Raise My Rent (The Fully Assumed Risk of Loss)

When the President announces increased margin requirements for energy speculators, by executive authority of the CFTC, he is raising the rent. There is a fully assumed risk of loss that has been pulled into current account, but we have to remember that speculators are flush with cash.

With repeal of Glass-Steagill the financial sector consolidated and Wall Street speculators literally have money to burn (money used to cause economic problems consolidation is supposed to avoid if not prevent). Functioning as one big investment bank (which is an organizational model that led to the Great Depression and the Glass-Steagill Act), money is being borrowed from the Fed at near-zero rates because the Great Recession has demanded it to pay the rent.

Increasing the margin requirement makes a highly exclusive market an even more exclusive domain, which raises the rent, not on speculators, however, but on the victims of the Great Recession who have had enough already!

Raising the margin requirement for Bank of America and Goldman Sachs does not in any way retribute the value accumulated. Instead, the capital formed from the overextended, deflationary risk (the liquidity crisis) of '08-09 is being horded to squeeze more and more rent out of the 99 percent using the Fed's current accounts. This, you see, is not banking--it is not a business model designed to meet consumer demand in the marketplace, adding liquidity to buy homes, refrigerators and dishwashers--it is racketeering. It is a bunch of gangsters dressed in pretty suits, looking prim and proper, going to church on Sunday.

Rather than making markets that are more distributive (more efficiently risk averse), we have markets being made more accumulatively retributive. The Great Depression, for example, was the price (the rent) inevitably paid to retribute the accumulated risk-value.

Despite our quest for dominion, nature will retribute value on demand. This does not mean our fate is determined in priority, however. We choose whether the fully assumed risk of loss is organized and managed to express in a catastrophic proportion or not by identifying moral hazards, which are best determined by empirical method rather than, for example, Ayn Rand's Aristotelian logic, which leads us to a theory of markets efficiently structured to administrate from the top down rather than empirically "on demand" like in a free market.

(Remember that maintaining a free market in priority economically retributes value in small, political proportions rather than large, catastrophic proportions that demand executive administration of power to control the rent on command. See the article, "The Bureaucratic Model of Power and Political Economy" on this website.)

We have the power to determine our natural fate in the future, and this power is being used with a quantum expertise that cannot be in any way considered ontologically exculpatory and non-retributive. Quite the contrary, our future is highly predictable, and rather than being beyond good and evil, it is an objective reality deontologically determined, loaded with moral value that is empirically verifiable and completely culpable.

Supposedly, futures markets are operating to manage the assumption of risk (loss) by hedging it, but what we see is the risk being manufactured (recreated or transformed) in the dark to predictably occur (transfer) in the future to make a profit (the process referred to as "creative destruction"). Capital is gained (that should not be taxed because it kills jobs) by timing the market with predictive efficiency--thus, the theory of "efficient markets," which is administered, not "on demand" by We the People, but by means of executive authority.

Empirically, "We" have found out again and again that administration by executive authority, even when posed as free-market efficiency, accumulates value to be retributed. We rediscover, again and again, why the Revolution occurred--because economic risk managed by executive authority is always catastrophic!

Efficient-markets theory has been such an obvious failure that even right-wing conservatives have gone radical (which indicates the risk is going gamma). Despite the Tea Party movement, for example, we don't have Revolutionary results because the power structure is too consolidated, which makes the value accumulated even more retributive and the risk even more catastrophic if we don't move to deconsolidate it in priority.

Margin requirements and position limits do not deconsolidate the risk, and if this is the best we can expect, then the risk of loss is fully assumed without failure of expectation.

(Remember that failed expectations are essentially the quantum value of the risk proportion. If efficient markets are supposed to reduce retributive value but the result is the Tea Party movement, the risk, rather than being managed in small, divisible, non-catastrophic quanta, is being intentionally managed as catastrophic, indivisible, quantum value that technically indicates the objective.

The gamma-risk proportion is a fully assumed value, and so, with all due reason, proponents of consolidation argue, it is best to manage it with skillful, technical efficiency, which is the domain of higher authority.

We expect the risk to go gamma and determine how the rent is paid on command. As an expected value, elite authority legitimately determines how the risk is attributed, which determines how the value objectively retributes emerging from a crisis proportion.

After the Great Depression, for example, value retributed in the form warfare and began distributing in the form of welfare to avoid the accumulation of a risk proportion that led to the Great Recession. Since, obviously, welfare alone, and monetizing the debt that occurs, doesn't work, deconsolidation is apparently the missing value. With the Reagan revolution, however, more value was given efficient-markets theory in which the accumulation of value--America being "a place where a person can still get rich," as Reagan described it--is considered non-retributive.)

From the Great Depression, the value of the risk retributed until the Reagan revolution. By the end of the Clinton administration the correction was fully reversed with the repeal of Glass Steagill, allowing risk-value to again more fully consolidate through executive management using the "theory of efficient markets."

(Since how big a business grows is the measure of success, the economy never fully deconsolidated after WWII. Despite knowing the risk, large corporates actively pursued inorganic growth. The predictable result is inflation and unemployment that requires the acumen and arcanum of an administrative, technical elite to manage with efficiency.)

Using this theory of "efficient markets," in keeping with the working model of consolidated capitalism, markets are made to be volatile and prone to crises, creating the opportunity to make money. Supposedly, operating with so-called market efficiency, plenty of money is made to pay the rent--paying off the public debt, for example, which is repeatedly disconfirmed because it always, knowingly, overextends the rent into large-scale risk proportions, adding to the budget deficit. Being risk-prone, by default, shifts the fully assumed risk of loss to a time determined by exclusive market activity (the efficiency), which consolidates market value, makes markets accumulatively more retributive, and predictably more risk prone.

While risk cannot be rendered non-retributive, there is a point at which the risk is non-transferable. It is the risk fully assumed in priority.

Non-Transferable Risk

The fully assumed risk of loss (transformed into predictable use value, using "risk-transfer vehicles," for example) is the retributive value that capitalism considers to be non-retributive.

As value is being conserved in historical perspective, quantum mechanics reveals there is a phase transition that accompanies a change of state (like a resurgence of market consolidation before deconsolidation occurs). A fundamental, existential reality is revealed in which, instead of being and nothingness, there is being and somethingness to which all things retribute.

