In recent testimony before Congress, the chairman of the Federal Reserve said we have the reserves to pay down the public debt and reduce the budget deficit. We have the money to reduce debt, Bernanke said, the question is whether we have the political will.
According to Bernanke, current monetary policy is designed to accommodate debt reduction without increasing the money supply. The money available for debt reduction, then, as he suggests, is willfully held in reserve and politically motivated (existing in a gamma-risk proportion). It is the Fed's charge to manage the reserve (the accumulated risk) without political motive, coaxing the accumulated wealth into productive capital.
The Fed is empowered to use the reserve to charge the economy with economic incentive. The incentive, bureaucratically derived, provides jobs and consumer demand (inflation: low bond prices at a high rate of economic interest). It provides the demand needed to resist falling prices as income rises at the top margin (deflation: high bond prices with a low rate of economic interest that accommodates the demand for debt).
Debt reduction, politically motivated, poses extreme risk for an already beleaguered middle and lower class who need an economic solution. The current solution, binomially determined, is to politically exact economic austerity (exceeding a level of tolerance that a free market will not abide). While Democrats pose to resist the austerity, Republicans anchor the resulting political compromise from an extreme position. The upper class wins, and everyone else loses. It is a political solution that will increase the demand for debt while the call is for its reduction.
The instability of this contradiction is what Bernanke is referring to. Anchoring is a gaming tactic that will conserve, and horde, the value needed to achieve growth while reducing debt. With the needed value conserved as wealth in the upper class, the lower classes must submit to austerity to share in that wealth (to convert it back into working capital). The systematic alternative (the political will binomially determined) is to realign with Democrats. The inherent risk of liability associated with consolidation of wealth (the risk of loss fully assumed) is then systematically accumulated into public debt (raising the debt ceiling). In true Hamiltonian form, elite authority masquerades as the will of the people, appearing to achieve the general welfare with the consent of the governed, falsely reducing the gamma risk to a proprietary (alpha) proportion of self-determination. The risk, however, is really being managed in the aggregate by a bureaucratic elite, resisting the declining rate of profit which is inherent to consolidation of the wealth and fundamentally defines "the risk" (the loss fully assumed in the alpha dimension).
Remember, in order to make a profit from the risk, there has to be someone there to buy what you are selling. There has to be a counter-party to the risk. Binomially, the political will is systematically determined, always providing a counter-party to the risk, delivering economic detriment to The People (the non-elite) with virtually no liability. Accountability is sufficiently absorbed by the political process to ensure economic instability (the risk to be arbitraged), and the outcome is patriotically characterized as the noble heritage of The Revolution to be conserved at all cost lest we risk the foundation of civil society.
Funny how the correction for what ails us is always what ails us. The value of the risk (the risk of loss) is always conserved (fully assumed) and politically delivered to the counter party.
The fix for the fix is to demand an economic solution--the political will, as Bernanke suggests, to ensure a free and unconsolidated marketplace which requires a distribution from the accumulation to pluralize, rather than consolidate, industry and markets. Using the accumulation (the huge horde of corporate cash and personal wealth) to merge industry and markets is anti-free market (anti-American dream).
Bernanke favors a more progressive tax code (allowing the upper-end tax cuts to expire) because he knows it is necessary to open what is otherwise an increasingly closed market that supports a deflationary trend, causing the need for debt. The question is less about whether we are capitalist or communist or this or that, but whether we are free, and without a free market, freedom is lost.
Tuesday, January 11, 2011
Saturday, January 8, 2011
Assuming a Proprietary Position
For small investors looking to not rely on social security for retirement, investing has resulted in reduction of net worth; and at this point, of course, average-income Americans are being told they must work longer and for less money. Let's just say that small investors are expected to assume their natural position, and like it.
According to conventional economic theory, the loss of net worth (and thus the increased need for welfare) is a legitimate function of freely taking a position in the marketplace and taking on the risk "posed" by assuming the position. If we didn't want to take the risk, then we should not have posed in that position.
Even after having been thoroughly violated, the risk seems to be permanently posed in, you know, that position.
Without being too risque, but to offer an apt description, let's just say that average-income Americans have been royally turned. According to conventional wisdom, however, average Americans knowingly and willingly assumed the position.
Of course, the exculpatory assumption of the risk is false. Much of the risk was assumed in the dark. Victims were not fully aware of the extent of the risk until it had been fully assumed, and the public is still not fully aware of the extent. There is much more risk that remains to be assumed (dark marketed). At this point, the public is being politically prepared for the extended application of the risk which is modeled to be fully assumed but not necessarily assigned by visible means of tax and subsidy.
Who will be assigned the fullest extent of the risk is to be decided in the current political process, and it is no coincidence that the process is currently being defined as having a right-wing bias. The compromises that occur will be political mitigation of economic risk (i.e., mitigation of the risk in the gamma proportion).
Elite theory postulates that The People naturally assume the proprietary position they are in. It is foolish to assume the position of risk and expect not to have to take it. Although small investors didn't see what was coming, they should have known that by putting their net worth out there, they were likely to be stuck with the risk (and size, especially when it comes to investing, does matter).
So, with the risk of loss fully assumed, The People are fully expected to assume the proprietary position...but not without all the good taste, civility and propriety of due process, of course.
According to conventional economic theory, the loss of net worth (and thus the increased need for welfare) is a legitimate function of freely taking a position in the marketplace and taking on the risk "posed" by assuming the position. If we didn't want to take the risk, then we should not have posed in that position.
