Where's the Supply?

December 27. 2008

If you recall, the promise of the trickle-down economics that has brought our economy to its knees was to add supply (so called, supply-side economics).

Instead of adding supply, the capital amassed was arbitraged to finance a leverage that exceeded 100/1 in some cases, and a false fundamental shortage was organized and executed to both inflate prices and deflate the economy, effectively, deliberately, short selling the entire economy.

The aggregate effect is to deliberately engineer payment of the leverage (the macro economic rent) at the highest possible rate through a complex routine of seemingly inchoate political-economic events. While it all looks disconnected, it all acts to pay maximum leverage at the lowest possible cost until the tax liability increases the cost.

Back when Bush was selected chief executive he declared, along with a Republican congress, that a regressive tax code would yield a supply-side benefit. It instead yielded a demand-side management, command, of the economy--a maldistribution of income that gives the power to command markets into a supply-side deficiency, causing stagflation, deflation and unemployment, as I said it would at the time.

Inflation has been controlled--commanded--by deflationary means (by reducing demand), not disinflationary means (by increasing supply).

A disinflationary (supply-side) means not only adds supply of goods and services but the number of firms available to produce it so that there can be full employment with low inflation due to the adequate supply. It also relieves dependance on just a few firms organized to be "too big to fail" which, as we have seen very well, does not produce an economics that resembles a free-market economy, but a result that can only be described as command economy--an elitist, not a pluralist, model of power and political economy.

Instead of The People deciding who is best to survive through pluralistic means of a free market, the worst survive the crisis they create, by virtue of their bigness, and consolidate even more. The worst survive and accumulate even more power by elite decisional process, deciding with techno-bureaucratic expertise who should survive to prevent the crisis they cause, and it will philosophically suffice to call this the inevitable "will to power" of our natural elite.

Pure and simple, the supply-side argument of the neo-conservative coalition was a lie. It has been very clearly disconfirmed by the evidence in the very biggest way once again!

Command control of the economy is the fully organized intent of the neo-conservative coalition now operating with political-economic complexity in the hope that We The People will not condemn their ideology to the dustbin of failed economic policies and programs empirically tested to a fare-thee-well.

The rhetoric now being proferred by neo-conservatives is the fear We The People should have of the alternative "ism" with its alternative set of beliefs and organized means of validation over verification--a self-similarity of organized means to ends that re-iterates the elitist model of power and political economy. Where a pluralistic process of verifiable accountability and legitimacy is needed, an elitist process will be iterated as a progressive, historical extension, and validation, of itself.

The method of neo-conservatives to determine "truth" is mostly an ideology of beliefs that are based on lies. They proclaim that they organize a free-market economy, for example, that they have done well to entirely discredit. The People should now fear the alternative ideology, effectively defining a re-iteration of the model as the alternative.

The non-iterative alternative is not ideological.

The People voted for freedom and democracy that comes with organizing for a real and verifiable free-market economy that not only provides plenty, supply, but that supply affords real and immediate, direct accountability that is not a function of ideology but of a pragmatic empiricism in which the truth has no ideological dependance and provides us with what we can all legitimately believe in despite all our differences.

If the captains of industry cannot, will not, subordinate to the rigors of a free and unconsolidated marketplace, out of greed, out of avarice, squandering what they have and coveting what they have not, organizing to deprive under the guise to provide, then We are not dependant on them as long as We ensure an organized free-market economics in priority. Someone else is always waiting to replace them and subordinate their greed, or the will to power, to the complete satisfaction of the consumer--the free marketplace that is The Will of the People and the legitimate profit that is its measure.

When the profit is not sufficiently reinvested to add supply but to deprive it on the demand side (the engrossment of capital, or the illiquidity we have now), the profit is then less a measure of preference than the power to determine the choice. The profit then becomes a measure of power and not of preference.

To correct for the distorted measure of the profit--the source and meaning of power it is supposed to empirically measure, instead of The People being subordinated to conservative ideology and the elite model with a bail out, the captains of organized micro means are subordinated to the clear and decisive macro means of a verifiable legitimacy that a free and unconsolidated marketplace provides and the "will to power" cannot avoid.

The "will to power" organizes to avoid being denied access to the marketplace rather than denying it. The only declarative knowledge is verification of a pluralistic process when the economy is freely participated independent of any "ism" declared to be absolute truth or knowledge. Adding supply is not dependant on belief, but maximum participation that leads to maximum innovation and productive efficiency dictated by the profitable demands of a free and unconsolidated marketplace.

Shorting the Economy

December 14, 2008

As we follow the oscillating valuation of capital assets with the advent of various retirement vehicles, massive pension funds and independent management of a person's savings, we have come to know the tricks of the arbitrage trade in a very close and personal way.

We have come to know the technique of short interest, for example.

First to be recognized is that there is no lack of savings. Americans save plenty and spend on credit to prevent the peril of the paradox of thrift. Conservatives argue, with a deceitful insincerity, however, that we should all save more when the acceptance and application of their policies and programs have acted to consolidate the savings (the capital) into their personal property by means to be discussed toward a fitting solution.

