Cash is king!
One barrel at a time.
When the asset class cashiers, demand is being hoarded. Now, understand, this is not some mysterious force of nature that can be attributed to the “big risk.” Instead, it creates the risk by deliberately destroying demand.
Capitalists say they are merely acting to maximize profits. That’s no crime, but the detriment is easily verifiable. Demand destruction to create value (reward that distributes by asset class) is a measurable zero-sum with a long-term (new-normal) negative yield, but the mechanism deliberately devised to deliver it on demand (the CFTMA, for example) is supposed to yield positive.
Who (or what) is liable for the detriment (the discrepancy)? Nobody, right! It just happens on demand.
Making Markets (being on the take) With Limited Liability
Some analysts predict oil at $150/bl. No, this is not buying assets in futures to stabilize the price and yield to the consumer’s demands, which is the benefit of demanding the price fixed to (determined by) the consumer’s income. (The benefit of futures markets is a fraud being perpetrated in the name of providing the greatest public good, utilizing the best practices–the proprietary incentives–of private enterprise. On demand, in a free market, prices disinflate to meet demand; but by means of consolidation, prices inflate to exceed demand with the result being high debt levels. The result is default on the debt–deflation–because there is insufficient supply of funds to meet demand.) Rising commodity futures prices do, however, conserve demand and increase purchasing power by asset class, with cash being king (the objective measure of success), of course.
Raising oil prices is a means of hoarding demand, which according to Adam Smith is highly unstable. Yet risk is being managed in hordes to supply demand in the name of free-market economics. Hoarding demand to create free markets is a fraud because it fixes prices, destroying demand to create an on-command existence.
What’s the objective reality here?
This is where Objectivist philosophy comes in.
Objectivist philosophy is used to rationalize the risk and limit the liability.
Since risk yields reward, what is the liability if reward is had by not taking risk but managing markets to avoid it by means of consolidation?
The CFTMA is a market-making mechanism. It is being used to consolidate the marketplace. “Making the marketplace more efficient” is then described as being the ontology (the objective reality) of an on-demand existence.
Over $70 a barrel, oil (an asset class with a demand curve about as inelastic as cash), tends to be deflationary. Driving up the price of oil has the effect of speculative demand, which resulted, for example, in the Great Depression (you know, “the big risk” that just naturally happens, unavoidably).
In the court of public opinion, Objectivist philosophy is used to exculpate the risk. Under stress, as Geithner, for example, has described it, reacting to the big risk (actively “made” bigger and bigger to make us “more competitive” in a global marketplace) we naturally tend to cash out (run on the bank) and hoard demand. The effect is deflation, like when oil exceeds about $70 a barrel, which can be objectively attributed to (measured as) demand exceeding supply when deflation is supposed to be measured as supply exceeds demand.
(Notice the measurable contradiction that both Adam Smith and Karl Marx said is “the big risk.” Smith said it can be actively avoided at a divisible level. Marx, however, contended the risk is indivisibly unavoidable because there is a natural tendency to make it bigger and bigger, essentially incorporating the capital into something completely different over time.)
To avoid the risk of supply being reduced to nothing in the futures, the reasonable course of action is to destroy demand by objective, right?
By hoarding demand (cash), interest rates are being held next to nothing, if not negative.
A negative yield supplies the demand for supporting the asset class, always tending to consolidate your assets and mine (in the name of making markets more efficient) by default (objective reality), naturally resisting the capacity for me and you to freely make demands, which (unavoidably) has a political, as much as an economic, dimension.