this in epitome is the heart of financialization's a go go moment
the construction of derivative products
was it all just elk antlers for contemporary corporate systems
or is it really a better fuller marketizing
de facto socializing of the portfolio of lenders ??
both !!!
like everything else in the end
two polar aspects contend
the ever more pervasive credit system
itself quickly revealing the irrational stage of the private firm
once society can immortalize a corporation
make it a for as long as necessary operation
how is it like the classic
self contained limited credit line firms of yore
how can the spontaneous selection process
called bankrupcy
retain its faithful following
when reserection powers exist thru the holy ghost called fed streaming credit
from the magic fountain
the credit system is by stages fillig in its missing linkages between various types of "enterprise"
a model oughta be able to show the improved dynamics of this process
a few insights not fully digested institutionally
credit is unlimited
prices and obligations are best if maximally elastic
but only if that elasticity expresses itself
in co ordinated movements
ie
price level and debt load need to move together
no fisher effects because the rate can't go negative
a negative rate socializes ..spreads fully the impact of debt /price level adjustment
smooths it out
rids the system of its anachronistic reliance on defaults to clear off excess debt loads
existing debt vs new debt is system wise
merely an accidental distribution of fixed nominal obligations
an optimal means of modification
of any existing array of obligations
requires both price level management and full range interest rates
that could both discount hunks of nominal debt and decrease debts real "value"
by use of both or either instrument
the lifting of the payment system off the shoulders of operating companies
would remove this burden of past actions on foward looking management
thus the obligatory universal default insurance system covering all obligations
derviatives are part of the slowly self assembling hommunculus of this future universal system