(When conceptualizing retributive value and non-transferable risk, consider, for example, the Pythagorean, base-ten number system. Analytically, the number 10 is pluralistically meaningful while, at the same time, holistically, it is the quatum, non-transferable value 0 from which the relative value of all the other numbers derive and to which they all retribute.

Retributive value is empirical, comparative value in which to measure, or reference, objective reality. It is the value that politically and economically measures the angst of our natural existence, tested by the strength--the virtue--of moral intelligence that exists in priority along with the fully assumed risk of loss.

Catholicism, for example, conceptualizes the fully assumed risk of loss as "original sin." It is value that represents the human condition in priority and the suffering a person knows will be bourne by living a moral existence.)

In the late 19th and early 20th Century, robber barons told us that capitalism marked the end of history in its consolidated state. John D. Rockefeller, for example, considered a free market to be "wasteful and inefficient" if it is not consolidated into elite management and control. Two world wars later, we reconsidered the value of managing reality in the image of elite objective and deconsolidated the risk proportion with the Glass-Steagill Act, which rendered the value to be retributed divisibly smaller and less catastrophic, more like a free market.

(Keep in mind that the objective was not to eliminate poverty but to make it less severe. Social Security, for example, is administered to manage the retributive value--the angst, the affective, psychological condition that foments the revolutionary spirit and transforms the fully assumed risk of loss into objective reality.)

While retributive value is a psychological component of risk, it has real, quantum value that can be measured and managed. When big business consolidates to manage risk (what is called "networking the externalities"), the efficiency produced is in the form of retributive value that capitalists want to ignore, and raise my rent.

Ignorance is bliss until you realize the risk (the price, or rent, to be inevitably paid as a consequence of action taken). When conservatives react by vilifying liberal reactionaries for waging class warfare, the quantum value to be retributed is not being ignored. It is being binomially managed in the gamma-risk dimension to conserve the accumulated value of the risk in historical perspective.

(Remember that while capitalism operates with ownership of private property, we don't really own nature. It owns us. We just rent it. When we use natural resources--labor, for example--to a detriment, because it is bought and paid for and so we can use it any way we see fit, and nature exacts retribution, we pay the rent.

The risk of loss is fully assumed. It is not a matter of if, but when, and managing the value to be retributed is a political function; something that a free market, for example, manages with a risk ontology that is free, open, and operates with immediate accountability. In opposition is a government apparatus that slowly cycles and recycles the risk proportion with limited accountability and late-order effects that can be described and explained with changing attributions.

With an authoritarian, political-economic regime--rather than simply buying or not buying in the marketplace to politically sanction by means of adverse selection, which has the effect of converging natural and positive law--market participants are presented with causal, risk factors that appear ideopathic, non-local, and thus non-retributive. The unknown quantity of causality is managed politically in the gamma dimension where it gains causal attribution, and regardless of the attribution, typically ideological, the rent will be paid on demand.

The attributive value will transform into retributive value, and without recognizing the quantum value that primarily causes the effects, we can always claim ignorance, if not stupidity, when bad things happen, like the Great Recession, without apparent attribution. Ideopathy then reduces to the absurd where psychopathy thrives as declarative knowledge of objective reality, occupying space in the gamma dimension where value is not in any way protected from its fully assumed risk of loss, but progressively more likely.)

The political management that occurs is an extension of "networking the externalities" so that when the consequences are shifted for future consumption it is not immediately apparent to consumers that the rent has been raised. Distracted with all the political gaming to apply attribution, consumers are subjected to fundamental attribution error and the accumulation of error will be impulsively managed into a corrective wave that will pay the rent. If we bank on ignorance, if not stupidity, we are sure to get what is coming to us in an oversized proportion.

It is not necessary to accumulate retributive value into an oversized proportion by organizing to avoid it. Since the risk of loss is fully assumed, it is best to manage the risk and let the corrective wave occur in a smaller risk-dimension.

In the alpha-risk dimension, a free market manages the corrective wave in small proportions. Risk, rather than being eliminated by objective, is conserved in a freely transferable and non-catastrophic state, free of phase transitions (sudden inversions) that affectively distort the position and the probable, future value of the risk with irrationally impulsive waves (greed, fear, and the resulting anxiety of avoiding the fully assumed risk of loss).

Non-catastrophic market risk requires the direct, integral value it yields not be derivative in late order and considered non-retributive. It cannot be allowed to consolidate and exchange in exclusive markets where the value derived gains a non-retributive attribution because nobody knows how it works except the experts--the people that cause risk events and thus are always positioned to profitably avoid, and verify, the retributive value.

In a free market, the value produced and consumed is immediately retributive with little or no error of attribution, and what error does impulsively occur is quickly corrected to conserve the reward (the value) integral to the risk. Rather than accumulatively derived and fully assumed in late order, the risk is fully consumed (fully retributive) in a short-order, non-catastrophic proportion.

Without fundamental attribution error, risk aversion transforms into risk adversion--the risk has a real, immediate, and objectively verifiable measure. It has adverse value to which capitalism has a natural aversion and so consolidates to give the value a non-retributive attribution that distributes the expected adversity (the price to be paid) in late order (fully assumed to occur sometime in the future). Anxiously, we know risk events will occur...but when?

Creating uncertainty over the timing creates an irrational, impulsive psychology of the risk proportion. Risk that is not politically managed with a free-market ontology tends to impulsively consolidate and overextend in order to avoid it, which is a fundamental misattribution of the risk proportion.

As soon as capital is allowed to consolidate, the error of attribution occurs. The fundamentals, while being descriptively maintained as declarative knowledge about the way things really work, appear to work in unpredictable, non-fundamental ways. The unpredictability is the timing factor (phase inversions) within the occupied space, which is the "opportunity" (phase inversions transformed into phase adversions) that Mitt Romney refers to when he describes and explains what it means to be free in America.

Phase Adversion

It is easy to predict the location of the detriment at any particular time if you have the power (the freedom) to cause it. By being organizationally risk-averse, capitalists tell us, risk is not eliminated but it is possible to render it less adverse if we organize to reduce the rent--specifically, if we render labor value competitively disinflationary against rising prices by consolidating the capital. It is no coincidence that this increases deflationary risk, which provides the opportunity to cause the risk supposedly being averted and the property adversely possessed.

