A popular revolt has raised the question,
is the government bankrupting the nation?
Today's FOMC meeting will tell us just exactly how "open" the market really is, for example, which should indicate how bankrupt we are and are going to be with the highest degree of technical certainty. (Keep in mind, of course, that an "open" market is a non-exclusive, democratic process, and a "federal committee" implies a governance resolved to ensure it.)
Since bankruptcy renders an incapacity for economic participation, the Federal Reserve is entrusted to keep us solvent, literally keeping capital (useful current value) in reserve to prevent the crisis of insolvency (liquidity crisis), and keep the market open.
There are essentially two options for keeping the market open in a credit economy: extending it, or forgiving it. There is, however, only one option the Fed uses--buying and selling debt. The Fed is not empowered to forgive debt, but is empowered to retire it.
Paradoxically, when the Fed retires debt, it expands the money supply. When it is too "forgiving," let's say, the debt paradoxically becomes overextended. There is more money to spend, but it buys less as prices rise to reduce (consolidate) the supply of money (to reduce the risk of competition through economy-of-scale). Instead of reducing debt, it increases it, and the result, paradoxically, is liquidity crisis. It would seem, then, the antidote is to not be so forgiving, but the difference is whether the extent of the crisis is a recession or a depression. Currently, for example, while the vertical extension of the crisis has been averted, it has been horizontally extended.
If the Fed keeps interest rates low, the market is more open than if rates are higher because the economy has liquidity. As long as the market has liquidity, our nation is not bankrupt--that is, despite liabilities exceeding assets, bankruptcy is never declared. This means that we are always sovereignly solvent, but our currency is devalued. The dollar is worth less. It buys fewer goods and services.
Even with a high amount of liquidity, if the money quickly recycles to the top quintile of incomes (if derivative markets continue to drive commodity prices higher on the news of a technical recovery, for example, and healthcare incomes continue to outpace that and are reinvested in derivatives), the market is not as free and therefore "open" as it could, or should be.
If we are to identify the source of common bankruptcy that plagues our nation, consolidation of the capital is where you will find it; and after the Great Recession, the market is even more consolidated, or closed, with new financial regulation and healthcare legislation that continues to consolidate income and bankrupt the nation.
The FOMC is going to tell us that state-sponsored capitalism has sponsored a technical recovery, but the probability for common bankruptcy has not much abated. If we are going to reduce unemployment, public policy that provides liquidity where it is needed is required. The FOMC must endorse a more progressive tax code that relieves the burden of the middle class, making the wealth more common and bankruptcy less common.
We see the tendency to provide, or deprive, for the common wealth. Provision comes in the form of liquidity. The Fed (a private enterprise that heads our private banking system) is the chief arbiter of supply management by controlling demand (the supply of money).
Despite being awash with liquidity, demand is still too deficient to add employment. As long as demand is low (deprivation), capital is cheap. This simply means that the capital is too consolidated which the FOMC will not admit to being a detriment. (and here is where the technical modeling predictably fails).
Despite ample liquidity, credit scores are too low to increase the demand that reduces supply and increases employment. The result is a debtor-financed recovery with liquidity (capital) being used to resist the declining rate of profit (deflation) without employment (inflation). Margins are maintained with budget deficits that essentially bankrupt our nation.
While the benefit is short, the detriment is long (the double dip).
Hedge funds will likely be short on the current trend. Sell now and stay ahead of the hedgers who set the trend but hide a high order of intent in high-frequency noise (volatility) that otherwise closes the market with limited risk of liability.
Tuesday, September 21, 2010
Monday, September 20, 2010
The Measure of Success
The measure of success is a largely philosophical question.
Classically, the measure of success, as Plato and Aristotle described it, for example, is the approximation to the ideal. So, ideal economic policy is quite different for billionaire hedge-fund managers than it is for restaurant workers. Each party has something to gain and something to lose: each party has a risk differential which probably correlates interactively in zero-sum.
Since hedge funds and service workers apply their time and resources to obtain the ideal in differential, there is conflict. To keep the peace, we have adopted a competitive marketplace to resolve the conflict and give empirical verification (legitimacy) to the outcome.
We immediately see that the theory of organized conflict resolution that we call the free-market system is operationalized with the scientific method. Hypotheses (risk differentials) are tested in the marketplace and the result is, as modern philosophers like Ayn Rand describe it, fundamentally legitimate (verified) and ontologically derived (unavoidable). Even if we try to consolidate the risk into a homogeneous, common self-interest, the elite (the party best able to manage the risk in their self-interest) will always emerge the winner in zero-sum.
According to free-market theory, ideally we should just "let it be," but, of course, we just can't keep our hands off of it; and this is where it gets technically complicated. We arbitrage "the risk" into an instability of valuable proportion that differentiates the risk into a relative value of useful dimension. This is where risk assessment gains its ideological (political) interpretation (dimension), and losing its empirical value of fundamental resolution gains a gamma-risk momentum and proportion.
For example, we hear it said that the government is bankrupting our nation. Does this mean that our fate has reached a high level of gamma-risk momentum with a high order of intention, or a low order of intention? Answering this question determines the extent of the risk in the gamma proportion. The risk is now extended to a liability with a probability coefficient to the reward that is not empirically derived from fundamental free-market means, but arbitraged, or arbitrated, with the force and legitimacy of public authority like it was with the sovereign application of the crown.
Now we have a philosophical problem--a paradox to be resolved, which if not resolved results in cognitive, political dissonance.
To assure hypotheses are not corrupted with ideological bias, it is necessary to devolve the risk to the fundament. The question whether government is bankrupting our nation is reduced to a practical rather than a rhetorical resolution. The question is then a measure of empirical value, legitimately rendered to define the current and future value of the risk. Otherwise, the value is differentiated into the instability of relative values that diminishes the probability of accepting or rejecting the risk that comes with the nation being bankrupt.
Reconciling the way things are now with government by consent is to say we agree and accept all the terms and conditions associated with the government being bankrupt (our liabilities exceeding our assets). The risk, of course, is that you may be assigned the liability. Who decides that?
The liability is assigned with the force and legitimacy of government authority. Without devolution of this power, the empirical consent of the governed is never obtained and the question of whether we are bankrupting ourselves is continuously recycled rather than resolved.
Candidates that argue the government is bankrupting the economy are guilty of the post-hoc fallacy, which gives good indication of what they will do to solve this problem--stick you with the liability. The probability of risk to you goes up with a very high order of intention that is not your own, and because government power has been usurped for an ideological distribution of the risk, your ability to render an accountability and assign a liability to the reward is limited to the election cycle and a two-party binomialism. It is hardly the model of a government by consent. It just does not measure up!
If we are not talking about deconsolidating the risk and ensuring a free-market distribution of income in priority, government by consent is indeed bankrupt.
Limiting the role of government to ensuring a free and unconsolidate marketplace effectively limits the need for it, resolves the paradox, and reconciles the difference (the political dissonance, the existential angst) between the ideal and the practical representation of it.
It is time to turn "what is" into what we all know "should be."
It is time to turn the possible into the probable.
