion that we have to support trickle-down economics to promote the general welfare.

To the question, does resisting Wall Street bonuses (trickle-down economics) generally increase the risk of loss, the answer is yes...but we already knew this intuitively, and anyone that thinks otherwise is being counter-intuitive, right? The quantum value "risk," although empirically verified to have increased with the loss of tax revenue, has been conserved and conveyed (constructed) as truth (intuitively known) in the form of the question being asked.

Conserving the identity of the variable to be explained is a tautology--it mirrors the image of the question. When the answer is the intuitive hypothesis (the Zen) to be empirically tested, it is presumed (by trying to prove it rather than disprove it) to be the truth (ignoratio elenchi). Ignorance of disproof (disapproving something by approving something else) is essentially the definition of confirmation bias.

While the question to be asked is whether income is distributed equitably enough to ensure risk is more equitably distributed (less volatile), it does not mirror the practical image (the objective identity) of the conserved, quantum-risk proportion and the value it is presumed to legitimately produce.

The zeitgeist of modern political-economic theory and practice mirrors the image of modern physics. Risk and value are elusive quantum existing both separately and as a simultaneous singularity that commonly binds us (our self-interest) to an objective, existential reality. Risk-value imaginatively exists everywhere and nowhere at the same time until it is objectively realized at a particular point in time and space by its direct, empirical observation.

Technically, understanding how value objectively derives from risk is the Zen of modern physics. We have an intuitive sense about what the good life is and how to get there since, apparently, truth, whether dependant on perception or not, has present value based on the probability of future events.

With the "self" being the only thing we objectively know, risk derives from its preservation. ("I think, therefore I am" is a subjective but objectively confirmable hypothesis, especially when imagining the probable risk to that existence.) Acting in the interest of the self is (objectively and at the same time intuitively) integral to (or the Zen of) the probable risk of loss that we imagine as fully assumed, and with as many objective realities as there are people, the probabilities--separately, combined, and fractally compounded--are virtually limitless. Hence, the value derived from the truth of the fully imagined risk (in one's self-interest) is naturally conserved in historical perspective (in one's self-image). Value is organizationally structured to reduce the probabilities by positioning (or pre-dicting) the risk.

Economics, for example, has become a technical operation of applied quantum mechanics. The same technical graduates building quantum calculators with Q-bits are building quantum risk determinators (the essential bits and bytes of RTV's) for Wall Street to pre-dict (since what they are really doing is dictating) where the risk is to be positioned at any particular time. The result (the risk-value derived) is then determined to be freely ontological (technically based on the laws of nature) with the Zen of feeling the direction of a trend (professional expertise) being what determines the marginal product.

The Zen of quantum mechanics avoids risk (like when animals are spooked before an earthquake) and produces a profit (capital gained and accumulated to avoid risk). Quantum accumulation of capital empirically expresses what we intuitively already know--the reward naturally accumulates with those capable of predicting the position, or timing, of risk.

Humans are economic animals, and just like other animals in nature, we struggle to successfully reproduce. With humans, however, there is a selective deontology that passes on values. Risk-value, as discussed in a previous article, is conserved in historical perspective, and like other animals, humans operate with the capacity to avoid risk, but in our case, risk is avoided to make it unavoidable for others, and the best way to do that is to create the "Zen" of beta volatility.

Stochastic Indicators and Risk Proportion

Previously, we discussed the post-hoc fallacy of the risk proportion.

When risk is consolidated from its otherwise free-market (not too big to fail) proportion to maximize the profit margin, GDP (and eventually the rate of profit) declines. Massive debt results and risk gains an increasing political (gamma) dimension.

For big, consolidated corporates, gaining the gamma proportion is critical for the administration of power (extracting value by extension of the risk proportion--shipping jobs to China, for example, where labor is largely a function of state control). Austerity is exacted (redistributed, or extended) from the top down with the force and legitimacy of public authority. (Keep in mind, risk that gains a gamma dimension relies on popular consent, and unpopular measures to pay the debt are systemically risky. The large, economy-of-scale proportion is inherently volatile and predictive control of the risk requires hard power. Maintaining the consolidated, risk proportion, while attributed to being the result of free-market mechanics by both the left and the right, is dependent on the administration of the state.) At this point, while the economy appears to get profitable support, the positive indicators are really negative. While it appears to be going long, the economy is really accumulating a massive, short interest.

Debt reduction will not cause GDP. Arguing that it will is a temporal fallacy. Risk, then, instead of reducing, becomes more extended.

Extension of the risk proportion is touted by both the left and the right to be pro growth. It is not! It is stagflationary. It psychologically sets us up for accepting an intentionally structured, crisis proportion as "the law of unintended consequences." This so-called "law" falsely exculpates the risk proportion, falsely reducing it to an unpredictable, stochastic oscillation. It is a clever, temporal fraud that extends the risk with the appearance of a legitimately undirected, fair-and-equitable, diffused, ontological proportion.