Consolidation does not make risk more averse (more avoidable and the rent more affordable), but it does make it more adverse. It is prone to crises proportions in which debt (retributive value) is surplused and managed through an over-extension of monetary and fiscal policy. The overextension causes inversions that phase the market risk into adversity (you know the old saying...just hold your losses until the correction occurs but, of course, the correction won't occur until you have realized your losses).

Occupying the available policy space, the effects of monetary and fiscal policy gain a causal attribution, and so the reaction is more risk prone than averse. Error accumulates, having an overall effect that is adversely selective. The system is designed for failure, which for the capitalist is the opportunity to "make money."

Despite being "the job creators," capitalists admit that they are not in business to create jobs, but to make money. The more money they make, they say, by causing unemployment (adversity), the more jobs will be aversely created (working more for less to avoid being unemployed) as capital is consolidated to avoid the adversity. Eventually the derived value (the cause) becomes so retributive that government gets into the job-creation business and inflates the money supply (the effect), creating jobs in the form of debt, which makes money through rising prices (higher rent).

The more consolidated the capital is, the more value can be extracted from labor (unemployment) while continuing to raise prices (inflation). Deliberately structuring value to derive from detriment is why modern economists measure labor value as consumer demand--a phase transition that has attributional value.

If labor value is identified as "expropriated," then the analysis admits that the rent is too high. Economists, however, want to argue that the rent is too low with the objective of raising it in compliance with their sponsors (the consumer) on demand.

Since the value is managed by objective, the effect is neo-classically described as "structural unemployment" because value that derives from adversity is non-retributive if it naturally occurs in predictable (and thus expected), algorithymic cycles.

Businesses (like Bain Capital) naturally cut costs (with money borrowed from the discount window) to expand the margin, and so when we hear that the current rate of unemployment is the "new normal" (i.e., it has entered a new phase) it is naturally endowed. It is an expected value along with the value adversely possessed and accumulated in the top income class who, as consumers, expect full compliance with their tastes and preferences on demand.

It is no coincidence that the "job creators" demand labor pay more rent than it can afford, which has the predictable effect of declining consumer demand. The diminished capacity for self-determination (rising prices against declining income) is not a risk of loss fully assumed, but is because consumers choose to overleverage their incomes.

We are all consumers, but most of us spend ourselves into adversity (trying to achieve class mobility without the income that determines it). Assets are adversely possessed by default, and consolidation naturally occurs, because consumers demand more than they can afford to buy. Net worth naturally diminishes because the rent is too low, not because it is too high, and so we need the Romney-Ryan plan, which is sure to raise my rent!

If labor value is considered consumer demand, the analysis can ignore the integral value of labor to derive the benefit. Debt accumulates because consumers are spendthrifts (because they demand it), not because labor is not paid enough to consume what is produced. Consumer theory of labor value tends to attribute the source of accumulated value (inflation and unemployment) to profligate consumer spending (quantum self-determination), not the detriment deliberately exacted in the form of hyper-extended debt, which measures to the penny the value (the distribution) needed for "consumers" to truly self-determine.

According to the proponents of managing markets with an economy-of-scale efficiency (the "efficient markets" theory), inventories are not deliberately managed to command high prices. (The theory of efficient markets, remember, according to Greenspan, for example, does not allow for fraud but, nevertheless, led to a massive accounting fraud and the Great Recession.) Supply gets low because consumers demand it with debt. The argument can then be made that labor is extended too much value and that consolidation of industry and markets is necessary to control consumer demand (by raising the rent). Businesses gain an economy-of-scale efficiency (and cause inflation and unemployment that capitalists blame on government intervention) to conserve scarce resources (with prices rising at a higher rate than labor is paid to demand it), not to conserve the accumulation of wealth that derives from the adversity (by causing default).

Never mind that consolidating power and raising the rent causes default. What the king did in the name of divine right we now do (inversely) in the name of natural law and market efficiency, conserving the retributive value in historical perspective.

The system we have now, called capitalism, has been structured to turn criminals into kings. Often referred to as gangster capitalism, the implication is that the structure lacks moral content. If we just had the moral content, supposedly, then we will structure for the moral content capitalism requires to be the benign and benevolent form of organization that it is touted to be. There is really nothing structurally wrong with the way capitalism tends to organize, so the argument goes, it's just a phase we're going through toward full maturity and self-determination.

(Keep in mind that the measure of power--the capacity to self-determine--is the retributive value. For the king, if the value consolidated is not retributive, he is not powerful, and the measure of that is the demand to demonstrate it when, for example, his subjects become restless, revolutionary, and want to occupy his space.

The reason the Fed is opaque--its proceedings during the 2009 financial crisis being, for example, highly redacted for public consumption--is because the value it produced is highly retributive. Allowing information to be freely accessed is to share power, which is why it is structured for its classified consumption with the force and legitimacy of public authority.)

Structurally there is the incentive to cause detriment--it is necessary to consolidate (conform) in order to be successful. The moral sentiment that capitalism requires at the macro level is lost to providing for one's family, for example. The value of probable detriment is accumulated at the quantum, micro-level of calculated risk (heuristic self-determination) which requires buying-in to the philosophy of risk that postulates consolidation is the model of efficiency (expands the pie) and deconsolidation is a moral hazard that causes deflation and unemployment.

Realizing that deconsolidation causes disinflation (rising buying power) and rising employment (the need for less government) requires a kind of quantum leap in the moral realm--a structural unification of theory and practice (a transitional, phase adversion) our political-economic system is conceptually modeled, according to ideological principles, to prevent.

Moral sentiment is a string-like entanglement. A probable, structural change at the general, relative level is constantly implied by the moral position observed at the quantum level, and is essentially what is meant by "the risk of loss fully assumed" in the gamma dimension.

When value accumulates and consolidates, instead of actually applying democracy, a free market is used to apply a false ontology. The outcome is the result of consumer demand, but not necessarily popular consent.

In order to prudently regulate in a free market, the prudent regulator requires income, and the more income acquired the more ability to regulate--to govern--with a prudence that is self-determined.

There is quantum incentive at the macro level to determine the self in conformity with the perceived, relative, value of the risk. Conformity to that value is used to falsely confirm the critical, relative-quantum value of popular consent (the naturally occurring gamma risk) in which the risk of loss is fully assumed.