Classically, the measure of success, as Plato and Aristotle described it, for example, is the approximation to the ideal. So, ideal economic policy is quite different for billionaire hedge-fund managers than it is for restaurant workers. Each party has something to gain and something to lose: each party has a risk differential which probably correlates interactively in zero-sum.
Since hedge funds and service workers apply their time and resources to obtain the ideal in differential, there is conflict. To keep the peace, we have adopted a competitive marketplace to resolve the conflict and give empirical verification (legitimacy) to the outcome.
We immediately see that the theory of organized conflict resolution that we call the free-market system is operationalized with the scientific method. Hypotheses (risk differentials) are tested in the marketplace and the result is, as modern philosophers like Ayn Rand describe it, fundamentally legitimate (verified) and ontologically derived (unavoidable). Even if we try to consolidate the risk into a homogeneous, common self-interest, the elite (the party best able to manage the risk in their self-interest) will always emerge the winner in zero-sum.
According to free-market theory, ideally we should just "let it be," but, of course, we just can't keep our hands off of it; and this is where it gets technically complicated. We arbitrage "the risk" into an instability of valuable proportion that differentiates the risk into a relative value of useful dimension. This is where risk assessment gains its ideological (political) interpretation (dimension), and losing its empirical value of fundamental resolution gains a gamma-risk momentum and proportion.
For example, we hear it said that the government is bankrupting our nation. Does this mean that our fate has reached a high level of gamma-risk momentum with a high order of intention, or a low order of intention? Answering this question determines the extent of the risk in the gamma proportion. The risk is now extended to a liability with a probability coefficient to the reward that is not empirically derived from fundamental free-market means, but arbitraged, or arbitrated, with the force and legitimacy of public authority like it was with the sovereign application of the crown.
Now we have a philosophical problem--a paradox to be resolved, which if not resolved results in cognitive, political dissonance.
To assure hypotheses are not corrupted with ideological bias, it is necessary to devolve the risk to the fundament. The question whether government is bankrupting our nation is reduced to a practical rather than a rhetorical resolution. The question is then a measure of empirical value, legitimately rendered to define the current and future value of the risk. Otherwise, the value is differentiated into the instability of relative values that diminishes the probability of accepting or rejecting the risk that comes with the nation being bankrupt.
Reconciling the way things are now with government by consent is to say we agree and accept all the terms and conditions associated with the government being bankrupt (our liabilities exceeding our assets). The risk, of course, is that you may be assigned the liability. Who decides that?
The liability is assigned with the force and legitimacy of government authority. Without devolution of this power, the empirical consent of the governed is never obtained and the question of whether we are bankrupting ourselves is continuously recycled rather than resolved.
Candidates that argue the government is bankrupting the economy are guilty of the post-hoc fallacy, which gives good indication of what they will do to solve this problem--stick you with the liability. The probability of risk to you goes up with a very high order of intention that is not your own, and because government power has been usurped for an ideological distribution of the risk, your ability to render an accountability and assign a liability to the reward is limited to the election cycle and a two-party binomialism. It is hardly the model of a government by consent. It just does not measure up!
If we are not talking about deconsolidating the risk and ensuring a free-market distribution of income in priority, government by consent is indeed bankrupt.
Limiting the role of government to ensuring a free and unconsolidate marketplace effectively limits the need for it, resolves the paradox, and reconciles the difference (the political dissonance, the existential angst) between the ideal and the practical representation of it.
It is time to turn "what is" into what we all know "should be."
It is time to turn the possible into the probable.
Doing the Double Dip
The top two-percent of income classes are doing the double dip.
Except for a few high-frequency debacles, it is not a deep dip to be seen from the start, but a long, slow scoop of the pie on the chart.
The dip's frequency will be long with short, sharp, impulsive and corrective waves (highly fractile sequences and degrees down to the minute, the second, the millisecond), reflecting the buy-long-go-short hedge fund strategy.
A noisy environment, economic and political, shrouds the double dip with a mysterious din, like so much cosmic noise of the electromagnetic spectrum. Much of the noise is interpreted as technical recovery--so many moves up, so many down, convergence here divergence there...hiss, crinkle, crackle, pop, you better log in to catch your stops; and if you're quick at the switch, you will be the hero, because in a flash it can crash to zero. Technically trapped you could be stuck when you thought for sure the other schmuck.
Don't be tricked and trapped by technical manipulations that can and will move against your position and acquire your book in a flash. Just beneath the din of volatility is a deflationary monster slowly devouring (selling short) the promise of prosperity for more and more people (hedging the risk), leaving nothing but crumbs to nourish the commonwealth.
Conflicting trends indicate the extent of this Keynesian monstrocity. While double dippers made sure there are plenty of houses to live in, for example, they also made sure they would be deprived for the extended value to be derived. They are to be bought and sold--arbitraged--like the people supposed to live in them.
Having a surplus of empty homes and a surplus of people needing housing is not free-market economics; and falling prices, because the buyers do not have the income to buy at any price, is not "disinflation," it is classic "deflation." Understand that this fundamental misattribution, this deliberate error, supports analytical models that too often produce technical projections that are "better" or "worse than expected" (the surprise-premium, or the arbitraged value of failed expectations).
To protect the arbitraged value (the surplus, which is the fundamental attribute of supply-side economics advanced by Republicans), the risk is attributed to the mortgagee (the debtor). Since the debtor is detrimentally dependent on the creditors for the income (economic growth) that was shorted to hedge the risk, the hedger (the creditor entrusted to reinvest the capital accumulated) has determined the fate of the mortgagee. In other words, creditors are responsible for causing and profiting from a detriment that is fully and improperly assigned to the debtor.
The ability to assign, or determine, the fate of The People is an opprobrium of power that our founders very deliberately intended to avoid, not encourage. We The People have the natural right, endowed by God, to self-determination. It is not up to Bank of America and Goldman Sachs to determine your fate or mine and then, with a royal sense of too-big-to-fail proportion, dismiss the detriment as the natural fate of the rabble.
The crude masses, as both Republicans and progressives maintain in both theory and practice, are too unsophisticated to know what their self-interest really is (the thesis of independence--the Aristotelian epistemology that reality exists independent of perception). The People are always happy to accede their natural rights to a ruling class by popular consent so that the republican form of government naturally supercedes the tendency to the democratic form.
It is a cruel amusement--the crudest means of confirming one's status (Democrat or Republican)--to watch The People, stirred about in a panic like an overpopulated pestilence, desperate for their economic security while it is managed to brim the bowls of their bogus benefactors. The Democratic, progressive faction of our national party system, for example, has done as much to support the current recessionary trend as to resist it in the interest of We the People (the general welfare).
Do progressives intend to do as much harms as good, or is it a function of an ontological accumulation of risk? In the case of the mortgage crisis, for example, progressives do little to match the supply of housing with the demand. Foreclosures increased at a record pace while progressives were preoccupied with a healthcare plan that will do as much to consolidate the wealth associated with it as to provide universal healthcare. The result of that priority will keep the critical variable for curing the mortgage crisis--income--the missing variable of self-determination conserved in the hands of The People's so-called benefactors.
