The Economic Fractalist

10 November 08:

An alternative ideal daily fractal decay pathway to the end of a second fractal weekly low:
18-19/46/22 of 46 days :: y/2.5y/2.5y decay with a more likely 18-19/46/22 of 43-44 day decay fractal

And   28/66 of 70/70 weeks  ::  y/2.5y/2.5y decay

The Value of the Science of Quantum Asset Valuation Saturation Macroeconomics

Qualitatively,  generational asset valuation saturation areas will always  and naturally occur as the collective demand for and collective ability to purchase assets reaches a peak limit, and the economy with an oversupply of assets cannot support the jobs necessary to service ongoing debt.  Jobs then decline; the money supply declines; debt undergoes default; supply is transiently increased as defaulted  assets are returned to the supply pool; further jobs are lost and asset valuations ultimately  decrease to a level that the economy and its wages can support. Appropriate asset inflation controlling interest rates, which are tied to the competing and countervailing debt investment assets, appropriate tax-advantaging of savings, and rational lending parameters targeted to prevent excesses in this natural process - all of these controlling elements are the direct responsibility of the central bank, local banks, appointed security exchange system, and the congress. These boron equivalent control rods have been left unattended, or worse, have been intentional removed by commission of bad monetary policy or intentional laissez-faire nonregulation of the financial industry. The lack of active prudent stewardship by those in an accountable elected position or an appointed position  demonstrates a basic gross misunderstanding of how the macroeconomic system works.

That asset valuations follow the growth and decay of the money supply and the real economy is in itself trivial. That asset valuations follow predictable time based quantum pathways to likewise specific and predictable high and low saturation points with predictable areas of nonlinear devolution - is nontrivial. This new science of macroeconomic asset valuation quantum fractal analysis shows that the macroeconomic system is a very well defined and very predictable operating entity with bounded limitations of saturation growth and decay. The science contains within it the message that responsible stewardship - of monetary policy including restrictions on money and asset derivatives, of asset tax policy supporting savings and discriminating against asset speculation, and of lending parameters which are based on the ability to repay incurred debt within the context of the predictable  bounded economic credit cycle and its expected terminal saturation nonlinear decay areas - are essential to prevent predictable excesses in the macroeconomic system with necessary corrective excessive consequences. Should speculators be allowed to accumulate wealth on the predictable asset valuation rises and declines of tradeable assets that this science now defines or should the government curtail this speculation and create policies that support savings and  favor useful investment for useful economic growth that is beneficial to society and to the world?  This then is the cited value added of this new quantum macroeconomic science.

The time frame for the incipient resolution of the current global financial and macroeconomic crises will only occur when asset valuations come qualitatively into alignment with peak oversupply, peak unemployment, and peak debt repudiation. While further federal debt and bailouts will mitigate the absolute valuation nadir of asset devolution, the quantitative time frame to the nadir of asset saturation decay will not be altered. And the consequences of this additional ongoing massive debt accumulation will be much slower real economic growth after the nadir.  At a minimum, the ever expanding mirage entitlement promises that have been made  to the global citizenry over the last half century by an ever reelected political body will undergo stark revision proportional to the 150 year nonlinear asset decline and valuation lows and the residual real economy’s ability to pay.  A great transformation of a global  linearly-thinking citizenry residing in a nonlinear world will occur during this transition period.

Fibonacci relationships come at the terminal portions of growth or maximal lengths before curvature. There is within this numerical relationship the sphinx’s basic secret of the energy universe. And because everything is a derivative or vice versa, a composite proportionality, i.e., fractal, of this relationship, this ratio is found empirically and repetitively throughout nature - even in time length ratios of valuation saturation curves in macroeconomics. 1.6 times the base decay fractal of 11 days equals about 16-17 days of maximal saturation growth for the third 27 day decay fractal.  How much the US recent interest rate decrease by 33 percent to 1 percent and Japan’s rate cut by 40 percent to 0.3 per cent has affected the last 16 days of global equity growth cannot be quantitatively known. What is qualitatively well known is that inappropriately low levels of interest rates cause economically harmful malinvestment and creates speculative asset overproduction, overinvestment, overvaluation, and sequentially over devaluation collapse. The next 11 equivalent US trading days with approximately 6.5 hours to each trading day likely represent the fractal time  area of the US and global equity, commodity, and gold greatest percentage nonlinear devolution in the history of the world. This will end a second equity weekly decay fractal composed of two subfractals of 5/11/10 weeks and 9/18/16 of 19 weeks. The larger weekly equity decay fractal sequence is 27/64 of 67/43-67 weeks. The first base weekly fractal is composed of a 5/12/12 week base containing the averged and volume integrated (May, June, July) 19 July 2007 Wilshire saturation curve valuation high at 92 weeks from the October 2002 low:  46/115/92 weeks :: x/2.5x/2x growth fractal.

Perhaps decay saturation curves occur in an ideal manner at the end of major credit cycles.  Perhaps not.  Two sets of data hardly represents the basis for scientific conclusion - but taken together and viewed in fractal patterns of weeks and months and years- all  of the saturation data points and valuation growth and decay curves - taken serially - make  the strongest case that the equity valuation evolution is not occurring by chance. It is not a herd psychology phenomenon but an investment money phenomenon reflective of available money held by private individuals and investment funds whose debt repayment requirements are relatively exponentially increasing as the value of convertible equity and commodity asset wealth - convertible into dollars - is exponentially decreasing. Will the quantum decay  saturation curves of 1929 parallel exactly those of September/October/November of 2008?  Will 29 October 2008 commence the accelerated phase of nonlinearity leading to a temporary major low on 2 November 2008 (barring trading halts) and a further low in ten trading days (barring trading halts)?

25 October 08:  A Fractal Decay Replica of 1929?

It would fitting for this chronically myopic Economic Fractalist attempting in every way to advance  the new science of deterministic nonstochastic asset valuation quantum saturation macroeconomics to have missed an exact - an exact quantum fractal decay replica of 1929 with all of the previously described qualifications that the macroeconomic dynamics of 2008: massive defaulting debt, asset over valuation, asset over supply, null savings of the masses fostered by bad monetary and governmental taxing policies, global wage dysequilidrium, balance of trade dysequilibrium, necessary US daily global borrowing, et. al. -  are all collectively so much  impossibly worse than the conditions of 1929. From the apogee of the 27 day third decay fractal to its nadir, a valuation decrease of 40 percent occurred in the 1929 DJIA. The decay fractal series in 1929 was 11/26/27 days. Could the quantum laws of saturation macroeconomics produce a replica 11/26/11 of 27 day decay fractal for the FTSE, Nikkei, and Wilshire - identical to 1929.?