The relative-quantum value to be controlled to the point of critical mass is the prudential regulator who when allowed to be radically free will adversely phase the status quo into current account. It is necessary, then, to keep the account transitionally phased into probable value, which the Fed, for example, along with the CFTC, assures is a risk of loss fully assumed in the future.

We are forever being offered two possible choices--regulation or deregulation. Again we see the necessity of reducing policy to a binomial space...a dummy variable that over time ensures the stakes (the risks and rewards) are systematically structured to be conserved.

With the risk of loss always fully assumed but never fully consumed, there is the appearance of stability through probable change. Being cast into a binomial variation, quantum change occurs over time while occupying the same space. Consolidating risk into that space, rather than expanding it in the alpha dimension, only renders the appearance of stability. Although it is not an objective reality, the outcome of the dummy variation has both the deliberative, prudential legitimacy of a due process while, at the same time, the risks and the rewards are conservatively self-regulated by limiting the possible, policy options.

Binomially limiting the options to more regulation or less ignores the quantum value (the risk proportion) of the prudent regulator. It allows for change without ensuring the capacity for self-determination (self-governance) in the alpha dimension.

Deregulation, keep in mind, does not yield alpha risk. The risk consolidates even more unregulated, gaining higher entropic value, becoming evermore entangled with the need for government. Thus the need to locate one's self-interest there, occupying the space of good offices to command and control risk rather than prudently demand and regulate it, democratically, in the marketplace, entangled only with individual tastes and preferences, directly applied with low entropic value.

Deconsolidation will result in deregulation by empowering the prudent regulator in priority.

The alpha quantum is a function of deconsolidating the risk proportion, not its regulated and deregulated consolidation. Once the alpha phases in, its value will locate over time within the space occupied by government. The fully assumed risk of loss will be functionally adverse--resisting, rather than supporting, rising rents.

Constant Coefficiency

When consumers can fully sanction risk producers (having equal capacity to say "yes" or "no" to price, quantity, and quality), we can say that the risk proportion is co-efficient. Both parties have equal power to provide and deprive, but as soon as producers are too big to fail, the co-efficiency loses its equilibrium and detrimental value accumulates in the system.

Throughout the articles on this website, risk is described and explained as a coefficient constant. It cannot be increased or reduced (created or destroyed) but it can be accumulated and distributed.

The amount of risk remains constant but varies coefficiently with reward. This is what it means to say that the risk of loss is fully assumed--that it cannot be avoided. Avoiding it accumulates reward but also accumulates the risk associated with it coefficiently. If the value accumulated is disconnected (shifted to unassuming parties), it will be retributed (re-assumed) one way or another and this retributive value (the risk of loss fully assumed) is the coefficient that keeps the value constant (the unavoidable ontology of the risk proportion that is referred to in these articles as the retributive value of the risk).

Our founders, for example, operationalized the concept of risk ontology and retributive value with a revolutionary form of government to peacefully process pluralistic tendencies (the risk of loss fully assumed) into productive capacity. This capacity--a legacy of legitimacy we struggle with today--included a continuous debt proportion to keep the revolution productively revolving rather than slumber into static coefficiency (low demand due to liquidity crisis like we have now). Since the system always coefficiently tends to equilibrium (the efficient-markets theory), value does not accumulate retributively and cause crises as long as government does not interfere with its inherent efficiency. Thus, according to Hamiltonians, when crises do occur it is because government, not business, is too big and powerful, which is the hypothesis we struggle to confirm today as both business and government get coefficiently bigger to manage risk in a disfunctionally too-big-to-fail, crisis proportion.

The crisis we are experiencing now is technically philosophical. The Hamiltonian model of perpetual debt emerged into the 20th Century as a monetized risk proportion that, technically, conflates with traditional, conservative principles to form a cognitive dissonance (political-economic uncertainty) struggling to be resolved. If technical analysts want to achieve predictive utility, it is necessary to identify and assign probable value to the source of the uncertainty. Normative valuations that are considered to be apodictic principles (like welfare causes unemployment) can no longer be taken for granted, which is to recognize the ontological value--the constant coefficiency--of the risk to the reward.

That risk cannot be increased or reduced (created or destroyed) but it can be accumulated and distributed is the crisis of psychological dissonance struggling to be philosophically determined.

Are we ontologically or teleologically determined? If we cannot self-determine, then freedom is just an illusion and we are condemned to a coefficiency of probable risk that Schumpeter described as "creative destruction." At this point, such a hypothesis is evermore dismal as we are being told we can't get rich without cutting back on government programs that keep us from being poor. The dissonance is overwhelmingly dismal and appears to be philosophically unresolvable.

Take the philosophy of government, for example. As we debate the size of government, budget deficits and debt, we tend to compare it with household budgeting or running a business. Of course, neither a household or a business is managed by the consent of the governed. For the most part, they are legitimately managed, and fully sanctioned, from the top down. While many of our leaders would like to make our government operate like a household or a business, it Constitutionally does not. Thus, the recent call by Republicans for an amendment so that it does legitimately operate, and fully sanction, from the top down.

The reason Republicans object to new regulations that require over-sized financial institutions (SIFI's) retain risk is because that is how they do business. It is a patented model of success. Entrepreneurs indeed patent business models that derive value by causing detriment, and these models are "successful" because the value derived is disconnected from the risk in a too-big-to-fail proportion from the top down. Risk-retention requirements do not, of course, solve this problem.

Firms that are too big to fail are "too big" to fail (the risk is coefficiently constant, and in this case, constantly detrimental to a fault). It is ridiculous to say institutions that are too big to fail will be allowed to fail. It normatively values detriment and utilizes angst as a means of exercising power from the top down rather than the pursuit of happiness pluralistically self-determined from the bottom up.

Technically, conservatives claim truth cannot be compromised, and because the masses do not understand why it is better for our nation not to compromise conservative, philosophical principles, it will have to occur without its consent. Hence, the value this consumes is fully retributive--it demands strong, authoritative leadership to resist the natural, pluralistic coefficiency of power. It is a full-blown, Constitutional crisis of legitimacy that has been stewing for over 200 years (and if our technicals are fixed to the VIX and contrary, it only indicates we have assumed too much, or maybe not enough).

The incentives that govern the direction of the risk perversely align to surplus detriment into a cataclysmic, crisis proportion.

