Data Dependency

The world of finance is focused on the Fed, and it has a lot to do with “notional” risk value.

A lot of risk value, is held in reserve, having a well-defined nominal value. This quantity is the “easing” that has been going on since the financial crisis, and has kept the US, and the global economy, from experiencing full-blown deflation. The nominal value is in the form of debt — a liability booked as an asset with the Fed, held in reserve.

These assets held in reserve are bonds sold to the Fed by its member banks. The Fed derives notes from these bonds and sells them back to the members (capital reserves), paying interest on the notes (to hold the bonds in reserve) and the banks pay dividends with it. Without managing the debt in this way (using derivative devices, which establishes the notion of the risk-free rate of return) the system is illiquid and collapses.

UK’s Prime Minister said today that central banks are too loose with money. Essentially, this means it is too “easy” to accumulate a lot of risk-value, have central banks buy it and then pay TBTF banks to do it at the risk-free rate. This information is the transactional interpretation that goes with the data the Fed says determines what the rate of interest is. It determines what the notion of risk is in a TBTF dimension.

Notice that the risk is not reduced, but held in reserve to derive value from it in the futures now.

Over time, managing capital reserves, financiers discovered that risk does not actually reduce. What emerged from the notion that the risk of loss is fully assumed in priority is central banking, like the Fed; and when they say the rent (the risk-free-rate of return) is data dependent, what that really means is the data actually depends on the artifice of its interpretation.

It is the art form that transacts “objective reality.” The interpretation generates the data to which a “natural identity” is ontologically derived to “cause” a dependence at the “risk free” rate, the notion of which does not naturally exist.

Advertisements

About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
This entry was posted in Political-Economy and Philosophy and tagged , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s