Buying it Back

Buy backs are an income adjustment measure.

ZIRP measures a declining rate of profit. Described as the “new normal,” what causes zero-interest-rate policy is what Bernie Sanders is talking about–the distribution of income. When income consolidates at the top the economy slows down, there is a deflationary trend, and the marginal profit naturally declines.

TBTF corporates then buy back their equity-share distribution (they take it back) to resist the naturally declining rate of profit. The take back is an income adjustment, measuring the legacy of the free market in a TBTF, risk dimension. The value used to consolidate equity share can be used to liquify economic growth, create jobs, and reduce credit-default risk, but doing that does not yield the default-risk premium (liquidating your equity interest by default).

(Remember that the risk really can’t be reduced, but it can be shifted or transferred using RTVs.)

Risk-transfer vehicles (RTVs) adjust income. Not by creating or destroying risk, but by shifting it around. Since buying and selling requires liquidity, capitalists end up buying and selling things to themselves in the form of credit-default risk (swaps) because everybody else is just renting the use of the things being bought and sold.

When default occurs (like Dodd and Frank said it surely will), there are winners and losers in the game of default-risk hot potato. The players are still millionaires and billionaires. The premium is economic desperation for everybody else. Deflating prices effectively increases the rents, adjusting for income, subordinated to the debt associated with the risk of default due to lack of liquidity (a diminished free market and organic economic growth).

Like Sanders says, consolidation of liquidity does not promote economic growth. He fully intends to resist what yields to economic desperation (the default-risk premium), and Wall Street does not like that one bit! They much prefer Mrs. Clinton, prepared to argue the ways of Wall Street as a matter of practicality, prevailing an income-policy program described as “normally” adjusted in new and innovative ways.

If you really want a “new normal” that actually benefits you (if you really want to “take it back”), aggress the passive resistance–Vote For Bernie Sanders!

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About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
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