It is wrong to assume the system can be maintained in a perpetual state of disequilibrium. The inequity accumulates into an ever-larger proportion of debt-to-equity like we have now. It is inherently unstable and trying to fix it without deconsolidating the risk proportion only makes the value being accumulated more retributive (more unstable)--it exacerbates the problem making the system even more prone to crises.

Consumers being culpable for assuming risk they cannot control is clearly a false assumption--it is illegitimate.

Without reconnecting risk producers with consumers we will continue to slumber with slow demand. As long as the incentive to produce (taking risk) is not aligned with consumer demands (as long as it is not deconsolidated), the economy will continue to operate to derive value by causing detriment.

As long as producers are making risk instead of taking risk--offsetting and accumulating risk to be consumed rather than adding supply--the risk of default looms ever larger.

Avoiding default is not as simple as raising the debt ceiling. Nor will raising, flattening, or cutting taxes and entitlements actually reverse the trend to default. It's like hitting yourself in the head with a hammer. Just because you switch to a bag of beans doesn't mean you won't have a headache, and it's just a matter of time until you beat yourself into a coma.

In order to cure the problem we must reconnect (retribute) the risk to the profit makers who falsely claim to be risk takers and thus claim that the reward is legitimately earned (i.e, that the risk has been fully consumed by taking it, which is verified by producing a profit or not). This is not a function of risk retention. It is a function of risk taking. Risk can always be cleverly offset and yet be falsely attributed to making a profit. It is just another version of the same problem--offsetting risk rather than taking risk and adding supply to make a profit.

In order to cure the problem we must deconsolidate the risk proportion. The risk has become so consolidated and disconnected from the profit that the disease--more consolidation--looks like the cure.

So that we do not continue to try and cure a hemorrhage with bloodletting, we need to look at some examples of how the risk is disconnected to cause detriment cleverly disguised as benefiting the victims.

The "New Normal"

Treasury secretary, Geithner describes the "new normal" of the business environment after last year's liquidity crisis to indicate where we go from here. The implication is that the well-trodden path is to somehow be different.

With unemployment continuing to rise, more foreclosures in the offing, and continued consolidation of net worth, the "new normal" is the old Keynesian reinvention of the old classical model and dynamics of capitalism. Nor is the global economy anything all that new.

The type of modeling predicts future trends.

Capital, industries and markets will continue to consolidate into the business model of "too big to fail" which bodes well for earnings and explains the steep rise in equities despite the prospect for economic recovery being very bleak by the same measure.

It used to be, classically, that earnings will not improve unless there is a distribution on the accumulation, causing employment. The gamma risk was virtually non-existent. Now, however, neo-classically, the money supply is maintained to allow for profits to lead employment (refered to as "capital formation") in a stagflationary trend. It is largely the result of managing a burgeoning gamma risk that is the "demand" for government action, substituting for the lack of demand (a deflationary accumulation) in the marketplace.

Geithner is indicating that, despite the rhetoric for a high gamma risk, the classic macro model will be the predictor for micro trends.

Since the classic model calls for continued accumulation, a double dip is highly probable. The gain in equities will retrace by at least half.

A macro distribution will not occur and pull the economy out of recession until commodities reflect the fundamentals with another sharp dip that will sustain a disinflationary trend and bring the consumer's dollar back in to support a secular, macro recovery instead of supporting the accumulation phase of a classic cycle.

What is new, or neo-classical, is the size of the money supply. It is so large that its consolidation allows just a few large entities (too big to fail) to manipulate, if not command, critical global markets, like energy, and cause the length and breadth of trends (and if you can cause it, you can certainly predict it).

M&A activity will increase in the second dip, indicating the end of the accumulation phase of the business cycle and a secular bull market to give the mergers and acquisitions value.

When the retributive value on so much value accumulated gets so high that the gamma risk becomes critical to profitability, commodities will lose support and a macro distribution will occur. Maintenance of the organizational model, and the big earnings, of being too big to fail gets support. The support will be the "ethic" of the marketplace despite Geithner's call for a "new business ethic" to guide us forward.

Ethics is mere rhetorical legitimacy if the economy is organized for command manipulation. The ethical reality, the legitimacy, is just whatever the outcome is (a false ontological legitimacy of the ends justifies the means as opposed to a true free-market ontology in which the means justifies the ends). The outcome is mitigated by rhetorical artifice and lengthy political processes resulting in apathy and anomie, reducing the gamma risk without reducing the retributive, economic value, which would defeat the value--the purpose--of the practical (predictive) dynamic model.

A distribution phase that reduces the gamma without retributing the value puts tension in the system to be managed. The result will be stagflation into the next crisis as the Fed and Treasury manipulate the neo-classical, Keynesian money supply to accommodate (resolve) low inflation and high employment within a deflationary (accumulative) organizational model of too big to fail.

What ultimately fails, and is resolved, is employment, accumulating the retributive value, strengthening support for the gamma risk, bringing the preferred organizational model into question. The risk is not likely for at least the next four years, and the market trends will be very similar to the last four. Hardly a "new" normal, just new gamma-risk rhetoric to support the norm.

Controlling the Future(s)

Big or small, the investor is looking to predict the future. Big investors, like hedge funds and private equity firms, can control trends--a sure predictor--in spite of the technicals.

The effect, the intended result, is the small investor, the small business, the small income at the mercy of big, consolidated capital, inimical to a free-market economics.

The data generated by the small investor is easy to track by big financial firms. The technicals that the small investor relies on to divine the future are easily manipulated to create "surprising" market valuations that are based on the position of the small investor.

A "surprise" means you missed it and will not share in the wealth. Rather you will have lost value, if not directly, indirectly so that you will not properly associate the cause with the effect, the cost with the benefit, the profit with the loss.

Without a proper correlation of cause and effect there is no proper accountability. There is no legitimacy "demanded" of the outcome, the intended effect that is not supposed to be legitimately commanded.

If you are playing poker, the player that stacks the deck, deals the cards and knows what everyone in the game is holding is always likely to win with the legitimacy of the law of averages. The player in command of the game induces and accumulates a retributive value, a risk, that must be managed which includes keeping the other players in the game with a false legitimacy, like just being lucky.

If the small investor goes long, big money managers go short... and so we have the recent move to limit naked shorts by regulatory decree, for example, to defend a free-market legitimacy of the outcome.