Even after having been thoroughly violated, the risk seems to be permanently posed in, you know, that position.
Without being too risque, but to offer an apt description, let's just say that average-income Americans have been royally turned. According to conventional wisdom, however, average Americans knowingly and willingly assumed the position.
Of course, the exculpatory assumption of the risk is false. Much of the risk was assumed in the dark. Victims were not fully aware of the extent of the risk until it had been fully assumed, and the public is still not fully aware of the extent. There is much more risk that remains to be assumed (dark marketed). At this point, the public is being politically prepared for the extended application of the risk which is modeled to be fully assumed but not necessarily assigned by visible means of tax and subsidy.
Who will be assigned the fullest extent of the risk is to be decided in the current political process, and it is no coincidence that the process is currently being defined as having a right-wing bias. The compromises that occur will be political mitigation of economic risk (i.e., mitigation of the risk in the gamma proportion).
Elite theory postulates that The People naturally assume the proprietary position they are in. It is foolish to assume the position of risk and expect not to have to take it. Although small investors didn't see what was coming, they should have known that by putting their net worth out there, they were likely to be stuck with the risk (and size, especially when it comes to investing, does matter).
So, with the risk of loss fully assumed, The People are fully expected to assume the proprietary position...but not without all the good taste, civility and propriety of due process, of course.
Thursday, January 6, 2011
Creating Counter-Party Risk
While risk is coefficiently constant, parties can be created in which risk is assigned to cause a reward. Depending on the ability to make the market, market participants are put in a position of proprietary profit or loss.
The more consolidated industry and markets become, the more ability acquired to make the market and position a counter-party to take the risk (and thus the need for government regulation to control the extent of the risk, or the externalities). In order for the beneficiary to gain and secure the entire extent of the profit, management of the risk also includes avoiding the liability of gaining profit by causing loss (the retributive value of the risk--a counter-risk--that cannot be avoided, only accumulated and distributed in a gamma, or political, proportion).
The propraetors of who win and lose in the province of finance have to be careful not to look like tyrants, especially if the legitimacy of the outcome is dependant on the lack of tyranny. In order to drive a distraction, attributions are created to suggest a cause-effect relationship--like when congressman Issa puts out a call for CEO's to contact his oversight committee regarding regulations that prevent them from creating jobs (instead of financing headline inflation, which puts jobs at risk).
Instead of creating jobs, the capital accumulated from middle-class net worth is being used to cause headline inflation. While demand is being reduced, the ability to command the price (which also determines the quantity that can be consumed without debt) increases. It gives the appearance of general prosperity (inflation), but is really an indication of general crisis (deflation). The value of counter-party risk is created, driving up stock and bond prices, for example, but at the expense, rather than the benefit, of middle-class net worth. The result is a middle class deliberately positioned to own more debt than equity. The demand for government then increases to consolidate the risk of default into the form of public, or sovereign, debt, which overleverages the counter-party risk into the persistent value of unemployment while the call is for cutting the public budget.
While cutting the public budget and paying down the debt is good for demonstrating power and verifying class distinction, it is exceedingly bad for the middle class. In fact, it is catastrophic, reducing the difference between the middle class and poor in the worst possible way--not by providing, but by depriving the American dream. We will blast back to the past when Henry Ford consoled unemployed Americans with the hope of having nowhere to look but forward. What happened going forward was world war and unprecedented government regulation of the private sector, especially the financial sector to prevent the ability to extend counter-party risk into the current crisis proportion.
While regulation can affect employment levels, it is a hefty intellectual strain to suggest, as congressman Issa does, that government causes unemployment. It is even more of a strain to suggest that government regulation of industry and markets has caused our currently high rate when the latest financial crisis occurred in the wake of a massive deregulation that congressman Issa is sure to suggest we desperately need to achieve full employment with low inflation. This policy, as we well know, positions the middle class to take the risk; and as we have seen, public policy is not based on what we know, but on what can be politically compromised into the legitimate public authority of the outcome--reduction of middle-class net worth (creation of the counter-party risk and reward).
Middle-class incomes did not gain from financial empowerment. Small, proprietary accounts have been easily positioned to take the risk. According to Ivy-League economists, the massive loss of net worth just evaporated, but small investors are too sophisticated to buy that, fully realizing that their wealth was consolidated into the upper class.
The liability of such a massive conversion and consolidation of wealth would reasonably result in the value being promptly retributed in the gamma proportion. Instead, there was a binomial, politically organized conservation of the risk. Populist sentiment was easily channeled into a conservative, ideological rhetoric that denies empirical valuation of public policy and programs by substitution, allowing continued overextension of the risk into a gamma proportion. The result is political compromise substituting for empirical truth, limiting progress to the dimension of an historical dialectic.
The political system is binomially organized to limit the liability of the risk. The two parties are counter-parties to the risk, safely limiting the liability to the authority of a political resolution. Ensuring an economic resolution would essentially mean deconsolidation of the risk into a more directly democratic (a more genuinely proprietary) resolution of conflicting interests.
While democrats have traditionally expressed the sentiment that the voice of the people is the voice of God, according to republicans, such a sentiment is inimical to brokering the compromises that are necessary for a civil society. Compromise, however, is no substitute for the empirical value (the self-governance) of direct popular consent through the proprietary means of a free-market accountability. Such an accountability (the measure of legitimate governance) only comes with ensuring full deconsolidation of the risk. It is not a rhetoric of hope. It is a practical philosophy that we need now in the fullest practical measure.