It appears, for example, that the President's latest debt-reduction program is fair and equitable because it flattens the rate we all pay to reduce it. Yes, raising taxes on the rich cleverly flattens a rate that the right wing argues is too progressive.

A flat rate, however, is not fair, nor is it equitable. The burden is regressive, and a regressive tax burden not only results in insufficient demand to drive the economy but insufficient revenue to pay the debt it generates.

Temporally--over time--extending the risk proportion is psychologically anchored-in to be the solution that solves the problem of over-extended risk. Cleverly, we have then a masterful execution of the post-hoc fallacy.

Temporal fallacy of the risk proportion results in what appears to be a random walk. A stochastic storm of contrary indicators emerge and subside with no apparent reason. Market valuation is like predicting the weather which, by no coincidence, relies on complex, fractal modeling that is the realm of quantitative gnosticists who have the secret knowledge to divine the present value of the risk by determining its future value. Predictors appear random, but are really known quantities black-boxed to appear stochastic.

The result is an oxymoron: stochastic oscillation of predetermined risk. It is a fraud, but there is no law that directly prohibits this arcane manipulation of market value that gains a benefit by causing deliberate detriment.

Legal remedy and regulatory authority is indirect and post hoc at best, and congress is making sure that where regulation does not promote even more consolidation of risk in a too-big-to-fail proportion, it will act to reduce the authority to regulate. Being free of government regulation, according to conservatives, is what a free market is (argued post hoc) with an apparent random walk being the evidence that profiles "the risk" and justifies the reward.

Notice how "the risk" (i.e., the reward in the gamma-risk proportion) is being characterized as "class warfare." Before analytically dismissing this as meaningless, ideological rhetoric, consider that it indicates the classical model of capitalism is fully operational despite neo-classical means to give its intended consequences the appearance of a free-market, stochastic ontology.

The consequences are no random walk. As long as "We the People" are not self-determined, the politics of elite control will always be reduced to a game of innovatively creating the appearance of a legitimate, risk ontology.

Notice that innovating the appearance--the predictable presence--of the risk is largely a function of political authority. While that authority is structured to binomially oscillate between what we call "liberal" and "conservative," the stochastics are, regardless, structured to be risk prone (the risk of loss is fully assumed), which means risk analysts will be fully prepared to cover their shorts by going long. The result is a stochastic (but predictable) oscillation of a predetermined risk proportion that has the appearance of random variability.

Psychology of Market Position

Contrary indicators instill the market with a psychology of uncertainty. There is a heightened sense of angst that directs participants into a defensive, risk-averse, feedback loop. The result is a deflationary trend marked by both inflation and unemployment, or stagflation.

Current uncertainty, however, is a market phenomenology. Markets are not causing a psychological disposition, psychology is causing the disposition of markets. Nor is government influence affecting the psychological condition of the marketplace.

Markets are being psychologically constructed to control the perceived legitimacy of the risk proportion and its distribution, which also influences the need for government to be in the loop. It sounds complicated because it is.

Affecting the "disposition" of market participants to take a position in the marketplace is inherently complicated, and complexity naturally appeals to authority, invoking an elitist, practical model to manage the uncertainty ("the risk"). Fusion of psychological and economic attributes are especially tricky because both rely on inferring a probable motive (the uncertainty). Risk proportion is large and intentionally complex, not because nature dictates it, however, but to mask an inherent culpability.

Directing the risk to secure a discrete, distributive benefit by means of deprivation (falsely referred to as the paradox of thrift) is not generally considered to be proper behavior. Capitalism, however, maintains that such behavior is only natural and causes markets to be more efficient as long as government does not regulate it or tax the benefit it yields.

Stagflation is the result of a discrete deprivation played out as a necessary condition for economic growth and general prosperity, but accumulating risk is what it really does.

Stagflation accumulates and distributes risk to a majority of non-elite citizens psychologically prepared (and economically positioned) to accept their fate as self-determined if not unlucky. Either way the legitimacy of the risk is phenomenologically constructed to exculpate the deliberate means of deprivation, describing liberty as the privilege--the reward--of deriving value in zero-sum.

When Jeff Skilling, for example, took the "liberty" to mark his risk-value schemes to the market (taking Ayn Rand's philosophy of self-determination to heart), the risk he accumulated was intended to be taken not by him, but by the so-called non-elite. Skilling went to jail, but not without taking the liberty to exact detriment in the self-interest, supposedly, of people he considered to be inferior and naturally subjected to his self-interest beyond what anyone considers to be good or evil. All that matters is the liberty--the capacity--to act in self-interest.