The fitting solution, amidst the current complexity of largely ideological solutions, is the rationalism we are all equally conferred by the good grace of God if we should be so wise to choose: a progressive tax code that finances an assured competitive multiplicity of the marketplace in priority, minimizing inflation, maximizing employment and a distribution of wealth and capital that effectively prevents manipulation of prices and markets through mass movement of consolidated capital and the crisis it knowingly and willingly causes.

"Quantitative easing" by the Fed is supposed to increase the money supply to add the lost liquidity--the value of The People's savings assets that have been consolidated into ownership of a few wealthy elits and their corporates--and alleviate the peril of the paradox of thrift.

The savings is of plenty. The problem is that it has been consolidated--horded, engrossed (the antithesis of a free market)--with the credit needed to drive the economy not in short supply but being deliberately withheld, shorted, deliberately causing crisis.

Our economy is deliberately shorted (deflated) in a neo-classical, keynesian, way. The end result is classical capitalism. The means is neo-classical.

The technique of shorting the market, selling high and buying low, requires an investor reserve (extra capital) because the potential loss can be more than zero--like being upside down on your mortgage. On the marco scale, wealthy elits that have the consolidated capital to command prices and markets, and thus the economy, have the exclusive reserve that commands the exclusive (class) benefit acquired at the cost of non-elits. The overall effect, both classical and neo-classical, is to short the economy. Your class status is defined by what side of the short sale you are on: whether you have bought dear and have to sell cheap by what you are told by the technocracy is a natural, non-anthropogenic cycle of boom and bust that is the paradox of thrift and the business cycle.

For plutocrats, this scenario is the very highest form of financial sophistication in which complex investment devices, like strike-price option strategies and various Ponzi (pyramid) schemes, give the appearance of pluralism or a stable diversification with a popular legitimacy of self-determination. It is the most sophisticated means of consolidating power (by shorting the economy) and making it look like the expropriation of value that confers the power was not deliberately expropriated but a "natural" event of the paradox of thrift. It is force majeur, so the argument goes, not a deliberate act of conferring detriment with an immoral import.

The scenario closely approximates Nietzche's concept of the elite being "Beyond Good and Evil." Expropriation of The People's wealth and power is, thus, "the will to power" that naturally, and always, enslaves the weak and rewards the strong. It is futile, if not immoral, to resist it.

Elits, following the Nietzche normative argument, consider the machinations of complex political-economic technologies to be THE moral imperative. It prevents a difficult, often tumultuous if not bloody, cycle of toggling between models of consolidation and deconsolidation of power--the "higher understanding" conservatives claimed they had regarding the prospect of "spreading the wealth around" in the last presidencial election.

Not only is Nietzche's philosophy the mere musings of a madman, its acceptance or application defines the criminal element and the enemies of a civil society where we now see the imperial rule of a corrupt and abusive corporate, and those who aspire to it, bent on convincing us We are being exploited for our own good--the public good or the general welfare. It is a normative nonsense that has rightfully earned its permanent place at the lunatic fringe of the political-economic spectrum.

Whether Nietzche's normative philosophy is accepted in priority, or applied in posteriori to its practice, the argument, in theory or practice, is a function of choice, of freedom. We are not determined to a "natural" existence of subordination to "the will to power" by those that aspire to subjugate and exploit. We The People will to power a self-detrmination by Natural Right, not the will of a power elite. One accepts freedom, the other accepts (chooses) tyranny.

The republic is not bestowed and validated by the heavy hand or inscrutable organized complexities of a power elite, but confirmed by the pluralistic, democratic means of The People's will to power. It is a republic that allows for a peaceful prosperity by means of continuous improvement, recruiting and organizing the talent of leadership in a continuously accountable process of verification and progress, not a continuous process of improving the means of applying tyranny and a validation of its legitimacy in posteriori that is speciously "Beyond Good and Evil."

While we tend to discount the value of philosophical analysis in the age of science, we ignore that our political-economic modeling fits a particular philosophical construct that comes to be a practical philosophy of a structurally self-fulfilled prophecy.

It is high time to assure the model of a peaceful and prosperous pluralism structured into the security of a prophetic philosophy sustainably self-fulfilled by the deliberate self-determination of The People.

Utopia is only what is not allowed to happen deemed to be the impossible.

Short selling the economy is an organizational technology continuously innovated in various forms to consolidate power and subordinate The People to those that have "the will to power," as Nietzche describes it. Rather than the "will" to power, however, it is more the "means" of power that is the determining variable.

Organizing the republic so that the will to power is subordinated to The People is not impossible, or unnatural, it is not allowed to happen.

It is time to choose the means of freedom for All The People, not just a few described as having "the will to power" and who will organize to short sell the means of self-determination and call it the natural cycle of doing business in the name of freedom only to defile the righteousness of the concept to solicit the acceptance of tyranny.