Without ensuring deconsolidation of the risk in priority, the probability of a protracted recessionary trend with high unemployment and inflation is politically confirmed. The retributive value has been successfully retrenched and reinvested to conserve the accumulated value of the risk. It is a remarkable demonstration of real, raw power concentrated into the hands of an elite with the apparent popular consent of the governed. Given the obvious cause-effect relationship (the value of the benefit and the detriment being so obviously equivalent), it has to be an unprecedented exercise of power in both a quantitative and qualitative proportion.
The new normal is the natural extension of the Hamiltonian model that Jefferson warned We the People be especially wary of: knowingly and willingly consenting to the means of our exploitation. It used to be that The People were not altogether sure about the means, but now we are aware of being positioned for the counter-party risk. The iterative value of the means to ends confirms the legitimate value of the risk and its conservation as "the" expected value.
We must keep in mind, however, that nature, despite whatever delusion of power we may possess, will surely correct for such an egregious error in good judgment. The risk will be so overleveraged and out of proportion it will be catastrophic. It will implode into the gamma dimension and civility will once again become a thing of the past.
We should not allow ourselves to pass into the darkness of deliberate detriment. Whether dialectically determined or technically derived, We the People are, by Nature, the Sovereign.
Our fate, especially in the age of science, is evermore proprietary and, thereby, fully determined. We are but counter-parties to ourselves. To know thy self is to realize the risk of loss is always fully assumed: coefficiently constant, intellectually valued, and fatefully consumed with moral existence.
The more consolidated industry and markets become, the more ability acquired to make the market and position a counter-party to take the risk (and thus the need for government regulation to control the extent of the risk, or the externalities). In order for the beneficiary to gain and secure the entire extent of the profit, management of the risk also includes avoiding the liability of gaining profit by causing loss (the retributive value of the risk--a counter-risk--that cannot be avoided, only accumulated and distributed in a gamma, or political, proportion).
The propraetors of who win and lose in the province of finance have to be careful not to look like tyrants, especially if the legitimacy of the outcome is dependant on the lack of tyranny. In order to drive a distraction, attributions are created to suggest a cause-effect relationship--like when congressman Issa puts out a call for CEO's to contact his oversight committee regarding regulations that prevent them from creating jobs (instead of financing headline inflation, which puts jobs at risk).
Instead of creating jobs, the capital accumulated from middle-class net worth is being used to cause headline inflation. While demand is being reduced, the ability to command the price (which also determines the quantity that can be consumed without debt) increases. It gives the appearance of general prosperity (inflation), but is really an indication of general crisis (deflation). The value of counter-party risk is created, driving up stock and bond prices, for example, but at the expense, rather than the benefit, of middle-class net worth. The result is a middle class deliberately positioned to own more debt than equity. The demand for government then increases to consolidate the risk of default into the form of public, or sovereign, debt, which overleverages the counter-party risk into the persistent value of unemployment while the call is for cutting the public budget.
While cutting the public budget and paying down the debt is good for demonstrating power and verifying class distinction, it is exceedingly bad for the middle class. In fact, it is catastrophic, reducing the difference between the middle class and poor in the worst possible way--not by providing, but by depriving the American dream. We will blast back to the past when Henry Ford consoled unemployed Americans with the hope of having nowhere to look but forward. What happened going forward was world war and unprecedented government regulation of the private sector, especially the financial sector to prevent the ability to extend counter-party risk into the current crisis proportion.
While regulation can affect employment levels, it is a hefty intellectual strain to suggest, as congressman Issa does, that government causes unemployment. It is even more of a strain to suggest that government regulation of industry and markets has caused our currently high rate when the latest financial crisis occurred in the wake of a massive deregulation that congressman Issa is sure to suggest we desperately need to achieve full employment with low inflation. This policy, as we well know, positions the middle class to take the risk; and as we have seen, public policy is not based on what we know, but on what can be politically compromised into the legitimate public authority of the outcome--reduction of middle-class net worth (creation of the counter-party risk and reward).
Middle-class incomes did not gain from financial empowerment. Small, proprietary accounts have been easily positioned to take the risk. According to Ivy-League economists, the massive loss of net worth just evaporated, but small investors are too sophisticated to buy that, fully realizing that their wealth was consolidated into the upper class.
The liability of such a massive conversion and consolidation of wealth would reasonably result in the value being promptly retributed in the gamma proportion. Instead, there was a binomial, politically organized conservation of the risk. Populist sentiment was easily channeled into a conservative, ideological rhetoric that denies empirical valuation of public policy and programs by substitution, allowing continued overextension of the risk into a gamma proportion. The result is political compromise substituting for empirical truth, limiting progress to the dimension of an historical dialectic.
The political system is binomially organized to limit the liability of the risk. The two parties are counter-parties to the risk, safely limiting the liability to the authority of a political resolution. Ensuring an economic resolution would essentially mean deconsolidation of the risk into a more directly democratic (a more genuinely proprietary) resolution of conflicting interests.
While democrats have traditionally expressed the sentiment that the voice of the people is the voice of God, according to republicans, such a sentiment is inimical to brokering the compromises that are necessary for a civil society. Compromise, however, is no substitute for the empirical value (the self-governance) of direct popular consent through the proprietary means of a free-market accountability. Such an accountability (the measure of legitimate governance) only comes with ensuring full deconsolidation of the risk. It is not a rhetoric of hope. It is a practical philosophy that we need now in the fullest practical measure.