The element of surprise also presents in the irrational valuation of derivatives, like commodity futures, which affects (supports) their "derived" equity valuations in an upward trend while demand is being reduced to support (effect) a deflationary trend. Combined with the ease of monitoring who owns what when, the small investor technically does not stand a chance.

The result of the action of this consolidated capital is, as the evidence of late clearly demonstrates, a massive reduction of net worth and further consolidation. Technical corrections for the result in posteriori by government decree (what conservatives argue is inimical to a free society and economic growth) only serves, as we see, to support the macro trend of consolidation.

For conservatives and the neo-conservative opposition, it is a win-win outcome. The allowable political choice is two types of conservatism that conserves the consolidation of wealth and power by administration of Ivy-League Hamiltonians.

Despite all the "hope" for "change we really need," the future of a consolidated capital is being technically well conserved.

Consolidated capital operates with inequity that naturally causes crisis and dispossession. The massive loss of net worth by the vast majority of Americans has been accumulated (consolidated) and used against them in futures markets to "defend" a command position and support the deflationary trend.

The consolidated value is now being prepared to be resold, distributed, at a profit. This value added will be falsely characterized as economic growth. It is a zero-sum loss (a detriment) shammed as a collective benefit (the accumulated profit). The benefit is not collective if it is accumulated, or exclusive. It must be distributed to be inclusive.

The distribution on the accumulated profit (reducing the surplus of supply that supports the deflationary trend by increasing demand) is the investment that fuels the recovery and provides the false collective benefit of providing for economic growth, which is not growth at all. It is a "recovery" (a distribution) of what had been lost in zero-sum in order to sustain the process of the business cycle in a state of disequilibrium--an inequitable distribution of income that defeats the equilibrity, and collective legitimacy, of the free-market mechanism.

The cycles provide the recurrent crisis and the business transactions necessary to consolidate wealth and power. The transactions, the buying and selling, gives the process a collective legitimacy of market mechanics. Without the demand dimension being the full determinant, however, it is a false collective legitimacy.

Where the command dimension is largely in operation, as it is now, the economy lacks a free-market legitimacy. It is necessary, then, to correct for the lack of legitimate power.

The gamma risk is operationalized with the retributive value that accumulates along with the consolidation of power (the illegitimate means to command the economy). It operates to manage the lack of demand economics--the free market, democratic dimension that provides a genuine, collective legitimacy of the process.

Technically correcting for the retributive value accumulated reduces (manages) the risk inherent to conservation of the command economy and the distribution of income that determines it.

The sacrifice of income that finances the zero-sum accumulation of value gains a collective legitimacy by operation of public process, mitigating the loss with the force and legitimacy of public authority. Without it, the legitimacy of the outcome is at severe (gamma) risk, and the means to the ends is technically corrected to manage the externality of the retributive value.

The retributive value accumulated on the current cycle is immediately about $2 trillion, which is about the value lost in net worth of the average income in the last quarter of 2008. The amount of deficit spending is quickly approaching that nominal value to correct for (mitigate) the accumulated loss to maximize conservation of the accumulated benefit. Thus we have the tension between the interjection, the demand, of the gamma risk and the imposition, the command, of the consolidated capital in a conflicted, volatile trend of deflation and inflation.

The recovery will be considered an inflationary trend by the Ivy-League managers of the consolidated capital. The result will be sustained unemployment and an aggregate effect of defending the value of the accumulation with a deflationary consequence of incurring the gamma risk (a disincentive for capital investment, being crowded out by public finance--deficit spending). The trend is thus in an almost complete command mode with capital moving into commodity futures to "hedge" against the inflating dollar by inflating the profit (the continued accumulation of income) without growth.

Administering this process of deprivation, of course, according to Hamiltonians, deserves a bonus because it provides for the public good (the sacrifice necessary for the consolidation of capital that finances the investment for economic growth).

Administration from the public sector in combination with the private sector, like the Federal Reserve, is to give the command a "demand" dimension.

The Federal Reserve saved us from financial firms that were allowed (a choice) to be too big to fail. The intended effect is coercion--extortion, racketeering--characteristic of a criminal element.

A free-market economy is supposed to be dominated by the element of choice (demand), not the element of having no choice (command). It is the very essence of freedom, or the lack of it--the legitimacy of power.

According to the Fed, we have no choice but to bail out the agents that caused the crisis and pay them bonuses to continue to use the bailout money in a manner that caused it, reinforcing the behavior because it is profitable. The consequences are fully intended to support the command structure of the economy and resist the democratic element of demand to form an elitist model of power: a bureaucratic model of power and political economy in which the public and private sectors are effectively merged to command and control, to resist, pluralistic, democratic tendencies.

If the economy is allowed to be in a demand mode, the consumer (the vast non-elite of "unbonused" if not unemployed) is the primary determinant of economic trend.

Instead, the sacrifice required to surplus the capital for investment is really being used to reward (bonus) the administration of the command mode. It is being used to conserve the consolidation of value in a neo-classical, neo-conservative manner.

The distribution by the public sector on the value accumulated is being operationally accumulated by the MBA, "bonus" bureaucrats in the private sector. The result is a stagflationary trend, keeping the economy out of a demand mode.

With each indication of recovery is a spike in energy prices. The data confirms that consumers are spending more than they make with these steep oscillations in price. (The short, sharp oscillations keep the profit high and the rate of substitution, as well as demand destruction, low, rigging the market for stagflation.) Continued erosion of net worth, and consolidation of that value, is the aggregate, intended result, always supporting the deflationary trend with a reduction of demand.

That reduction of the "demand" dimension results in a spike in bankruptcies, which has also been confirmed by the most recent data, further reducing the "choice" dimension of the economy with fewer small businesses and a reduced ability to pay, or to choose.

The unemployed sacrifice, suffering the deflationary demand reduction to provide, or finance, the benefit. The unbonused employed sacrifice as costs rise while their incomes decline, continuing to erode their net worth, financing the so-called collective benefit of consolidating the capital to achieve maximum economic efficiency (the economy of scale and networked externalities by horizontal and vertical organizational integration).

The collective benefit of the sacrifice is false. It is a zero-sum distribution. It is a loss with the vast majority of individual incomes incurring the detriment without fully participating in the benefit, rendered by a process of exclusion.