To the victor naturally goes the spoils, and when The People invoke a standard of morality (an otherwise arbitrary, changeable, measure of "the good life), Atlas shrugs.

Stagflation operates in much the same way on a macro, economy of scale. As industry and markets consolidate more and more to efficiently derive value to be converted into capital and consolidated into wealth, the vast majority of citizens are positioned to believe that this economy-of-scale efficiency is necessary to achieve optimal growth and employment.

Amassing capital is supposed to be for investment. Instead, the converted value is consolidated into wealth (deflation) where it is held hostage to secure public policies that favor its accumulation and, thus, stagflationary accumulation of risk.

An economy of scale accumulates risk that a free-and-unconsolidated marketplace otherwise keeps legitimately diffused in a non-catastrophic and highly productive proportion. The economy-of-scale efficiency is a psychological phenomenon constructed to fatefully position victims to accept detriment while minimizing the retributive (illegitimate) value of the risk proportion.

Stagflation spreads the risk, but it is a re-distribution from an accumulation (exercising power from a centralized source, which defines what a free-market is not). Risk is spread out (stagflated) to diffuse its large (gamma-risk) proportion. While the total amount of risk is not reduced, the current potential of its present value is reduced which, being derived from an accumulated source, tends to be retributive (fundamentally illegitimate). "The risk" is transformed into beta risk and the psychological uncertainty (potential future value discounted to the present) that positions us to accept policy programs that do not optimize free-market mechanics (deconsolidation). Instead, we are conditioned to accept more consolidation (accumulation of even more risk in the political dimension where its accumulated potential is unavoidably gamma).

Understand that Ayn Rand's archetype, Mr. Skilling, was manipulating market position. When his victims were properly positioned he moved to consolidate the value converted from the accumulated risk proportion, selling his position with a buy rating. This essentially describes how Wall Street works, and more broadly, and globally, our economy. In much the same way, stagflation consolidates value derived over time from accumulating risk, leaving the shareholders with all the risk.

Shareholders, then, tend to rent stocks and arbitrage the accumulated risk proportion in order to avoid it. Rather than invest growth, investors buy risk value, not employment and the income that enables economic stability. Earnings do not derive from adequate income, but from income rendered inadequate through inflation and unemployment, accumulating debt (the empirical value of the declining rate of profit) which is "the risk" to be avoided.

Keep in mind that a liquidity crisis triggers the creation of money "de novo" to prevent deflation. New money replaces the inadequate income (the income consolidated) to support profits, not increase purchasing power--the power to sanction in the marketplace, which would be the result of deconsolidation (reinvestment of capital, rather than its consolidation into wealth, which would legitimately spread the risk and the wealth, and would reduce debt without the political risk of extreme austerity). New money is given to banks ("ex nihilo") and the income is supposed to trickle down, but because the marketplace is so consolidated the income is quickly consolidated at the top (producing virtually "nothing"). The result is a long, stagflationary trend like we have now.

Stagflation is essentially the result of monetizing the risk. Instead of pluralizing the marketplace, a competitive plurality is minimized. Growth is limited to creating new markets rather than competitive expansion into old markets. The likely result of this deliberate consolidation, contrary to the espoused efficiency it is supposed to render, is the lowest quality (the lowest possible cost) at the highest possible price. Instead of adding supply (and employment), allowing for continuous consolidation of industry and markets will always result in a high ratio of debt to GDP.

Game theory that suggests markets are naturally limited to just a handfull of providers to maintain the profit margin is a part of the psychology constructed to justify reducing the general benefit of free-market mechanics. It is a classic case of fundamental attribution error.

Gaming theory assumes the free market causes consolidation to make a profit. High profits, however, are the incentive to enter a market, and thus the incentive to deny entry by consolidating the capital. Take away the barriers and what remains is the incentive to be both productive and to make a profit doing it. Participation in the marketplace does not reduce to only making a profit.

The free market does not naturally reduce to consolidation, but consolidation does naturally reduce the free market.

In a free market, what remains are those producers willing to be in the market for the sake of producing high quality goods and services at a competitive price, and the Ayn Rand archetypes are limited to innovatively venturing new markets because they are in business to make money, not employ people.

Rather than an interminable wrangle over what short-term measure, like tax cuts, will best jump-start the economy, the net result of simply ensuring a free-and-unconsolidated marketplace in priority will be full employment with the confirmed expectation of low inflation. Uncertainty reduces to fulfillment, and angst reduces to the adventure--the liberty--of taking risk.

Instead of monetizing consolidated debt that is too-big-to-fail, we should monetize risk valued in a small-enough-to-be-directly-accountable, free-market proportion. If we want to reduce debt and the size of government, we have to put ourselves in a free-market position.