Without ensuring deconsolidation of the risk in priority, the probability of a protracted recessionary trend with high unemployment and inflation is politically confirmed. The retributive value has been successfully retrenched and reinvested to conserve the accumulated value of the risk. It is a remarkable demonstration of real, raw power concentrated into the hands of an elite with the apparent popular consent of the governed. Given the obvious cause-effect relationship (the value of the benefit and the detriment being so obviously equivalent), it has to be an unprecedented exercise of power in both a quantitative and qualitative proportion.
The new normal is the natural extension of the Hamiltonian model that Jefferson warned We the People be especially wary of: knowingly and willingly consenting to the means of our exploitation. It used to be that The People were not altogether sure about the means, but now we are aware of being positioned for the counter-party risk. The iterative value of the means to ends confirms the legitimate value of the risk and its conservation as "the" expected value.
We must keep in mind, however, that nature, despite whatever delusion of power we may possess, will surely correct for such an egregious error in good judgment. The risk will be so overleveraged and out of proportion it will be catastrophic. It will implode into the gamma dimension and civility will once again become a thing of the past.
We should not allow ourselves to pass into the darkness of deliberate detriment. Whether dialectically determined or technically derived, We the People are, by Nature, the Sovereign.
Our fate, especially in the age of science, is evermore proprietary and, thereby, fully determined. We are but counter-parties to ourselves. To know thy self is to realize the risk of loss is always fully assumed: coefficiently constant, intellectually valued, and fatefully consumed with moral existence.
Thursday, December 30, 2010
Proprietary Position
We tend to keep risk confined to a Cartesian geometric. There is, however, risk in a third dimension to time and pitch. It is the proprietary risk.
Proprietary risk is essentially who owns what when--or the extent of your proprietary position within the binary space of time and pitch. Within this space, your risk is either on or off (the risk of loss is fully assumed). The amount of risk owned (or assigned) appears to oscillate between 0 and 1 in two dimensions, but your proprietary position is correlatively constant. Proprietary risk, actually, is always either zero or one, which is why, for example, people that do not need credit are always able to get it (with the risk of loss to those that can't fully assumed, keeping the value in reserve).
With the business cycle, proprietary risk demonstrates its consolidation in the gamma proportion. So, when a distribution occurs from an accumulation, while the proportion of risk appears to change, it is actually conserved in the gamma proportion in the form of extended debt and the risk of default. Consolidation of the risk is reconfirmed in the accumulation phase of the cycle when the risk is off and the call is for debt reduction, like we have now.
Your position (how much economic rent you pay) is confirmed by cyclical oscillation, actuating the proprietary risk (the amount of risk you verifiably own) and the probability of default in the accumulation phase. Since the risk follows the reward, it actually consolidates with the wealth; and since the distribution occurs in the form of debt, not equity, the accumulation phase of the cycle leaves you with a debt you do not actually own. The risk was never proprietarily yours. It is consolidated, extended, and reclaimed with the reward--it is a liability that accumulates with the equity in a gamma-risk proportion to be politically distributed in the form of a public good.
According to Hamiltonians the power to distribute risk independent of reward is a public good because it provides productive incentive. It inspires a vibrant economy.
The non-elite aspire to elite power, which is the ability to extend proprietary risk without displacing the position of the reward and the power it assumes, managing the liability by renting it out. The rent puts the non-elite in the position they are in and the debt assumed is then called proprietary--it is their property, defining their status or class by extension of the risk, just like the king did.
Today, the extension of risk takes the form of positioning counter-party risk. Since we all have the equal right to pursue happiness like the king, it is assumed we all equally own the risk in priority like the king. It is a false assumption (with the risk of loss fully assumed).
Constitutionally, we are all equally empowered to manage the risk from a proprietary position. We all individually decide whether to take (assume) the risk extended to us or not. The Revolution ensures us all the right to take ownership of the risk, which means, just as it was with the king, the risk of loss is fully assumed.
According to the Hamiltonian model, the risk is what we are all entitled to. Hamiltonians make sure it is well extended, ensuring the risk of loss demonstrates and tests the extent of power (with the risk of loss fully assumed in the gamma proportion).
When Bank of America and Goldman Sachs leverage commodity prices from their proprietary desks at a 10-1 ratio--extending risk, demonstrating power--what position does that put you in?
Proprietary risk is essentially who owns what when--or the extent of your proprietary position within the binary space of time and pitch. Within this space, your risk is either on or off (the risk of loss is fully assumed). The amount of risk owned (or assigned) appears to oscillate between 0 and 1 in two dimensions, but your proprietary position is correlatively constant. Proprietary risk, actually, is always either zero or one, which is why, for example, people that do not need credit are always able to get it (with the risk of loss to those that can't fully assumed, keeping the value in reserve).
With the business cycle, proprietary risk demonstrates its consolidation in the gamma proportion. So, when a distribution occurs from an accumulation, while the proportion of risk appears to change, it is actually conserved in the gamma proportion in the form of extended debt and the risk of default. Consolidation of the risk is reconfirmed in the accumulation phase of the cycle when the risk is off and the call is for debt reduction, like we have now.
