The further one advances rightward on the political spectrum the more likely one will encounter devout sentiments to the effect that finance must be an entirely separate discipline from economics.¹ SFEcon, having been reasonably characterized as the economics of securities analysis, is therefore comforted in knowing that we have nothing to lose in giving further offense to economic orthodoxy.

As shown below, a generic industrial sector IK's capital account k_IK $ is continuously relieved by debt service on the left and continuously charged with financial services e_IK=i_K·k_IK, where i_K is (minus) economy K’s interest rate. An economy's interest rate -i_K operates in the negative to effect the positive feedback attaching to financial positions: un-serviced debts and un-redeemed savings grow exponentially at the rate of interest.

By our convention, capital obligations k_IK are positive quanta; and (minus) financial services e_IK, being formed by the product of a positive and a negative, are negative. The action of financial services e_IK therefore reverses its directional arrow in the figure above, and operates to heap-up financial obligations k_IK. (Minus) debt service must also compute to a negative, which also reverses the direction of the arrow illustrating its flow, and therefore operates to reduce financial obligations.

Inspection of the signal path for a capital position k_IK above points up the critical problem to be addressed in controlling the dynamics of economic adjustment:

We know that R_IJK drives a physical process that is weakly self-reinforcing: though technical utility diminishes at the margin of an input’s application, production nonetheless rises with rising inputs. Economic science is thereby obligated to explain why production should not increase without limit, even with constant technology.

But any minimally faithful construction of economic control’s financial component begins by compounding the problem: financial positions are strongly self-reinforcing — which leaves us with a concept of economic dynamics as governed by the interaction of two positive feedback systems.