Doing the double dip will keep progressives fully employed, but even worse than the so-called unintended malefactions of the progressive faction are those who shamelessly claim that the popular demand for equity and justice is but class envy. We can be reasonably sure The People distrust the good intentions of, but do not envy, their malefactors.
An accumulation of a crisis proportion is not enviously valued, it is retributively valued, and the detriment it causes (the value) despaired.
There is nothing more crude, with so little care, than to victimize The People with their own despair.
A power elite only flatters itself with the belief that the means to exploit the weaknesses of others is something to be envied.
Keep in mind that an economy-of-scale, too-big-to-fail, ruling class distinction can only exist in a gamma-risk proportion. Despair can be re-transformed into the value of non-disparity.
Despite being modeled to eliminate risk, too-big-to-fail organizations accumulate risk into a crisis proportion which our founding fathers deliberately intended to pluralize and diffuse into the peaceful and prosperous proportion of free-market self-determination. In the case of consumer finance protection, for example, it would be Elizabeth Warren's job to diffuse, or deconsolidate the risk into an alpha proportion.
If financial institutions are not too-big-to-fail, they will not be able to rule the marketplace. The marketplace would be controlled by consumer sentiment--the alpha risk an economy-of-scale is intended to avoid.
Ensuring the alpha risk dimension of power in maximum proportion reduces both the beta (the noise--the volatility) and the gamma risk (the need to consolidate the risk into a controlling authority). As the need for a controlling, central authority evolves, the empirical, pluralistic efficiency and legitimacy of popular consent is reduced. It is then necessary to "devolve" that accumulated power (the consolidation of the risk) to the stable and cost-efficient level we are all looking for.
Ensuring the alpha in priority (deconsolidating or "devolving" the risk) will stabilize our economy at both the micro and macro levels without sacrificing the efficiency, the productivity, of free markets.
With a productive incentive in full force, the distributive deficiencies of the free-market system abates. Systemic risk (despair) is transformed into the can-do innovative productivity of positively competitive forces. Instead of privation, there is provision. Instead of big government intruding into every aspect of our lives, we turn our attention to the latest and greatest thing that fuels economic growth--doing everything cleaner, greener, quicker, smarter, faster. Instead of relying on a controlling authority, we are free to innovate and continuously improve the quality of life for everyone through the empirically direct means of popular consent, transforming government into its more ideal, democratic form (government by consent).
Without maximizing alpha risk (deconsolidating economy-of-scale entities) Elizabeth Warren, for example, will just be spinning her wheels. While she recognizes the need to control the value of the risk being derived from the means (the power) to reassign it, which is why hedge funds and Wall Street so strongly object to her, she is, nevertheless, not likely to advance deconsolidating the risk.
Consumer financial protection is likely to be more a function of consolidating the risk into a regulatory authority, effectively treating the problem with the problem. Elizabeth Warren, for example, who will be overseeing development of the new protection agency knows all the "tricks and traps" of the trade, but her oversight and practical effect is likely to be Ivy League despite the resistance to her.
Treating the "tricks and traps" of consumer finance will do little to address the more fundamental mis-assignment of risk that occurs. It may help consumers reduce the cost of credit, but If the people who need to have buying power to prevent deflation are the highest credit risk, and therefore cannot get credit (and are likely then to get trapped, reducing buying power even more), the probability of deflation is nearly perfect.
The need for credit and the incentive for credit companies to find new ways to trick and trap on the existing extent of credit increases, despite the regulatory effort, to avoid the declining rate of profit.
The entire system is put at risk (including the power elite) in a gamma proportion by mis-assignment of the risk.
Mis-assigning and then over-leveraging the value of risk results in the fundamental attribution error that makes for faulty predictive modeling and creates the derivative value of arbitraged risk that Elizabeth Warren has stridently condemned. While the function of the Consumer Finance Protection Agency is to protect consumers, it will do more to protect the providers from themselves (the declining rate of profit which reduces credit scores while increasing the need for credit). The practical model progressively diverges form the ideal model of self-determination (consent of the governed), causing political dissonance.
Reducing the political dissonance (the noise of divergent ideals and practices) to a distributional problem inherent to capitalism may be an accurate assessment, but it is not enough. Keeping distributions (like the extension of credit) from consolidating into economic contraction is a different problem, something that Keynesian economics--substituting for free-market economics--fails to do, along with protecting consumer credit, in priority.
Monetarism is used to keep the capital consolidated (thus the demand for credit and its over-extension). A double dip is possible because the retributive value is continuously monetized into a redistribution. The problem with that, of course, is it accumulates debt (and the pressure to tax AND spend).
Value that needs to be retributed (the deflationary value--the double dip) is transformed into an extended risk--systemic risk redistributed (monetized) into a crisis proportion. In order to extend the proportion (to do the double dip), it is transformed into a high frequency (volatility) to maintain its current value (extending the retributive value into the future).
Value arbitraged with high frequency and mass momentum creates noise at high volume, masking an underlying, well-orchestrated score composed, performed and conducted for the crimson court of too-big-to-fail economy-of-scale. The noise is for common consumption; the music is for the discriminating ear on the inside.
Ponderous platitudes will not prevent the expansion of poverty, and although economic expansion will, it is the artful object of rhetorical ruse.
While preventing poverty is progressively hip, its an interpretive dance with a deep double dip.
Except for a few high-frequency debacles, it is not a deep dip to be seen from the start, but a long, slow scoop of the pie on the chart.
The dip's frequency will be long with short, sharp, impulsive and corrective waves (highly fractile sequences and degrees down to the minute, the second, the millisecond), reflecting the buy-long-go-short hedge fund strategy.
A noisy environment, economic and political, shrouds the double dip with a mysterious din, like so much cosmic noise of the electromagnetic spectrum. Much of the noise is interpreted as technical recovery--so many moves up, so many down, convergence here divergence there...hiss, crinkle, crackle, pop, you better log in to catch your stops; and if you're quick at the switch, you will be the hero, because in a flash it can crash to zero. Technically trapped you could be stuck when you thought for sure the other schmuck.
Don't be tricked and trapped by technical manipulations that can and will move against your position and acquire your book in a flash. Just beneath the din of volatility is a deflationary monster slowly devouring (selling short) the promise of prosperity for more and more people (hedging the risk), leaving nothing but crumbs to nourish the commonwealth.
Conflicting trends indicate the extent of this Keynesian monstrocity. While double dippers made sure there are plenty of houses to live in, for example, they also made sure they would be deprived for the extended value to be derived. They are to be bought and sold--arbitraged--like the people supposed to live in them.
Having a surplus of empty homes and a surplus of people needing housing is not free-market economics; and falling prices, because the buyers do not have the income to buy at any price, is not "disinflation," it is classic "deflation." Understand that this fundamental misattribution, this deliberate error, supports analytical models that too often produce technical projections that are "better" or "worse than expected" (the surprise-premium, or the arbitraged value of failed expectations).
To protect the arbitraged value (the surplus, which is the fundamental attribute of supply-side economics advanced by Republicans), the risk is attributed to the mortgagee (the debtor). Since the debtor is detrimentally dependent on the creditors for the income (economic growth) that was shorted to hedge the risk, the hedger (the creditor entrusted to reinvest the capital accumulated) has determined the fate of the mortgagee. In other words, creditors are responsible for causing and profiting from a detriment that is fully and improperly assigned to the debtor.