Your position (how much economic rent you pay) is confirmed by cyclical oscillation, actuating the proprietary risk (the amount of risk you verifiably own) and the probability of default in the accumulation phase. Since the risk follows the reward, it actually consolidates with the wealth; and since the distribution occurs in the form of debt, not equity, the accumulation phase of the cycle leaves you with a debt you do not actually own. The risk was never proprietarily yours. It is consolidated, extended, and reclaimed with the reward--it is a liability that accumulates with the equity in a gamma-risk proportion to be politically distributed in the form of a public good.
According to Hamiltonians the power to distribute risk independent of reward is a public good because it provides productive incentive. It inspires a vibrant economy.
The non-elite aspire to elite power, which is the ability to extend proprietary risk without displacing the position of the reward and the power it assumes, managing the liability by renting it out. The rent puts the non-elite in the position they are in and the debt assumed is then called proprietary--it is their property, defining their status or class by extension of the risk, just like the king did.
Today, the extension of risk takes the form of positioning counter-party risk. Since we all have the equal right to pursue happiness like the king, it is assumed we all equally own the risk in priority like the king. It is a false assumption (with the risk of loss fully assumed).
Constitutionally, we are all equally empowered to manage the risk from a proprietary position. We all individually decide whether to take (assume) the risk extended to us or not. The Revolution ensures us all the right to take ownership of the risk, which means, just as it was with the king, the risk of loss is fully assumed.
According to the Hamiltonian model, the risk is what we are all entitled to. Hamiltonians make sure it is well extended, ensuring the risk of loss demonstrates and tests the extent of power (with the risk of loss fully assumed in the gamma proportion).
When Bank of America and Goldman Sachs leverage commodity prices from their proprietary desks at a 10-1 ratio--extending risk, demonstrating power--what position does that put you in?
Tuesday, December 21, 2010
Value in Reserve
The U.S. dollar is our currency. It has "current" value held in reserve.
So that the currency has predictable, stable, present value, the value is stored (held in reserve) and represented in the form of Federal Reserve Notes. Held in reserve, the currency is not only more manageably stable, or unstable, but more portable, backed by the full faith and credit of the Federal government. In other words, the Federal Reserve provides credit instruments that are legally tendered for goods and services.
Business can be conducted (goods and services exchanged) with other currencies (scrip, for example), but the income it produces can only be valued, declared, and taxed in the dollar denomination (the rate of exchange), legally dependant on the value in reserve. While value can be exchanged in kind, for example, the income it produces is held in reserve--The Federal Reserve.
States can print their own money, but its "currency" is held in Federal reserve. A state would increase the value of its currency by increasing its reserves. Since a state cannot buy Reserve Notes with its currency, it can only buy its currency with Reserve Notes, the more scrip it prints the more debt it assumes against the value held in reserve (i.e., in an account credited to The Federal Reserve Bank).
The currency is uniplexed. Flowing from the reserve, the monoplexed value is directed to support an accumulation and achieve an expected valuation at the target with the least possible resistance. The latest political "compromise" on tax policy (deflation), for example, combined with the effect of QE (inflation) demonstrates a process that conserves the transmission of power to at least a one-to-one ratio. The value in reserve is conserved over time and policy space. At the same time, on the economic side, when Bank of America, for example, engages in predatory practices and fraud, it is an expected transmission of value (the extension of the risk) held in reserve (in the form of credit, or debt). Ninety-eight percent of the population incurs an economic detriment with little or no political recourse because it is an expected value reserved for the propertied class who deserve "the credit" (the currency) of being solvent.
So we see the power (the "currency" or credit) of consolidating economic value into reserves. It controls the extent of debt and the extension of the risk, which is why Thomas Jefferson was so strongly opposed to Alexander Hamilton's Federalist scheme to finance private property through credit extended (value iterated) from the top down (in reserve)--what we refer to as "trickle-down economics."
This struggle continues today. It is nothing new, but the means of managing the value in reserve (conserving the stakes since The Revolution) becomes evermore complex and fractal. A joint-stock company is now the modern corporation and the risk it consolidates (the externalities networked) is managed through the Federal Reserve system independent of the Treasury (as an economic entity--a banking entity--independent of political accountability, operating with proprietary accounts).
The modern corporate operates with virtually limited liability and unlimited political and economic influence. Its power far exceeds the power of any one individual that does not reside at the top of the Leviathan. The power of each and every individual is collectively incorporated, held in reserve and extended as the ruling class sees fit just like the king did and just like Jefferson warned us it would, making a mockery of democracy and the republic.
Remember that a democratic legitimacy of power is not supposed to be limited to the political space. A free and unconsolidated marketplace (free-market economics) is supposed to ensure a democratic self-governance (the power to choose on an individual basis) in priority. The republic is to support a democratic form of governance, not operate against it and limit the liberty of the Sovereign (We the People) to act in self-interest. It is to ensure a free and unconsolidated (a democratically proprietary) marketplace in priority with the force and legitimacy of public authority.
While the Federal Reserve operates as a quasi-proprietary entity to keep the markets "open" through the Federal Open Market Committee, the evidence, however, suggests it keeps markets proprietarily closed with enough "easing" and "accommodation" distributed from the reserve (in the form of debt) to suggest an exculpatory, free-market legitimacy.
The republic, operating with value in reserve, either ensures a genuine free market in priority (turning debt into equity) or prosecutes the criminal element that intends to profit by causing a detriment (rigging the market for default, or turning equity into debt).