The growth, the purported benefit, is really not growth at all following negative growth with the supply having been "conserved" by the sacrifice of the excluded non-elite (the unsophisticated masses who willingly sacrifice without fully sharing in the benefit).

Conservation of the supply is critical to understanding the indirect scheme of consolidating value so that it looks legitimately unconnected and "uncommanded." This is where our Ivy-League economists tell us the value is forever lost, and not a zero-sum consolidation.

Supporting the deflationary trend by controlling the future(s), along with extracting the value by such incremental means as flash trading (which also manipulates the technical data), means the value of the existing supply is in cantango.

The value of the existing supply, because the investment to expand it is being invested to conserve it (the liquidity crisis), is realized, or consolidated, when the recovery finally includes the unemployed who must bid up a limited existing supply. The intended effect is to mitigate the cyclical decline in the rate of profit described by all classical economists; and so, neo-classically, we now hear pop analysts heralding the coming cyclical bull market with better-than-expected profits despite increasing unemployment...suprise!

Rising employment will be the fully expected (fully intended) unexpected, surprise premium (the zero-sum loss/gain) that the Ivy-League economists say does not exist.

The rate of profit is neo-clasically supported through the deflationary phase while resisting employment (demand). The inflation is not supposed to happen, classically, in the deflation phase because the demand is not there to support it.

Keynesian stagflation is the neo-classical result, allowing for profit margins that are to be unexpected without the demand (employment). It is really value that has been surplused and later consolidated so that it is not readily, immediately, clear where the profit is coming from. That inflation, that profit, is explained away as the capital formation necessary for growth, rather than the means of limiting growth (limiting demand) to increase the marginal profit.

The inflation will be deemed "fundamental." However, it will have been caused (commanded) by elite control of the economy, and that command and control will be extended to the Fed to control these "market forces" (the cyclical trend) toward a so-called collective benefit by increasing the interest rate, which supports the deflationary trend.

Increasing the interest rate is a regressive burden on incomes. People that must borrow to pay the cost of living (to demand in the marketplace) receive the debtor assignment on the public debt. By default they pay the debt held by those with the ability to buy the debt (to command in the marketplace).

Those with the greatest ability to pay are then, by legal process, those who are the exclusive beneficiaries of The People's collective sacrifice (Hamiltonianism).

The value of the recessionary trend was not lost. Consolidation of the value (the sacrifice) was just timed to appear disconnected with the benefit in the recovery phase of the cycle. That value is also expressed by conserving the ability to command who sacrifices to achieve the efficient formation of the capital.

After the sacrifice (the accumulation of the capital--the loss of net worth by the vast majority), the next phase of the business cycle is deflation. It is the phase the economy is in now.

In the deflationary phase, prices are pressured to fall due to the reduced demand (the sacrifice). Falling prices reduces the surplus, but does not eliminate it. Growth goes from negative to positive. The surplus (the sacrifice) is conserved and the process for expropriating the benefit is maintained to achieve the so-called collective benefit of so-called economic growth.

The recovery phase of the business cycle is then achieved in zero sum. The diminished surplus is replaced, not really adding supply.

Adding supply controls inflation. Disinflation provides the purchasing power necessary for sustained, positive growth, actually adding supply, improving choice, adding demand, reducing the command dimension of the economy.

Disinflation creates savings, which is turned into capital that finances growth and innovation in the pursuit of profit (the return on investment). Deflation is financed by negative growth--the sacrifice that reduces net worth in zero-sum. The value is accumulated to consolidate the wealth and power into an elitist organizational form that is to be systemically self sustaining, but not without risk of having to repay some of the benefit to its source (the retributive value).

The sacrifice necessary to keep the elitist form self-sustaining is what is currently referred to as the systemic risk. It is the risk of systematically incurring more cost than benefit with the legitimacy--the free will--of a collective process of self-determination, like a market system in which individuals choose to participate.

If by the necessity of participating in the marketplace to survive means having to be the one to sacrifice, or to be a non-elit, the pluralistic legitimacy is empirically failed. That incurs a "risk" to the value that finances the elite and conserves the surplus. There could be a "demand" for the illegitimately gained value to be retributed if it is not successfully organized, timed, and argued legitimate on the basis of economic efficiency.

The systemic risk is commanded and controlled by the elite of power through the market system and the business cycle in the name of achieving the highest economic efficiency--consolidated economies of scale that minimizes risk and maximizes the profit (the surplus of capital) for reinvestment. That organized largeness of scale also includes the co-operation of the public sector.

The non-elit participant, who pays the debt (borrowed from the surplus) and suffers the deflationary reduction of net worth that finances (conserves) the surplus, is greatful, relieved, that the value surplused is trickled down enough in the recovery phase to survive by the good grace, the noblese oblige, of the elite.

Relief of some of the sacrificial burden is systematically substituted for retribution of the accumulated value. It is just enough income to sufficiently pay down the debt, according to an arbitrary credit score, allowing for enough demand to reduce the surplus inventory (the sacrifice and the value to be retributed).

Suffering the deflatonary phase of the business cycle not only elicits an increased demand (a distribution on the accumulation) to support the value of the surplused inventory (matching demand with supply without disinflation), but solicits a demand to retribute the entire value of the sacrifice.

The demand for more participation, for more purchasing power (for more democracy), is a risk to conserving the distributional value of the system.

The systemic risk is controlled by substituting it with a gamma risk that is easily co-opted.

The latent demand elicited to retribute the value is transformed into a demand for elitist command and control. Congress responds with a technocratic delegation of extended representative authority who manage the risk without direct accountability to the electorate.

A lack of full accountability succesfully co-opts the demand for full retribution of the value into a technocracy for managing the risk and conserving the structure that commands the distribution of power and authority.

The bureaucratic model of power and political economy successfully displaces the natural demand for full retribution of equilibriating value. It is placed into the elitist realm of esoteric knowledge so that we must suffer deprivations for reasons we cannot begin to fully understand. This systemic induction of ignorance condemns us to a deductive systemic legitimacy of command and control for our own good; for the general welfare.

We are paying the people that act to reduce our net worth to continue doing it with our tax money because it is for our own good? Despite what behavioral economists say, this can only happen by force and legitimacy of public authority; by a process of command, not demand!