The ability to assign, or determine, the fate of The People is an opprobrium of power that our founders very deliberately intended to avoid, not encourage. We The People have the natural right, endowed by God, to self-determination. It is not up to Bank of America and Goldman Sachs to determine your fate or mine and then, with a royal sense of too-big-to-fail proportion, dismiss the detriment as the natural fate of the rabble.
The crude masses, as both Republicans and progressives maintain in both theory and practice, are too unsophisticated to know what their self-interest really is (the thesis of independence--the Aristotelian epistemology that reality exists independent of perception). The People are always happy to accede their natural rights to a ruling class by popular consent so that the republican form of government naturally supercedes the tendency to the democratic form.
It is a cruel amusement--the crudest means of confirming one's status (Democrat or Republican)--to watch The People, stirred about in a panic like an overpopulated pestilence, desperate for their economic security while it is managed to brim the bowls of their bogus benefactors. The Democratic, progressive faction of our national party system, for example, has done as much to support the current recessionary trend as to resist it in the interest of We the People (the general welfare).
Do progressives intend to do as much harms as good, or is it a function of an ontological accumulation of risk? In the case of the mortgage crisis, for example, progressives do little to match the supply of housing with the demand. Foreclosures increased at a record pace while progressives were preoccupied with a healthcare plan that will do as much to consolidate the wealth associated with it as to provide universal healthcare. The result of that priority will keep the critical variable for curing the mortgage crisis--income--the missing variable of self-determination conserved in the hands of The People's so-called benefactors.
Doing the double dip will keep progressives fully employed, but even worse than the so-called unintended malefactions of the progressive faction are those who shamelessly claim that the popular demand for equity and justice is but class envy. We can be reasonably sure The People distrust the good intentions of, but do not envy, their malefactors.
An accumulation of a crisis proportion is not enviously valued, it is retributively valued, and the detriment it causes (the value) despaired.
There is nothing more crude, with so little care, than to victimize The People with their own despair.
A power elite only flatters itself with the belief that the means to exploit the weaknesses of others is something to be envied.
Keep in mind that an economy-of-scale, too-big-to-fail, ruling class distinction can only exist in a gamma-risk proportion. Despair can be re-transformed into the value of non-disparity.
Despite being modeled to eliminate risk, too-big-to-fail organizations accumulate risk into a crisis proportion which our founding fathers deliberately intended to pluralize and diffuse into the peaceful and prosperous proportion of free-market self-determination. In the case of consumer finance protection, for example, it would be Elizabeth Warren's job to diffuse, or deconsolidate the risk into an alpha proportion.
If financial institutions are not too-big-to-fail, they will not be able to rule the marketplace. The marketplace would be controlled by consumer sentiment--the alpha risk an economy-of-scale is intended to avoid.
Ensuring the alpha risk dimension of power in maximum proportion reduces both the beta (the noise--the volatility) and the gamma risk (the need to consolidate the risk into a controlling authority). As the need for a controlling, central authority evolves, the empirical, pluralistic efficiency and legitimacy of popular consent is reduced. It is then necessary to "devolve" that accumulated power (the consolidation of the risk) to the stable and cost-efficient level we are all looking for.
Ensuring the alpha in priority (deconsolidating or "devolving" the risk) will stabilize our economy at both the micro and macro levels without sacrificing the efficiency, the productivity, of free markets.
With a productive incentive in full force, the distributive deficiencies of the free-market system abates. Systemic risk (despair) is transformed into the can-do innovative productivity of positively competitive forces. Instead of privation, there is provision. Instead of big government intruding into every aspect of our lives, we turn our attention to the latest and greatest thing that fuels economic growth--doing everything cleaner, greener, quicker, smarter, faster. Instead of relying on a controlling authority, we are free to innovate and continuously improve the quality of life for everyone through the empirically direct means of popular consent, transforming government into its more ideal, democratic form (government by consent).
Without maximizing alpha risk (deconsolidating economy-of-scale entities) Elizabeth Warren, for example, will just be spinning her wheels. While she recognizes the need to control the value of the risk being derived from the means (the power) to reassign it, which is why hedge funds and Wall Street so strongly object to her, she is, nevertheless, not likely to advance deconsolidating the risk.
Consumer financial protection is likely to be more a function of consolidating the risk into a regulatory authority, effectively treating the problem with the problem. Elizabeth Warren, for example, who will be overseeing development of the new protection agency knows all the "tricks and traps" of the trade, but her oversight and practical effect is likely to be Ivy League despite the resistance to her.
Treating the "tricks and traps" of consumer finance will do little to address the more fundamental mis-assignment of risk that occurs. It may help consumers reduce the cost of credit, but If the people who need to have buying power to prevent deflation are the highest credit risk, and therefore cannot get credit (and are likely then to get trapped, reducing buying power even more), the probability of deflation is nearly perfect.
The need for credit and the incentive for credit companies to find new ways to trick and trap on the existing extent of credit increases, despite the regulatory effort, to avoid the declining rate of profit.
The entire system is put at risk (including the power elite) in a gamma proportion by mis-assignment of the risk.
Mis-assigning and then over-leveraging the value of risk results in the fundamental attribution error that makes for faulty predictive modeling and creates the derivative value of arbitraged risk that Elizabeth Warren has stridently condemned. While the function of the Consumer Finance Protection Agency is to protect consumers, it will do more to protect the providers from themselves (the declining rate of profit which reduces credit scores while increasing the need for credit). The practical model progressively diverges form the ideal model of self-determination (consent of the governed), causing political dissonance.
Reducing the political dissonance (the noise of divergent ideals and practices) to a distributional problem inherent to capitalism may be an accurate assessment, but it is not enough. Keeping distributions (like the extension of credit) from consolidating into economic contraction is a different problem, something that Keynesian economics--substituting for free-market economics--fails to do, along with protecting consumer credit, in priority.
Monetarism is used to keep the capital consolidated (thus the demand for credit and its over-extension). A double dip is possible because the retributive value is continuously monetized into a redistribution. The problem with that, of course, is it accumulates debt (and the pressure to tax AND spend).
Value that needs to be retributed (the deflationary value--the double dip) is transformed into an extended risk--systemic risk redistributed (monetized) into a crisis proportion. In order to extend the proportion (to do the double dip), it is transformed into a high frequency (volatility) to maintain its current value (extending the retributive value into the future).
Value arbitraged with high frequency and mass momentum creates noise at high volume, masking an underlying, well-orchestrated score composed, performed and conducted for the crimson court of too-big-to-fail economy-of-scale. The noise is for common consumption; the music is for the discriminating ear on the inside.
Ponderous platitudes will not prevent the expansion of poverty, and although economic expansion will, it is the artful object of rhetorical ruse.
While preventing poverty is progressively hip, its an interpretive dance with a deep double dip.
Thursday, September 16, 2010
The Keynesian Alternative?
