House of Paine

fractal macro

my new e pal 'stormy '
        hipped me to this site 

http://www.economicfractalist.com/

scitz the kat  Strikes
                    part II

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Welcome to the small alcove 
for the advancement 
of cause and effect saturation macroeconomics


 This site pursues the hypothesis 
that the nature of market valuations 
and economic cycles 
is both causal
 and 
quantitatively decipherable

 Valuations confirm to fractal cyclical patterns 
that can be recognized,
 interpreted in conjunction with data 
emanating from the macroeconomic system,
 and used with short term and long-term predicative power


 Information from this site 
is not intended to be construed 
as investment advice 
or as an investment tool.

 This site has been constructed
 because of the expected inevitability
 of a major sudden phase transition
 to occur at the conclusion 
of a grand 140 plus-year second fractal cycle 
starting in 1858.


 For the masses this phase transition
 will occur both very unexpectedly 
and very suddenly.

 Approaching the global macro economy 
from such a causal and fractal Weltanschauung 
may help those considering further debt obligation 
and those in position 
of formulating future interest rate
 and monetary policy. 

The cyclical nature of the macroeconomic system
 operates by causality rather than chance.

 Valuations of assets are controlled 
chiefly by interest rates 
the cost of money

 Lowering nominal interest rates,
 below asset inflation controlling rates
, leads to macro economical disequilibria
 with excessive money expansion 
through increased borrowing.

 This expansion engenders
 unbalanced forward consumption,
 consumer saturation, overproduction,
 and inflation of assets and consumer items.

 With the addition of ongoing wages 
of the consumer masses,
these oppositional elements are countervailing, 
and periodic macroeconomic imbalances 
will self correct.     

Market overvaluation saturation 
and decay corrections
 to new lower saturation points
 occur in a fractal manner.

 Cyclical patterns can readily be identified 
on valuation charts 
denominated in minutely, hourly, daily,
 weekly, monthly, and yearly units.

 The transitional asymptote 
of overvaluation saturation curves
 are followed by decay curves
 which bring market valuations
 to lowered levels where intelligent buyers
 reenter the market.     

Human psychology is a decidedly 
lagging indicator 
and follows as an end effect
 of the mechanistic saturation
 and decay evolutions in the market.

 Market contrarians understand these turning points 
and anticipate the directional changes 
of the markets 
based both on market asymptotic overvaluation saturation areas
 or decay end-point saturation characteristics
 and counter intuitively 
by recognizing the lagging psychological parameters 
of extreme optimism or pessimism 
in reaction to the mechanistic 
respective high and low points.     

Both the degree of valuation 
and the cyclical time course
 of valuation evolutions 
appear to conform to range bound 
near quantum-like units and quantum related Fibonacci numbers

 While the absolute degree of valuation
 is influenced by the absolute interest rate,
 the percentage or proportionality changes
 of valuations from highs to lows 
and lengths of time to decay 
and intra-cycle nodal points 
appear to conform to these range bound 
near quantum units.     

The ideal growth fractal time sequence is
 X, 2.5X, 2X and 1.5-1.6X. 

The first two cycles include
 a saturation transitional point 
and decay process in the terminal portion 
of the cycles

. A sudden nonlinear drop 
in the last 0.5x time period 
of the 2.5X is the hallmark 
of a second cycle 
and characterizes this most recognizable cycle

 After the nonlinear gap drop,
 the third cycle begins. 
This means that the second cycle 
can last anywhere in length from 2x to 2.5x.

 The third cycle 2X is primarily a growth cycle
 with a lower saturation point 
and decay process followed by 
a higher saturation point. 

The last 1.5-1.6X cycle is primarily 
a decay cycle interrupted 
with a mid area growth period.

 Near ideal fractal cycles
 can be seen in the trading valuations 
of many commodities and individual stocks.

 Most of the cycles 
are caricatures of the ideal
 and conform to Gompertz mathematical type saturation
 and decay curves. 


  28 April  06

The Non-Paradoxical Fractal Evolution of the US Dollar

The US dollar has taken a recent beating as it nears the conclusion of
of its first multi weekly growth fractal.

While all fiat currencies have their weaknesses, the weaknesses of
the leading currencies are relative. The Euro, the Yen, the Yuan, and
the US dollar - all have enormous structural problems with underlying
inherently unstable fractional lending banking practices and lack of prudent
regulations throughout the domestic lending, and hence, money creation
industries. The market determines the pecking order of the international
relative worth based on interest rates, GDP growth, rates of money creation,
stability, and utility of the currency.


The last major devolution of the US dollar index against the summation of
other fiat currencies lasted over three years and occurred in a monthly
fractal decay series of 8/19-20/12-13 months. The dollar's very low saturation
decay resting place after its great fall from its high end valuation five years
ago; its utility in purchasing oil; and the premium of rising short term
US debt instrument interest rates over those of the Euro and Yen  - have
synergistically attracted traders to  the US dollar, resulting  in a
multi weekly
fractal growth evolution.

From the low of the monthly dollar index devolution there has been a
close to  ideal weekly fractal growth progression of:

x/2.5x/2x/1.5x or

11/26/22/14 of 14-16 weeks.

The third growth fractal ended on a low rather than a high with the
1.5X  decay pattern rising above this low and falling off in a
nonlinear fashion during the last two weeks. Ideally the sum of the
lengths of the first two growth fractals equals the sum of the third
growth fractal and the decay fractal or:

x + 2.5x = 2x + 1.5x

The low on the dollar index concluding the first fractal would ideally
equal about 84.5-85.5 which approximates the high of the first X (11)
week fractal. Go to the links to TFC charts for the dollar index.

A new dynamic driver for the US dollar index may soon be operative.
The initial slopes of incipient second fractals can occasionally be
nearly vertical. Shortly ahead those who have dollars may find its purchase
power greatly increased relative to depreciating US assets and mirage
markers such as trading index spiders. An analogy could  be made to
the rise in value of mattress dollars in the early 1930's - only
greatly magnified in 2006 as a result the inevitable devastating
implosion of US housing prices and wrong sided negative net equities.

The selling of even a small percent of the plethora of US debt
instruments for redemption into dollars will propagate, at least for a
time, a positive feedback collapse of held US debt issue valuations.
US bond holders will watch the relative value of their currently held
bonds sink and attempt to sell them to both gain dollar currency
holdings and prevent further loss from bond devaluation. As has been
annotated in prior posts, the rise in interest rates represented by
TNX and TYX are on a near term collision course with equities, housing
valuations, and commodities.

The inverted Wilshire fractal daily count from the high on 11 January
2006 to the upper defining available money asymptote:

13/33/31 of 26-33 days :: x/2.5x/2-2.5x

And the daily fractal growth count for the Wilshire since the October 2005 low:

24/60/ 54 of 48-60 days :: x/2.5x/2.5x

And on a long term weekly bases:

30/75/75 weeks :: x/2.5x/2.5x

with a potential daily extension including the 75th week of the third
75 week fractal of:

14/35/35 of 35 days  :: x/2.5x/2.5x ....

The 4.7 percent growth rate in the US GDP during the first quarter
represents on an annual basis about 650 billion dollars.  A well-sized
scoop  of the GDP's goods and services sold in the US represents over
800 billion dollars of imported goods sold by American salesmen to the
American consumer and 600 billion dollars of new governmental debt
obligations for Iraq, Katrina, and the usual suspects.

The world's economists know the globally unbalanced system will break.
Asset valuation fractals may prove to provide the quantitative road
map for this inevitable collapse and the
very profound reequilibration of the complex money-debt-wage-asset system.

Gary Lammert