No one wants to do business with anyone that can't be trusted--anyone that intends to do harm or deliberately cause a detriment. If we have to do business with malefactors, in the absence of a free market we want the liberty (the complete lack of resistance) to prosecute the criminal element. Instead, we have a corporate body that quickly consolidates value and reserves it for exclusive use (most likely to cause a detriment) in a too-big-to-fail, proprietary proportion. (Keep in mind that there is not much reason to be too big to fail unless there is some intended consequence that would otherwise make you fail, like Bank of America's practice of robosigning and dual-track fraud. As long as Bank of America keeps enough in reserve as a member of the reserve system, it will not fail, and would not be allowed to fail anyway because it is too big.)
In a free market, there is little need for prosecuting the criminal element because bad intent will not survive the marketplace without rigging the market. The criminal element will not survive without consolidating industry and markets into economies of scale to network the externalities, which includes limiting and co-opting the political risk (the risk of liability kept in reserve, or the retributive value of the risk that cannot be avoided, only proprietarily accumulated and distributed).
Being suspicious of wealthy interests that want to build economies of scale is characterized as a cynical paranoia--a droll psychosis typical of conspiracy theorists at the analytical margin. The Great Recession, however, is not the result of big government requiring banks to make bad loans. It is the result of overleveraging in a too-big-to-fail proportion, and with that value being held in reserve, it is not yet over. It is a legacy of the Federalists (the Hamiltonian Tories) who gained control of our financial system at the inception of our nation and have maintained it with the extension of debt, prompting Jefferson to declare that The Revolution is not yet over.
If you are disgusted with the federalist extent of power, Jefferson shared your sentiment. The purpose of The Revolution was to create a free people, not a "monocratic" monster with the sentiments of a loyalist.
So that the currency has predictable, stable, present value, the value is stored (held in reserve) and represented in the form of Federal Reserve Notes. Held in reserve, the currency is not only more manageably stable, or unstable, but more portable, backed by the full faith and credit of the Federal government. In other words, the Federal Reserve provides credit instruments that are legally tendered for goods and services.
Business can be conducted (goods and services exchanged) with other currencies (scrip, for example), but the income it produces can only be valued, declared, and taxed in the dollar denomination (the rate of exchange), legally dependant on the value in reserve. While value can be exchanged in kind, for example, the income it produces is held in reserve--The Federal Reserve.
States can print their own money, but its "currency" is held in Federal reserve. A state would increase the value of its currency by increasing its reserves. Since a state cannot buy Reserve Notes with its currency, it can only buy its currency with Reserve Notes, the more scrip it prints the more debt it assumes against the value held in reserve (i.e., in an account credited to The Federal Reserve Bank).
The currency is uniplexed. Flowing from the reserve, the monoplexed value is directed to support an accumulation and achieve an expected valuation at the target with the least possible resistance. The latest political "compromise" on tax policy (deflation), for example, combined with the effect of QE (inflation) demonstrates a process that conserves the transmission of power to at least a one-to-one ratio. The value in reserve is conserved over time and policy space. At the same time, on the economic side, when Bank of America, for example, engages in predatory practices and fraud, it is an expected transmission of value (the extension of the risk) held in reserve (in the form of credit, or debt). Ninety-eight percent of the population incurs an economic detriment with little or no political recourse because it is an expected value reserved for the propertied class who deserve "the credit" (the currency) of being solvent.
So we see the power (the "currency" or credit) of consolidating economic value into reserves. It controls the extent of debt and the extension of the risk, which is why Thomas Jefferson was so strongly opposed to Alexander Hamilton's Federalist scheme to finance private property through credit extended (value iterated) from the top down (in reserve)--what we refer to as "trickle-down economics."
This struggle continues today. It is nothing new, but the means of managing the value in reserve (conserving the stakes since The Revolution) becomes evermore complex and fractal. A joint-stock company is now the modern corporation and the risk it consolidates (the externalities networked) is managed through the Federal Reserve system independent of the Treasury (as an economic entity--a banking entity--independent of political accountability, operating with proprietary accounts).
The modern corporate operates with virtually limited liability and unlimited political and economic influence. Its power far exceeds the power of any one individual that does not reside at the top of the Leviathan. The power of each and every individual is collectively incorporated, held in reserve and extended as the ruling class sees fit just like the king did and just like Jefferson warned us it would, making a mockery of democracy and the republic.
Remember that a democratic legitimacy of power is not supposed to be limited to the political space. A free and unconsolidated marketplace (free-market economics) is supposed to ensure a democratic self-governance (the power to choose on an individual basis) in priority. The republic is to support a democratic form of governance, not operate against it and limit the liberty of the Sovereign (We the People) to act in self-interest. It is to ensure a free and unconsolidated (a democratically proprietary) marketplace in priority with the force and legitimacy of public authority.
While the Federal Reserve operates as a quasi-proprietary entity to keep the markets "open" through the Federal Open Market Committee, the evidence, however, suggests it keeps markets proprietarily closed with enough "easing" and "accommodation" distributed from the reserve (in the form of debt) to suggest an exculpatory, free-market legitimacy.
The republic, operating with value in reserve, either ensures a genuine free market in priority (turning debt into equity) or prosecutes the criminal element that intends to profit by causing a detriment (rigging the market for default, or turning equity into debt).
No one wants to do business with anyone that can't be trusted--anyone that intends to do harm or deliberately cause a detriment. If we have to do business with malefactors, in the absence of a free market we want the liberty (the complete lack of resistance) to prosecute the criminal element. Instead, we have a corporate body that quickly consolidates value and reserves it for exclusive use (most likely to cause a detriment) in a too-big-to-fail, proprietary proportion. (Keep in mind that there is not much reason to be too big to fail unless there is some intended consequence that would otherwise make you fail, like Bank of America's practice of robosigning and dual-track fraud. As long as Bank of America keeps enough in reserve as a member of the reserve system, it will not fail, and would not be allowed to fail anyway because it is too big.)