With unemployment at 10 percent or more, the number of Americans living in poverty increasing, and corporations sitting on $2 trillion in cash, we should be looking for other alternatives.
Since the Keynesian alternative to consolidated capital has yielded a downward class mobility, the most visible reaction is a conservative popular revolt.
If the probability of class mobility is verifiably down and not up, at least half of American voters are prepared to declare their independence and shape a more favorable alternative that is not exactly Democrat or Republican.
Being treated like so much macro-meat in the marketplace, herded together like cash cows to be parceled into prime and sub-prime, is not exactly flattering, and both parties are going to suffer a stampede of popular sentiment.
Binoms (binomial partisans) are under pressure to resolve the dissonance. This is an overwhelming psychological condition that compels a resolution even on a macro scale (you know the old saying, "there is no resisting an idea whose time has come).
Free-market economics is not dead, its time has come!
It is time for The People to realize, the more free the market, the less political risk in proportion (the less need for government and the probability of being stuck with all the risk, like negative class mobility or negative equity).
The free market measures the proportion of political risk--it may be in your favor today, maybe not tomorrow. Binoms are realizing that ideology does not minimize the risk, it makes it more volatile if anything at this point.
While Keynesian economic policy is supposed to stabilize systemic risk, it makes it more volatile. Toggling between expansion and contraction of the money supply (boom and bust with ever higher frequency and a bias for bust), binoms are prepared to see another alternative that ensures stability--free market economics (deconsolidation of the risk)--with the force and legitimacy of government authority.
Investing in America is a function of ensuring free-market economics in priority (expansion of the commonwealth), not partisan politics.
Investing in America is a function of maximizing the empirical power of popular consent with a bias for boom, not the Keynesian alternative with an empirical bias for bust.
Since the Keynesian alternative to consolidated capital has yielded a downward class mobility, the most visible reaction is a conservative popular revolt.
If the probability of class mobility is verifiably down and not up, at least half of American voters are prepared to declare their independence and shape a more favorable alternative that is not exactly Democrat or Republican.
Being treated like so much macro-meat in the marketplace, herded together like cash cows to be parceled into prime and sub-prime, is not exactly flattering, and both parties are going to suffer a stampede of popular sentiment.
Binoms (binomial partisans) are under pressure to resolve the dissonance. This is an overwhelming psychological condition that compels a resolution even on a macro scale (you know the old saying, "there is no resisting an idea whose time has come).
Free-market economics is not dead, its time has come!
It is time for The People to realize, the more free the market, the less political risk in proportion (the less need for government and the probability of being stuck with all the risk, like negative class mobility or negative equity).
The free market measures the proportion of political risk--it may be in your favor today, maybe not tomorrow. Binoms are realizing that ideology does not minimize the risk, it makes it more volatile if anything at this point.
While Keynesian economic policy is supposed to stabilize systemic risk, it makes it more volatile. Toggling between expansion and contraction of the money supply (boom and bust with ever higher frequency and a bias for bust), binoms are prepared to see another alternative that ensures stability--free market economics (deconsolidation of the risk)--with the force and legitimacy of government authority.
Investing in America is a function of ensuring free-market economics in priority (expansion of the commonwealth), not partisan politics.
Investing in America is a function of maximizing the empirical power of popular consent with a bias for boom, not the Keynesian alternative with an empirical bias for bust.
Shaping the Future
The series of articles on risk I have authored and published to this site are not only to identify variables typically ignored or attributed to randomness, but to describe and explain a practical means of shaping the future.
A probabilistic ontology is not a random walk. Closer inspection reveals a probability of risk that is largely determined by indicators (symbols that guide perception) technically designed to shape the perceived risk and, thus, the future. Identifying the incentives associated with the perception of the risk predicts its future value and its probable path, or trend.
High-frequency trading, for example. As I have pointed out in previous articles, value is being determined by a highly consolidated capital. That concentration combined with high frequency increases the velocity of the risk (and the reward). Remember, these are hedge funds--they magnify the margin by hedging the risk. They increase their profits by shifting the risk to you, now at high frequency and velocity which, if you are not in control, appears to be randomness.
Randomness, as I have described and explained in the series, suggests a lack of culpability. If there is a zero-sum detriment, the beneficiary needs to demonstrate a lack of responsibility for the outcome and pin it on the victims as having "taken" (consented to) the risk, and lost.
Americans, having been stuck with overwhelming detriment on a macro-economic scale that suggests a macro-risk ontology (the systemic risk), now seek to mitigate the loss and recover damages (retribute the value). The macro means of mitigating the loss (the risk) in a post-industrial, post-modern world is the Keynesian application of economics.
Suing out the damage is a function of political process at the macro level. Victims consider the damage to be deliberately inflicted--their net worth confiscated and used against them in the pursuit of "the American dream." Keynesian economics is a technical means of managing the risk of liability by consolidating it (reducing it to the force and legitimacy of public authority)--what the series refers to as the gamma-risk proportion.
Having been betrayed by political rhetoric that promises the American dream, Americans are deciding (are determined) to actually "take" the risk, rather than have it extended to them, and reduce the dissonance (the gamma-risk proportion). While it may not be everyone's cup of "tea," taking the risk to shape (determine the probability of) the future transforms rhetorical possibility into the realpolitique of probability, posing a significant risk that is fully gamma.
Risk analysts do not figure a gamma-risk proportion. If the practical model does not assume the risk is a possibility because it ignores it, the probability it will occur is ontologically assumed and is fully extended (nearly 100%). While it may seem to be stupidity error, ignoring the probable risk is a calculated, political measure, ideologically (axiomatically) derived.
Since risk axiomatically derived suggests a model that fixes, or determines, the risk-to-reward coefficient, the value of what you don't want to occur tends to be undervalued and the risk becomes over-extended as discussed in previous articles on the extension of the risk.
Avoiding the over-extension requires abandoning its ideological assumptions which, in the gamma proportion, renders the possible evermore probable. I refer to this as the ontology of the gamma-risk proportion.
Republican rhetoric, postulating a free-market system that provides for the commonwealth, for example, has suffered a significant loss of credibility within the short-term, declarative memory of its constituency. Without abandoning its ideology that subsidizing the rich provides for the common wealth, it is entirely dependent on the two-party system to systematically recycle the risk to "conserve" its current value. I refer to this as recursion of the risk, which very effectively shapes the future, until now.
The system is set up to inspire class mobility but then deny it with a macro ontology. The system, however, at this point of our political-economic history, in the midst of a deepening crisis, has inspired a critique of that ontology instead.
Fundamentally questioning the logic of producing value by denying it to a cohort that the system "selects" to give it the power of consent will, at this point, with a macro ontology, not be denied.
As the middle class gets bigger, there is less distinction between the classes. While each member of a different class puts their pants on the same way, there is a big difference in the value of their pants. While the use value may be the same, the market value is a mark of distinction symbolizing the ability to pay and is expressed by referencing to a political group or party (and perhaps more important, inspiring the over-extension of debt into a crisis proportion).
Tea partiers, for example, are highly motivated to manage the macro-risk without Keynesian attributes. Eventually, class symbols (like reverse pricing) are not enough to demonstrate class identity. It is then reduced to the ability to survive the extension of the risk that results in the zero-sum accumulation of net worth (macro-economic liquidity crisis).
