Market makers say they make markets more efficient by means of consolidation, but intending to consolidate the free market is naturally resisted by executive, regulatory authority because it is harmful. (It has a measurable, nuisance value that, unlike the realised risk, can actually be reduced on demand.) The intending result is inflation and unemployment.
(See other articles by griffithlighton on nuisance value.)
Inflation and unemployment is now the old way of doing things. This is being referred to as “the new normal.”
The new way yields slow growth and falling median income (deflation), which is what it means when Sanders says most all new income goes to the top 1%, and Trump says we are headed for a massive recession.
There is a lot of resistance to going back to the old way from both the left and the right of the political spectrum, which means it is not really an ideological issue but a technical one.
(Nature just is what it is. It is not Democrat or Republican. It is independent of ideological bias, which serves to measure the probable risk–like the more independent candidates are doing.)
Naturally, the party structure intends to resist Trump and Sanders. Operating with the legacy of Republican policies, combined with the Clinton legacy of the CFTMA, we now have falling commodity prices with falling median income, which (like the old way) demands debt to keep the economy from complete financial collapse. If that happens, capitalism as “the best and brightest way” to do things–being the final stage of economic development–is a completely disconfirmed hypothesis. (Notice that the new way just reinvented the problem to be solved, which leads to the “it’s too complicated” argument that the Clinton camp is fond of to resist really doing anything, for example, or even to prosecute TBTF CEOs who knowingly use financial fraud as a legitimate business model.) To keep the hypothesis alive, Democrats operate to supply the fiscal stimulus necessary to sustain the capitalist model, and the Fed accommodates that, buying toxic assets from its member banks.
(Toxic waste has a measurable nuisance value. It must be managed if the host is to survive over time, which is the zero-hedge effect.)
Managing toxic assets is a zero-hedge program, and the party system (the binome of Democrat and Republican identity) maintains it. (I describe the binome in my Master’s thesis: The Bureaucratic Model of Power and Political Economy, published by the University of Louisville Library on demand.)
“Making markets more efficient” is a risk-hedging scheme. It does not reduce the risk!
Like the “Zero Hedge” says, nothing survives given enough time, which is why capitalists have “modernized” the management of risk by always operating in the “futures” markets (the CFTMA).
(When I was doing my Master’s thesis, the committee was skeptical about predicting market mechanics will be effectively reduced to the timing of information–which is frontrunning, essentially, and that is exactly what happened. The CFTMA is a timing mechanism. Instead of using options and futures to stabilize prices for the use value of the underlying asset, it was effectively turned into Marx’s description of the commodity fetish. That does not mean that capitalists are Marxists, but it does mean that capitalism does tend to defeat the free market in order to survive, yielding to the zero-hedge effect. Like Marx and Engels observed, if industry and markets keep consolidating, over time, all it takes is a change of operational identity, naturally yielding to the law of large numbers; but, then, like Milton Friedman said, laughing, who in the world can really trust the leadership of consolidated power to actually do the right thing! … The “Panama Papers” confirms that, doesn’t it? What is the effective mechanism for accountability, here?)
Now that the government has to open its records on demand, we see that thousands of little people were criminally prosecuted for fraud associated with the harm done by the Great Recession. Not one CEO of a TBTF bank, however, was prosecuted by the Obama administration, even though referrals were made to Justice by the financial crisis investigative committee, citing evidence of criminal fraud.
The statute of limitations is about to run out. Will the Obama administration be able to prosecute for criminal fraud on time? … Probably not, on command, by executive authority.
(Notice the operant condition about the timing of the information necessary to hold everybody legally accountable. It is something that a free market just happens to naturally do with complete propriety of the risk, properly deconsolidated, operating so that the only effective hedge is the incentive to simply do the right thing on demand).