In a free market, there is little need for prosecuting the criminal element because bad intent will not survive the marketplace without rigging the market. The criminal element will not survive without consolidating industry and markets into economies of scale to network the externalities, which includes limiting and co-opting the political risk (the risk of liability kept in reserve, or the retributive value of the risk that cannot be avoided, only proprietarily accumulated and distributed).
Being suspicious of wealthy interests that want to build economies of scale is characterized as a cynical paranoia--a droll psychosis typical of conspiracy theorists at the analytical margin. The Great Recession, however, is not the result of big government requiring banks to make bad loans. It is the result of overleveraging in a too-big-to-fail proportion, and with that value being held in reserve, it is not yet over. It is a legacy of the Federalists (the Hamiltonian Tories) who gained control of our financial system at the inception of our nation and have maintained it with the extension of debt, prompting Jefferson to declare that The Revolution is not yet over.
If you are disgusted with the federalist extent of power, Jefferson shared your sentiment. The purpose of The Revolution was to create a free people, not a "monocratic" monster with the sentiments of a loyalist.
Monday, December 20, 2010
Being Well Fed
If Bank of America and Goldman Sachs showed up at your door and demanded 2% more for food and fuel so that their trading desks could make a profit, keep their reserves well fed, and provide you with the opportunity to get rich, you would likely be offended to be so brazenly played for a fool. A visibly direct accountability would be very impolitic, so we have the Fed to feed the appetite of bankers for exacting austerity (the economic rent) that keeps the rich well fed at your expense.
Now that FDIC banks can legally operate as investment banks, taking deposits and making loans is only about 20% of a big bank's business. These banks are so big, like Bank of America, they command the marketplace. Don't be fooled by rhetoric that describes this consolidation as the means for feeding you and your family with an efficiency only possible by building economies of scale. No! This continued consolidation is intended to drive down your income and drive up the prices you pay to feed the greed; and all the evidence is there to support that hypothesis.
Continuous consolidation does not allow for more pluralism, it allows for more command and control structured into the Federal Reserve; and what is put in reserve is your income to support banking activity that causes inflation and unemployment, deflating your income, minimizing the probability you can get rich to nearly nothing despite being told otherwise. The result is dependancy on a consolidated business-government entity that commands and controls the risk and the distribution of reward with highly indirect and technocratic means.
The Fed is independent of government authority, managing the banking system independent of political influence while it indirectly exacts austerity (extends political risk) in the name of free-market economics.
With the result being anything but a free market, we have to wonder what exactly we are being fed....
A lot of baloney... and more than enough!
We're being well fed alright.
Now that FDIC banks can legally operate as investment banks, taking deposits and making loans is only about 20% of a big bank's business. These banks are so big, like Bank of America, they command the marketplace. Don't be fooled by rhetoric that describes this consolidation as the means for feeding you and your family with an efficiency only possible by building economies of scale. No! This continued consolidation is intended to drive down your income and drive up the prices you pay to feed the greed; and all the evidence is there to support that hypothesis.
Continuous consolidation does not allow for more pluralism, it allows for more command and control structured into the Federal Reserve; and what is put in reserve is your income to support banking activity that causes inflation and unemployment, deflating your income, minimizing the probability you can get rich to nearly nothing despite being told otherwise. The result is dependancy on a consolidated business-government entity that commands and controls the risk and the distribution of reward with highly indirect and technocratic means.
The Fed is independent of government authority, managing the banking system independent of political influence while it indirectly exacts austerity (extends political risk) in the name of free-market economics.
With the result being anything but a free market, we have to wonder what exactly we are being fed....
A lot of baloney... and more than enough!
We're being well fed alright.
Friday, December 17, 2010
Illusions and Delusions
A binomial dialectic gives the illusion of progress. We should not delude ourselves that the the new tax cuts will be more effectively distributive.
Distributive measures added to the tax-cut extension will be consolidated by merging financial interests. The short-term relief provided suffers the illusion of a counter-cyclical, long-term distributive trend. All the rhetoric about the unfairness of the extension is a Burkeian gaming strategy, binomially determined with the illusion of caring about the people that are sure to suffer a massive detriment the tax policy will extend. Hope that springs eternal, especially in this case, binomially determined, admits to delusion.
Ninety-eight percent, despite the compromise, will suffer no illusion of the extended detriment. The benefit will accumulate into the top two percent with the appearance of populism provided by the Tea Party delegation who very callously oppose the extension of unemployment compensation, for example, which is hardly a populist sentiment.
Interesting how direct access of populist sentiment is limited to conservative values and principles. While unemployment compensation is sure to reverse the deflationary trend by providing the demand businesses need to reduce unemployment (everybody wins in a populist fashion), the Tea Party advocates tax cuts for the rich, which will cancel-out the extended benefit of the compensation, extending the risk of default instead.
Tea Party sentiment will extend unemployment as an expected value, suffering the delusion it will cause employment and thus deficit reduction. Unemployment, however, in Reaganesque, supply-side fashion, does not cause employment and reduce debt. Unemployment rises, the demand for debt increases, and risk continues to accumulate in the gamma proportion.