When crisis occurs (remembering that it is supposed to be improbable as long as we axiomatically adhere to the right ideology), class is fully valued, categorically and unsymbolically, in the form of the ability to pay (where you once could not afford the reverse price for a pair of pants, now you can't afford a pair of pants). The risk is then rendered with Keynesian attributes and the debt accumulated (extended) to maintain a middle class status.
The ability to pay (the risk) is monetized and consolidated into state control which, of course, tends to conserve the status-quo. The middle class is returned to the previous extent of the risk in liege (in debt) to its benefactor (the beneficiary of the detriment now buying and selling the monetized middle-class debt with funds expropriated from their net worth, which caused the crisis).
The zero-sum is successfully applied and prepared to be recursively re-applied in an ontological fashion, protecting the reward from the risk of liability--but the Tea partiers are too smart for that.
If we want real freedom, we must break the cycle of consolidated risk. Real freedom requires each person declare independence. The extent of our self-determination (the risk) will then be obtained by shaping the probability of what We The People want will occur.
Shaping the future is like what Michelangelo said about his sculptures--the ideal image has always been there, all we have to do is remove what we don't want.
The commonwealth is a work of art just waiting to be sculpted.
It is perfectly natural (our natural right) to revolt against a system that is constitutionally endowed with the freedom of self-determination but operationalized to deny it. Nature ontologically acts to resolve this paradox that has been extended to an unavoidable, gamma-risk proportion.
It is our natural right to deny systematic means that prevent shaping the possible into the probability of what We The People want, beginning with providing for what we all need.
A probabilistic ontology is not a random walk. Closer inspection reveals a probability of risk that is largely determined by indicators (symbols that guide perception) technically designed to shape the perceived risk and, thus, the future. Identifying the incentives associated with the perception of the risk predicts its future value and its probable path, or trend.
High-frequency trading, for example. As I have pointed out in previous articles, value is being determined by a highly consolidated capital. That concentration combined with high frequency increases the velocity of the risk (and the reward). Remember, these are hedge funds--they magnify the margin by hedging the risk. They increase their profits by shifting the risk to you, now at high frequency and velocity which, if you are not in control, appears to be randomness.
Randomness, as I have described and explained in the series, suggests a lack of culpability. If there is a zero-sum detriment, the beneficiary needs to demonstrate a lack of responsibility for the outcome and pin it on the victims as having "taken" (consented to) the risk, and lost.
Americans, having been stuck with overwhelming detriment on a macro-economic scale that suggests a macro-risk ontology (the systemic risk), now seek to mitigate the loss and recover damages (retribute the value). The macro means of mitigating the loss (the risk) in a post-industrial, post-modern world is the Keynesian application of economics.
Suing out the damage is a function of political process at the macro level. Victims consider the damage to be deliberately inflicted--their net worth confiscated and used against them in the pursuit of "the American dream." Keynesian economics is a technical means of managing the risk of liability by consolidating it (reducing it to the force and legitimacy of public authority)--what the series refers to as the gamma-risk proportion.
Having been betrayed by political rhetoric that promises the American dream, Americans are deciding (are determined) to actually "take" the risk, rather than have it extended to them, and reduce the dissonance (the gamma-risk proportion). While it may not be everyone's cup of "tea," taking the risk to shape (determine the probability of) the future transforms rhetorical possibility into the realpolitique of probability, posing a significant risk that is fully gamma.
Risk analysts do not figure a gamma-risk proportion. If the practical model does not assume the risk is a possibility because it ignores it, the probability it will occur is ontologically assumed and is fully extended (nearly 100%). While it may seem to be stupidity error, ignoring the probable risk is a calculated, political measure, ideologically (axiomatically) derived.
Since risk axiomatically derived suggests a model that fixes, or determines, the risk-to-reward coefficient, the value of what you don't want to occur tends to be undervalued and the risk becomes over-extended as discussed in previous articles on the extension of the risk.
Avoiding the over-extension requires abandoning its ideological assumptions which, in the gamma proportion, renders the possible evermore probable. I refer to this as the ontology of the gamma-risk proportion.
Republican rhetoric, postulating a free-market system that provides for the commonwealth, for example, has suffered a significant loss of credibility within the short-term, declarative memory of its constituency. Without abandoning its ideology that subsidizing the rich provides for the common wealth, it is entirely dependent on the two-party system to systematically recycle the risk to "conserve" its current value. I refer to this as recursion of the risk, which very effectively shapes the future, until now.
The system is set up to inspire class mobility but then deny it with a macro ontology. The system, however, at this point of our political-economic history, in the midst of a deepening crisis, has inspired a critique of that ontology instead.
Fundamentally questioning the logic of producing value by denying it to a cohort that the system "selects" to give it the power of consent will, at this point, with a macro ontology, not be denied.
As the middle class gets bigger, there is less distinction between the classes. While each member of a different class puts their pants on the same way, there is a big difference in the value of their pants. While the use value may be the same, the market value is a mark of distinction symbolizing the ability to pay and is expressed by referencing to a political group or party (and perhaps more important, inspiring the over-extension of debt into a crisis proportion).
Tea partiers, for example, are highly motivated to manage the macro-risk without Keynesian attributes. Eventually, class symbols (like reverse pricing) are not enough to demonstrate class identity. It is then reduced to the ability to survive the extension of the risk that results in the zero-sum accumulation of net worth (macro-economic liquidity crisis).
When crisis occurs (remembering that it is supposed to be improbable as long as we axiomatically adhere to the right ideology), class is fully valued, categorically and unsymbolically, in the form of the ability to pay (where you once could not afford the reverse price for a pair of pants, now you can't afford a pair of pants). The risk is then rendered with Keynesian attributes and the debt accumulated (extended) to maintain a middle class status.
The ability to pay (the risk) is monetized and consolidated into state control which, of course, tends to conserve the status-quo. The middle class is returned to the previous extent of the risk in liege (in debt) to its benefactor (the beneficiary of the detriment now buying and selling the monetized middle-class debt with funds expropriated from their net worth, which caused the crisis).
The zero-sum is successfully applied and prepared to be recursively re-applied in an ontological fashion, protecting the reward from the risk of liability--but the Tea partiers are too smart for that.
If we want real freedom, we must break the cycle of consolidated risk. Real freedom requires each person declare independence. The extent of our self-determination (the risk) will then be obtained by shaping the probability of what We The People want will occur.
Shaping the future is like what Michelangelo said about his sculptures--the ideal image has always been there, all we have to do is remove what we don't want.
The commonwealth is a work of art just waiting to be sculpted.
It is perfectly natural (our natural right) to revolt against a system that is constitutionally endowed with the freedom of self-determination but operationalized to deny it. Nature ontologically acts to resolve this paradox that has been extended to an unavoidable, gamma-risk proportion.
It is our natural right to deny systematic means that prevent shaping the possible into the probability of what We The People want, beginning with providing for what we all need.
Tuesday, September 14, 2010
Probability of Risk
Statistically, the probability of risk is 100%. The risk is fully extended. Discounting the probability of the risk, the extent is "determined."
