Economists sometimes refer to late-order effects. For example, when companies merge and acquire, a late-order effect is higher prices.
Corporate conglomerates always argue that attaining scale lowers prices. Over time, however, prices go up to capitalize on “pricing power”–which is, essentially, a coercive, non-market price. In the mean time, there is plenty of time to re-attribute the value derived from rising prices (which has an equivalent retributive value) due simply to consolidation of industry and markets.
M&A is typically characterized as being generally beneficial. A price increase is good because the value of the company increases, but the ability of the average payer to pay it decreases. This correlation causes a declining rate of profit, and as the deflationary trend continues, there is more incentive to M&A, which perversely proliferates the incentive to cause the risk being avoided, in late order.
Since the incentive is in late order, there is a lot of room for making a correlation. Epistemology tells us that correlation does not prove causation, and many analysts are sure to capitalize on that.
A recent late-order effect is rising residential rents. It is really good for REITs that pay a big dividend, but really bad for renters. Analysts admit that the rising rent has a deflationary effect. They also attribute the price increase to the Great Recession.
With the repeal of Glass-Steagall, nine years later, we had the financial crisis, and we still have the Great Recession. A lot of homes were built to satisfy the American dream, and foreclosed. Now, in late order, we have a lot of homes for sale against rising rents, which reduces the capacity to buy a home, supporting the risk detriment that the best-and-the-brightest (dysfunctionally organized in solidarity without Glass-Steagall) are still expected to avoid.
Without asking whether TBTF capitalists intended the late-order risk-value, do we still expect TBTF banks, and continued consolidation of industry and markets, to resist deflation (the coercive value of economic desperation)? How rational is that!
A Sanders rally!
The strong deflationary trend (I have been telling you about), being resisted with accommodative monetary policy, well, lately, analysts seem to think it is in order.
The effect will be to keep interest rates low, accommodating equity prices (like I have been telling you) against a long, deflationary trend.
It’s capitalist heaven!
It’s high prices against growing economic desperation, which has an Equivalent Coercive Value.