The expected value of the accumulated risk is about a trillion dollars. Half of that is already consolidated. The other half is expected to be consolidated as monetary and fiscal policy combines in the next two years to fight deflation.
Interest rates will be low to "accommodate" deflation and "ease" the mounting debt. Monetary policy will be applied to prevent a depressionary trend (a point at which the gamma risk is poised for catastrophic distribution and marginal tax rates must settle at 90% to conserve the stakes). A macro-risk ceiling is maintained to conserve the value of the risk (the arbitrage spread).
Accommodation and easing gives the illusion of prosperity. It appears that wealth is expanding, but this is actually risk being extended to consolidate the reward. Equity values, for example, will be pushed to peak levels (along with peak oil, etc.), forever suggesting a recovery that, again, is a hope that springs eternal (the benefit forever arbitraged--economically hedged if not politically compromised--into a detriment).
Slow growth, persistent unemployment and the demand for debt will be risk derived from a financial sector that continues to consolidate. The consolidation of too-big-to-fail institutions will be allowed to be even bigger to manage the extreme demand for debt (the risk of default). As the demand for capital requirement increases, the economy deflates. If there is not a double dip, it will be very close, nevertheless. Preventing the double dip is to reduce the gamma risk (demand for increasing marginal tax rates), not economic growth.
A binomial realignment, as we have seen, will not reverse the deflationary trend, but will bounce it along the upper limit. The political economy of any portfolio is to play the bounce off the ceiling (which measures the expansion and contraction of the risk arbitraged in the gamma proportion).
Investors should not suffer the illusion of risk being managed in an alpha proportion. Preventing a double dip is for the purpose of extending risk into default and consolidation of the equity. It is not to spread the risk, which prevents default, consolidation, and the demand for debt (reducing gamma to arbitrage in the alpha dimension, measuring real economic growth and cost-saving innovation).
A populism that calls for extreme marginal tax cuts while reducing budget deficits suffers a delusion of massive proportion. A current populist sentiment that suffers the illusion of power by merely accepting conservative principles is to allow the empirical power of popular consent to be used against them.
Distributive measures added to the tax-cut extension will be consolidated by merging financial interests. The short-term relief provided suffers the illusion of a counter-cyclical, long-term distributive trend. All the rhetoric about the unfairness of the extension is a Burkeian gaming strategy, binomially determined with the illusion of caring about the people that are sure to suffer a massive detriment the tax policy will extend. Hope that springs eternal, especially in this case, binomially determined, admits to delusion.
Ninety-eight percent, despite the compromise, will suffer no illusion of the extended detriment. The benefit will accumulate into the top two percent with the appearance of populism provided by the Tea Party delegation who very callously oppose the extension of unemployment compensation, for example, which is hardly a populist sentiment.
Interesting how direct access of populist sentiment is limited to conservative values and principles. While unemployment compensation is sure to reverse the deflationary trend by providing the demand businesses need to reduce unemployment (everybody wins in a populist fashion), the Tea Party advocates tax cuts for the rich, which will cancel-out the extended benefit of the compensation, extending the risk of default instead.
Tea Party sentiment will extend unemployment as an expected value, suffering the delusion it will cause employment and thus deficit reduction. Unemployment, however, in Reaganesque, supply-side fashion, does not cause employment and reduce debt. Unemployment rises, the demand for debt increases, and risk continues to accumulate in the gamma proportion.
The expected value of the accumulated risk is about a trillion dollars. Half of that is already consolidated. The other half is expected to be consolidated as monetary and fiscal policy combines in the next two years to fight deflation.
Interest rates will be low to "accommodate" deflation and "ease" the mounting debt. Monetary policy will be applied to prevent a depressionary trend (a point at which the gamma risk is poised for catastrophic distribution and marginal tax rates must settle at 90% to conserve the stakes). A macro-risk ceiling is maintained to conserve the value of the risk (the arbitrage spread).
Accommodation and easing gives the illusion of prosperity. It appears that wealth is expanding, but this is actually risk being extended to consolidate the reward. Equity values, for example, will be pushed to peak levels (along with peak oil, etc.), forever suggesting a recovery that, again, is a hope that springs eternal (the benefit forever arbitraged--economically hedged if not politically compromised--into a detriment).
Slow growth, persistent unemployment and the demand for debt will be risk derived from a financial sector that continues to consolidate. The consolidation of too-big-to-fail institutions will be allowed to be even bigger to manage the extreme demand for debt (the risk of default). As the demand for capital requirement increases, the economy deflates. If there is not a double dip, it will be very close, nevertheless. Preventing the double dip is to reduce the gamma risk (demand for increasing marginal tax rates), not economic growth.
A binomial realignment, as we have seen, will not reverse the deflationary trend, but will bounce it along the upper limit. The political economy of any portfolio is to play the bounce off the ceiling (which measures the expansion and contraction of the risk arbitraged in the gamma proportion).
Investors should not suffer the illusion of risk being managed in an alpha proportion. Preventing a double dip is for the purpose of extending risk into default and consolidation of the equity. It is not to spread the risk, which prevents default, consolidation, and the demand for debt (reducing gamma to arbitrage in the alpha dimension, measuring real economic growth and cost-saving innovation).
A populism that calls for extreme marginal tax cuts while reducing budget deficits suffers a delusion of massive proportion. A current populist sentiment that suffers the illusion of power by merely accepting conservative principles is to allow the empirical power of popular consent to be used against them.
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