Critical to the cyclical command of the process is the legitimacy of the outcome: being defined as elit or not by process of surviving the business cycle, and whether you are a buyer or a seller within the recovery phase of the cycle. At this point the commanders are merely sellers in the marketplace; the commanded, merely buyers, freely engaged in the process of doing business, being retailed lost value and property.

Merely containing the elements of freedom (choosing whether to participate in the economic process or not) and market mechanics, the organized processes of consolidating capital and the business cycle is argued to be proof of a free-market system and not a command economy in operation. The necessary legitimacy is merely deduced from the elements being semantically present in the argument, not verified, or induced, from the evidence which, of course, tells quite a different story.

Timing the market (controlling the cyclical trend) is essential to the false legitimacy of a consolidated capital as a free-market system freely participated in toward a legitimate, collective outcome.

The longer the slope of the recovery phase, the more the consolidation of value and wealth looks like a "natural," undeliberate process with a free-market legitimacy of collective action.

It is necessary for the market process and the cyclical effects to appear legitimately free. The process must appear to be a product of self-determination instead of a tyrannical command and control and expropriation of ownership that can only be reacquired by borrowing from the accumulated value (being resold) by incurring a debt and the emblem of subordination.

The vast majority of Americans do not have to be slaves to the command and control, the tyranny, of a consolidated capital.

Deconsolidate it!

A highly progressive tax code and reinvestment of the capital to pluralize the marketplace without a huge debt either public or private will achieve "real" economic growth and a real freedom that conservatives argue is an evil tyranny to be resisted.

We hear all the time in pop media that the way to freedom and prosperity is the well-trodden path...the old, or conservative, way of doing things (toggling between Democrats and Republicans).

Believing the solution is the old way that always results in crisis is irrational. The only way to evade the fundamental simplicity of this truth is to convince The People they lack the elitist, secret knowledge necessary to fully understand that the best way to solve a problem is to ensure its recurrence.

The conservative argument is, then, reduced to this plausible absurdity: the problem is not really a problem at all, but a collective benefit that is erroneously perceived by the ignorant masses to be a problem because they must be made to sacrifice to achieve the general welfare.

The public good will not be achieved unless we are forced to do it, as the behavioral economists argue. So, for example, the best way to achieve the public good of providing healthcare for all is to force a public option--a simple dummy variable that will consolidate the market into no choice.

Pluralism is abandoned for the unaccountable better judgement of elite authority in which application of the irrational becomes a measure of power (success); like cutting healthcare costs by ensuring medicare doctors get a pay increase.

A free market does not tolerate the irrational. It is the consolidation of power that tolerates the irrational. It is an emblem of power to be "conserved" by its confirmed application (like toggling between dummy variables).

Consolidation is argued to be the empirical model, the natural tendency, of efficiency because the pluralistic, free-market model tends to be "irrationally exuberant." The exuberance, however, is caused by mass momentum of consolidated capital following organized economies of scale (large size of horizontal and vertical integration) in every case since the dawn of what we now call capitalism and the crises of boom and bust we needlessly experience to this day.

The free market is not the natural problem, it is the natural solution.

Free-market economics is resisted by being organized into a consolidated capital not because it does not work, but because it does.

The economic problems we look to solve are organizational. Allowing the economy to organize into economies of scale that are too big to fail is the problem, not the solution. It is nevertheless being applied as the solution in the name of The General Welfare.

While networked externalities (organized consolidation) hedged the risk and caused the formation of capital at the inception of capital markets, it "naturally" led to boom-and-bust cyclical trends--crises in which eager small investors became the willing, dispossessed dupes of consolidated wealth and power.

Two hundred years later, the small investor is still being duped into believing the wealth was lost, evaporated, not consolidated. The risk is "freely" taken, but the reward is to be found in the loss of value resold as a profit, bought with a debtor's share of the wealth. Thus was borne the credit economy and liquidity crisis we now endure as free-market economics.

The small investor must now identify where the consolidated capital moves next--where the next bubble will occur. (The bubble never really "bursts," it just "moves" around. Deflation in one area inflates another. The result is the cyclical trend.)

The system of buying and selling, the market system, is the means by which consolidation is "freely" transacted, making it look like the public needs to be saved from itself, and the conservative argument that elite command and control (consolidation) is a necessary condition to ensure the efficiency of markets. The efforts of the Obama administration are, then, perfectly rational, and consistent with conservative philosophy--a confirmed belief in the efficiency of free markets and the need to command and control its irrational exuberance (the gamma risk).

The action of the private sector to avoid the gamma risk requires being in the dark.

Hiding in the dark, the phenomenon of "dark markets," is what a free market definably is not. It is nevertheless what the dark marketeers say they are doing as long as government does not interfere with their freedom to pursue it.

A dark market is a complex maze of seemingly disconnected cause-effect relationships. It is a scheme of buy and sell transactions across market sectors and segments that includes time sequencing and quick, flash transactions that are nearly imperceptible. The more the cause of an effect cannot be detected, the less confirmable liability for illegitmate gains; specifically, gains acquired by means of rigging the market through a system of timed buy and sell transactions of various contractual classes, like options and futures contracts.

Happily hiding in the dark where dirty deeds are not clearly identifiable is the pursuit of not being accountable to either a democratic process of free-market economics or government oversight (avoiding the risk). It is a pursuit that effectively minimizes freedom, not maximizes it, which is the ultimate, Constitutional, measure of success.

As places to hide become fewer at this point, big money will move into a traditional, classical mode of consolidation of real assets, buying distressed businesses and investing in businesses that the recesson had put out of business.
Economic entities will be merged and acquired satisfying the traditional model of maximimum value that draws the most investment (a bubble). This will be a move into cyclicals and will confirm an economic recovery phase of the cycle indicated by the increased gama risk in dark financial markets and a retrace on the value of those assets to an oversold condition, gaining support more at the the fundamental. A secular bull market will then occur.

Controlling the future(s) has become the philosopher's stone of neo-classically managing the risk inherent to the consolidation of the capital. It conserves an organizational modality despite the tendencies to subject it to the risk demanded by The People in an evolving modern world of constitutional legitimacy.

Control of futures will innovate ahead of the gamma risk. Trends will be indicated not only by the path consolidated capital takes, but how it is reorganized into modalities.

Identifying organizational modes will indicate the future of trend analysis by identifying the means of not just profitably predicting the future, but commanding it; not by means of managing the risk, but by virtually eliminating it.