Real risk becomes actual (measurably useful) in the future. While it would seem the actual (nominal) risk is the unknown quantity, risk is managed to solve for reality–real value in constant dollars, regressed in a monetary time series to determine if the risk-value (its real identity) is non-conforming. The named identity of the quantity, it’s “nominal” value is not its real value because current value and constant value diverge with inflation. To conform the values and confirm whether you are a winner or a loser, the nominal quantity is adjusted (deflated) to measure the rate of change–the status quo.

When prices go up for wages, salaries, stocks, bonds, commodities…, the way to tell if you have really gained or lost value is to change the current value (use value now) into constant value over time. Thus, the deflator: R = N/PI *100, and this mathematical expression for constant value is not limited to the CPI.

The difference between real and nominal value is the risk inherent to a Synthetic Fixed-Rate Swap, for example. Even though this device is used to finance deficit spending, acting as a loan it is “really” a risk-transfer device. Discerning the difference between the real and the actual is tricky because these derivative devices are the tricks of the trade, monetizing a series of events to adjust for the risk, dividing the value and inflating it into the future, which is what the CPI (the deflator) objectively measures.

The objective measure (deflation) does not mean the process of price inflation (raising rents in the futures) is organic. What “just happens” is not caused without purpose because “nothing” is caused without purpose, and nothing, you may have noticed, does not exist–it is THE non-conforming identity (what the mathematician describes as infinity, which much exist but, you see, has no attributive value because it has no measurable cause, and if it can’t be measured, according to the phenomenalist, it doesn’t exist.)

Standards of measure, like the CPI (a regression over time), are a divisible quantity, and it just happens to be that a quantity can’t be divided by zero, but we try anyway, which results in a retributive value–a synthetic risk proportion that “naturally” corrects (“really”) in all the futures now (“actually”) on demand.

Divisibility is the standard measure, which always yields TO something (having apparent purpose), and if we don’t properly name it (like logical positivists say we should), then we have to adjust the nominal, non-conforming identity to the real (absolutely valued) identity that is always (currently useful) now.