The risk is always fully valued. Discounting the probability it will not occur (the null hypothesis) is the risk as far as we can determine. So, the only way to be completely certain (the probability of risk fully discounted to zero) is to have complete control (like consolidating markets to determine the extent of the risk, for example, or by controlled experiment and nulled hypotheses as a scientist).
In the world of scientific inquiry, hypotheses are nulled to verify the probability of having acquired truth, or knowledge, as best can be possibly determined. Even after this rigorous, empirical, cognitive regime, theories are tested for predictive utility. Since theories are apt to be thrown out or amended, knowing truth is an approximation of its absolute value (discounted from the fullest extent), much as Socrates and Plato postulated.
Platonically, there is "nothing" really new. Everything reoccurs in different forms over time (and space), becoming a closer approximation of absolute value (what science discounts, or nulls in the form of hypotheses, to absolute zero, or certainty, otherwise known as the unchangeable condition of God, or what is Platonically described as "the world of ideas").
Classical cosmology (the theory of everything) does not postulate random events. It postulates truth can be absolutely known (things appear random if you don't know the truth--or have perfect knowledge like God). Everything can be known by its ideal measure (like the 100% measure of fully extended probability we use today). It is not necessary to null hypotheses because every thing teleologically tends to the ideal form of it (including the risk, which ideally is zero).
It is unnecessary to verifiably know something by knowing what it is not if you already know what it is to the fullest extent (its absolute 100% value).
Political, economic, and religious arguments, for example, tend to the classical, teleological form to avoid the risk of verifiable hypotheses. Arguments are reduced to axiomatic moral principles, or hazards, that run the risk of negative consequence if violated. Since predictive utility tends to self-fulfilling prophecy (like not cutting taxes for the rich causes unemployment), validation of axiomatic principles masquerade as empirical verification of hypotheses (with the proposition of the risk "determining" or prophesying its absolute value).
Classical philosophers tended to describe and explain the dynamic of nature with a teleological attribution. It was not until the scientific revolution that the classical, teleological interpretation was replaced with ontology.
Successful use of the scientific method launched the current probabilistic interpretation of the risk in which we null hypotheses, discounting the possibility that we can ever obtain absolute truth, ontologically anyway.
The Constitution of the United states was also a product of this cognitive, scientific revolution. We recognize the empirical benefit of a verifiable government by consent, discounting the probable extent of the risk to the inalienable right of self-determination.
Delimiting the risk to the direct control of The People allows for a scientific process--a continuing revolution--of continuous improvement (maximum participation) rather than a government of self-adulated kings, criminals, or any of various forms of elite incompetence. An intellectual, moral competence is especially important and inherent to a pluralistic model, recognizing and protecting the stability of keeping risk pluralistic and deconsolidated (exactly the opposite of what we have now).
Rather than economy-of-scale organizations that are too big to fail and create barriers to entry (minimum participation), maintaining a pluralistic model recognizes the moral value and practical effect of deconsolidated risk. A risk ontology that systematically operationalizes self-interest with the public good recognizes that providing for the wealth of nations is not by means of its deprivation.
Accumulating a benefit by causing a detriment (deprivation of others) is not in anyone's self-interest. It accumulates risk and causes general instability.
Ensuring the fullest probability of participation (pluralism) is not only a moral sentiment, it is a practical measure that, as our founders recognized, ensures the general welfare (avoids the accumulation of systemic risk that plagues us now).
Pluralism operates with the working hypothesis that we all know everything together, forming the perfect reduction of risk--self-determination or self-government. That reduction does not occur without the fullest participation, and income is required to participate. Self-determination is dependant on the provision of income, not its deprivation.
Providing for the commonwealth is a moral imperative (it has absolute value). If we want to reduce systemic risk, it means absolutely everything.
While we struggle to come up with a scientific theory of everything, classical philosophers breezed right through epistemic cosmology 101 with absolute, but unverified, knowledge of the truth.
By means of verification we recognize that many things once considered to be empirical truth and declarative knowledge (like the earth is flat) are now declared disconfirmed hypotheses. Indeed, we tend toward an absolute value of knowing what the truth really is, but fully dependant on our perception of it. Truth is a phenomenology. It is not independant of the mind as Aristotle argued (just as the real value of capital is not alienated from labor as Marx conceived it, but fully realized in the detrimental value of the risk).
The risk analyst is presented with a phenomenology of the risk that this series of articles has attempted to demonstrate. Analysts are keenly aware that the perception of risk is both a determining variable and the variable to be determined. It makes for an especially fractile reduction in which acting on the information affects the values being observed (the risk of unintended consequences--randomness that classical philosophers attribute to ignorance of absolute values).
Perception of the risk not only determines the probability, but the relative value risk yields in a current environment. Current, relative value is a coefficient of an absolute value that is knowingly increased or reduced. The risk coefficient (risk-to-reward) indicates the extent of the risk and delimits the risk to be encouraged or avoided. We then discover (perceive) the extent to which we are all knowingly and willingly "determined" to discount the probability of what we don't want will occur.
As we discount the probability of having obtained knowledge, we consistently verify that there is no absolute zero (trying to eliminate economic risk, for example, produces political risk in equal proportion). Wherever we find nothing, something always appears. So, maybe the classics are right--we are just discounting the probability of our ignorance to discover what we knew all along.
While modern physics has stirred a popular critique of scientific inquiry, let's turn the heightened philosophical awareness to the political-economic domain where critical thinking gravitates against what remains of social inertial forces.
The risk is always fully valued. Discounting the probability it will not occur (the null hypothesis) is the risk as far as we can determine. So, the only way to be completely certain (the probability of risk fully discounted to zero) is to have complete control (like consolidating markets to determine the extent of the risk, for example, or by controlled experiment and nulled hypotheses as a scientist).
In the world of scientific inquiry, hypotheses are nulled to verify the probability of having acquired truth, or knowledge, as best can be possibly determined. Even after this rigorous, empirical, cognitive regime, theories are tested for predictive utility. Since theories are apt to be thrown out or amended, knowing truth is an approximation of its absolute value (discounted from the fullest extent), much as Socrates and Plato postulated.
Platonically, there is "nothing" really new. Everything reoccurs in different forms over time (and space), becoming a closer approximation of absolute value (what science discounts, or nulls in the form of hypotheses, to absolute zero, or certainty, otherwise known as the unchangeable condition of God, or what is Platonically described as "the world of ideas").
Classical cosmology (the theory of everything) does not postulate random events. It postulates truth can be absolutely known (things appear random if you don't know the truth--or have perfect knowledge like God). Everything can be known by its ideal measure (like the 100% measure of fully extended probability we use today). It is not necessary to null hypotheses because every thing teleologically tends to the ideal form of it (including the risk, which ideally is zero).
It is unnecessary to verifiably know something by knowing what it is not if you already know what it is to the fullest extent (its absolute 100% value).
