The Anti-Inflation Agendae
Look at the price of oil. Support tends to occur at $70/bl. Below resistance, arbitrageurs tend to say the price (the momentum) is oversold. Options and futures tend to confirm that hypothesis, showing a positive slope above resistance “on delivery” (on demand) for the next several years.
Supporting the price is a function of demanding the resistance. When OPEC did not cut production quotas, it effectively supported the price (resisting the rate of substitution) in the futures, but right now the sum of the moment (the oversold “momentum”) has an anti-inflationary effect, which supports demand and the abstracted price of oil (“X”) going forward.
It’s easy to confirm the stakes (“X”) if you can control the incentives that conform to what Randians call “natural identity” (thus forming the expected values of technical support and resistance).
“The technicals,” arbitrageurs are apt to say, “don’t lie.” It’s a conforming identity. A naturally recurrent level of support and resistance exists to measure its confirmation over time.
Operating with the technicals there is full accountability. We know what to expect (the stakes are conserved), essentially defining what “objective reality” is not, going forward, discounted to maturity, effective (now) on delivery with confirmed conformity.
If something just keeps happening over and over again, it must be a natural identity–an expected value; the default condition–right? Like Dodd-Frank postulates: it’s not “if” but “when” the next financial crisis occurs, and when it does we will have the means to fail in a TBTF proportion without deconsolidation of the risk?
At the core of the TBTF problem is the consolidation of risk. Even with a “living will” SIFI’s are still TBTF.
Being “too big to fail” does not mean you can’t fail, but it does mean you are TOO BIG to fail. (Notice the conforming identity of “X” is the problem to be solved for.)
Despite being at the core, deconsolidation of industry and markets (“X”) is not a core value. Members of both the DNC and the RNC do little to resist the “natural monopoly” as being the established model of efficiency. (Since “X” is a known value it is not a missing value to be solved for.) Instead of solving for the missing value we are always conforming the other values to yield the variable being determined, which makes it look like it is an absolute value having a “natural identity.”
Consolidation of economic power is the problem, not the solution. Every time we try to inflate our way out of the problem we confirm the identity of the solution without conforming to its technical truth.
If either of the two major parties want to have a positive mandate they must have a conforming identity.
Deconsolidation of the risk is a fundamental value that will determine whether a party wins with positive support. Given the value of “X” (the stakes), yielding to positive support is not likely, however.
Following the 2014, midterm realignment, expect to see a deflationary, policy program.
With a GOP-controlled congress, expect to see an anti-inflationary program. Tax and regulatory reform tops the agendae, having a predictably deflationary affect on demand to “add supply” at the highest possible prices.
The technicals look a lot like the charts that currently predict the price of oil with all the support needed to overcome the resistance.