Political, economic, and religious arguments, for example, tend to the classical, teleological form to avoid the risk of verifiable hypotheses. Arguments are reduced to axiomatic moral principles, or hazards, that run the risk of negative consequence if violated. Since predictive utility tends to self-fulfilling prophecy (like not cutting taxes for the rich causes unemployment), validation of axiomatic principles masquerade as empirical verification of hypotheses (with the proposition of the risk "determining" or prophesying its absolute value).
Classical philosophers tended to describe and explain the dynamic of nature with a teleological attribution. It was not until the scientific revolution that the classical, teleological interpretation was replaced with ontology.
Successful use of the scientific method launched the current probabilistic interpretation of the risk in which we null hypotheses, discounting the possibility that we can ever obtain absolute truth, ontologically anyway.
The Constitution of the United states was also a product of this cognitive, scientific revolution. We recognize the empirical benefit of a verifiable government by consent, discounting the probable extent of the risk to the inalienable right of self-determination.
Delimiting the risk to the direct control of The People allows for a scientific process--a continuing revolution--of continuous improvement (maximum participation) rather than a government of self-adulated kings, criminals, or any of various forms of elite incompetence. An intellectual, moral competence is especially important and inherent to a pluralistic model, recognizing and protecting the stability of keeping risk pluralistic and deconsolidated (exactly the opposite of what we have now).
Rather than economy-of-scale organizations that are too big to fail and create barriers to entry (minimum participation), maintaining a pluralistic model recognizes the moral value and practical effect of deconsolidated risk. A risk ontology that systematically operationalizes self-interest with the public good recognizes that providing for the wealth of nations is not by means of its deprivation.
Accumulating a benefit by causing a detriment (deprivation of others) is not in anyone's self-interest. It accumulates risk and causes general instability.
Ensuring the fullest probability of participation (pluralism) is not only a moral sentiment, it is a practical measure that, as our founders recognized, ensures the general welfare (avoids the accumulation of systemic risk that plagues us now).
Pluralism operates with the working hypothesis that we all know everything together, forming the perfect reduction of risk--self-determination or self-government. That reduction does not occur without the fullest participation, and income is required to participate. Self-determination is dependant on the provision of income, not its deprivation.
Providing for the commonwealth is a moral imperative (it has absolute value). If we want to reduce systemic risk, it means absolutely everything.
While we struggle to come up with a scientific theory of everything, classical philosophers breezed right through epistemic cosmology 101 with absolute, but unverified, knowledge of the truth.
By means of verification we recognize that many things once considered to be empirical truth and declarative knowledge (like the earth is flat) are now declared disconfirmed hypotheses. Indeed, we tend toward an absolute value of knowing what the truth really is, but fully dependant on our perception of it. Truth is a phenomenology. It is not independant of the mind as Aristotle argued (just as the real value of capital is not alienated from labor as Marx conceived it, but fully realized in the detrimental value of the risk).
The risk analyst is presented with a phenomenology of the risk that this series of articles has attempted to demonstrate. Analysts are keenly aware that the perception of risk is both a determining variable and the variable to be determined. It makes for an especially fractile reduction in which acting on the information affects the values being observed (the risk of unintended consequences--randomness that classical philosophers attribute to ignorance of absolute values).
Perception of the risk not only determines the probability, but the relative value risk yields in a current environment. Current, relative value is a coefficient of an absolute value that is knowingly increased or reduced. The risk coefficient (risk-to-reward) indicates the extent of the risk and delimits the risk to be encouraged or avoided. We then discover (perceive) the extent to which we are all knowingly and willingly "determined" to discount the probability of what we don't want will occur.
As we discount the probability of having obtained knowledge, we consistently verify that there is no absolute zero (trying to eliminate economic risk, for example, produces political risk in equal proportion). Wherever we find nothing, something always appears. So, maybe the classics are right--we are just discounting the probability of our ignorance to discover what we knew all along.
While modern physics has stirred a popular critique of scientific inquiry, let's turn the heightened philosophical awareness to the political-economic domain where critical thinking gravitates against what remains of social inertial forces.
Saturday, September 11, 2010
Political Extension of the Risk
Politically extending the risk by means of public policy confirms income class and the current value of the risk in a zero-sum proportion.
The current debate is consumed with income-class valuations. Which income class, for example, is more worthy of risk protection--the class more, or less able to "take" the risk? It is a question that is economically motivated (the zero-sum) but politically (ideologically) determined.
Income is not only the measure of success, it is the variable that determines it. The more income (the ability to pay), the more protection from the risk which, by virtue of the accumulation, extends from it. No better way to protect yourself from risk than to determine who takes it when and how, and even more important, politically, why?
Why is a philosophical question, and while it is a speculative endeavor it does not preclude empirical measurement. Quite the contrary, it is empirically verifiable by very clearly defined class distinctions.
Like Skinner said about psychological motivation--you can't see it but you can measure its effects.
The effect of tax cuts for the rich, for example, has yielded an obvious zero-sum benefit. Those representing the rich, of course, argue the effect was neither caused by the benefit (accumulation of income) nor intended to cause harm (consolidation of lower-class assets into upper-class income). While the motive is speculative, the effect is clearly verifiable.
Now that the wealth is so consolidated that the only risk to be taken is the risk nobody wants, the capital accumulated is ready to merge and acquire assets distressed by the accumulation. At this point, the risk is so over-extended, the additional unemployment produced by M&A will push the economy over the edge.
The political risk (the gamma) is so extensive, even the typically complacent, ideologically compliant middle class is radicalized. The recession has made moving into the upper class so verifiably improbable, and being busted down (the risk being extended to anyone of lesser means) probable, the probability of risk is reaching its fullest, ontological extent.
The probability of risk (change) is never zero. It is always 100 percent.
The current debate is consumed with income-class valuations. Which income class, for example, is more worthy of risk protection--the class more, or less able to "take" the risk? It is a question that is economically motivated (the zero-sum) but politically (ideologically) determined.
Income is not only the measure of success, it is the variable that determines it. The more income (the ability to pay), the more protection from the risk which, by virtue of the accumulation, extends from it. No better way to protect yourself from risk than to determine who takes it when and how, and even more important, politically, why?
Why is a philosophical question, and while it is a speculative endeavor it does not preclude empirical measurement. Quite the contrary, it is empirically verifiable by very clearly defined class distinctions.
Like Skinner said about psychological motivation--you can't see it but you can measure its effects.
The effect of tax cuts for the rich, for example, has yielded an obvious zero-sum benefit. Those representing the rich, of course, argue the effect was neither caused by the benefit (accumulation of income) nor intended to cause harm (consolidation of lower-class assets into upper-class income). While the motive is speculative, the effect is clearly verifiable.
Now that the wealth is so consolidated that the only risk to be taken is the risk nobody wants, the capital accumulated is ready to merge and acquire assets distressed by the accumulation. At this point, the risk is so over-extended, the additional unemployment produced by M&A will push the economy over the edge.
The political risk (the gamma) is so extensive, even the typically complacent, ideologically compliant middle class is radicalized. The recession has made moving into the upper class so verifiably improbable, and being busted down (the risk being extended to anyone of lesser means) probable, the probability of risk is reaching its fullest, ontological extent.
The probability of risk (change) is never zero. It is always 100 percent.
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