Quantitative Asset-Debt Saturation Macroeconomics: A self-assembly mathematically Patterned science
THE END GAME FOR THE 2021-2074 54 YEAR FOURTH GRAND FRACTAL FOR THE US HEGEMONY IS THAT FURTHER MONEY CREATION AND NEAR NEGATIVE OR NEGATIVE INTEREST RATES WILL BE NEEDED TO SERVICE THE ACCUMULATED DEBT LOAD AND MAINTAIN SOCIAL PROGRAMS. THIS WILL CAUSE INFLATION AT THE CONSUMER LEVEL FOR THE LARGE BASE OF THE WORKING POPULATION. THOSE COMPETING PARAMETERS WILL BE THE 54 YEAR CONUNDRUM RUB FOR CENTRAL BANKS AND POLITICIANS CONTROLLING FUTURE MONETARY POLICY and QE/QT. THIS CONUNDRUM WILL LIKELY LEAD TO extremism, AUTHORITARIAN GOVERNMENTS, and escalated global nuclear brinksmanship. At the cyclical saturated total peak valuations of system: 1837, 1929 and 2021, too much debt had been manufactured and too many assets had been produced at too overvalued of prices. Bad debt taken to own overvalued asset Could not BE repaid and was liquidated. This results in less money and DEBT supporting the composite asset debt system. Owners of overvalued assets sold OR walked away from acquired debt-dependent assets leaving them to the owners of the debt that supported the valuation. assets decayed in VALUE and were liquidated at lower valuation prices. The total valuation of the asset Debt system collapsed to a nadir point WHICH resets the growth process. The Central Banks' role The central banks expand and contract available system debt/money to sustain the asset-debt macroeconomic system with the bank’s defined boundary conditions of 1. unacceptable unemployment vice 2. unacceptable consumer inflation (and likely unacceptable consumer asset devaluation). The asset-debt macroeconomic system then integrates the central bank’s manipulation of credit/money expansion/contraction via interest rates and broader measures of QE/QT and self-orders and self-assembles asset valuations into the most efficient time-based mathematical trading saturation growth-to-peak valuation fractals, and trading saturation decay-to-nadir valuation fractals. Within major valuation growth trends there is periodic countertrend decay and vice-versa. The monthly self-assembly fractal groupings for US equities since the massive 2009 QE programs have been:
5/13/10/7 months :: a x/2.5x/2x/1.5x fractal pattern
3/7/7 months and 8/17/17 months both x/2-2.5x/2-2.5x fractal patterns
10-11/26/16 months: a x/2-2.5x/1.5x fractal pattern
and starting in March 2020. 8/17/13 of 123 months :: a x/2-2.5x/1.5x fractal pattern
After the pandemic start and a 6/15/15 day :: x/2.5x/2.5x crash devaluation nadiring in March 2020, global central banks and governments have created a short lived super bubble involving real estate, equities, commodities, and used cars. 40 year high consumer inflation provided the feedback control measure on western central banks who have ramped up interest rates in a historical accelerated fashion with absolute levels not seen since 2007. Qualitatively the crash in equities and commodities will later be explained by the interest rate increases and the unmanageable debt burden on heavily indebted individuals, corporations, and sovereigns impacted by those increases.
The Nikkei with Japan’s high total debt to GDP ratio is the best proxy for the asset-debt system and its self-organizing fractals.
The monthly/weekly, and daily self-assembly fractals for Japan’s Nikkei since March 2020 are:
Monthly: 8/18/13 of 13 months
Weekly: 33/72/(10/21/25 of 26 = 55)) :: x/2-2.5x/1.6x 18 March 2023 Update THE 1982 13/31-33 YEAR :: NONLINEAR END OF The 1994 31-33 YEAR SECOND FRACTAL: THE TERMINAL DAILY 12 OCT 2022 TO 25 MAR 2023 4 phase FRACTAL SERIES: 17/28/36/25 DAYS :: X/2-2.5X/2-2.5X/1.5X The Asset-Debt Macroeconomic system is deterministic and Its valuation growth and decay cycles are self-assembled in the most efficient manner and in highly ordered time-based fractal patterns. The two time based fractal patterns are a 3 phase cycle: x/2-2.5x/1.5-2.5x and a 4 phase cycle: x/2-2.5x/2-2.5/1.4-1.6x. Cycle lengths are determined by absolute or average valuation nadirs for a given time unit. The exception is the third subcycle (fractal) of the 4 phase cycle where the peak or lower high valuation determines the third subcycle's 2-2.5x time length.Longer term cycles of asset valuation growth and decay (yearly, quarterly, monthly) are created by credit and debt expansion followed by asset valuation decay via credit tightening and/or by bad debt liquidation/restructuring. Shorter time-based cycles (monthly, weekly, daily, hourly, minutely) self-assemble by saturation peak buying followed by saturation selling. The hallmark of long term second fractals (second sub-cycles) of 4 phase cycles is nonlinear devaluation and gapped lower low valuations. Shorter cycles are components of the longer cycles, and a 3 or 4 phase daily or weekly cycle may be at or near the the end of a longer (yearly) cycle with nonlinearity at the end of the 3rd or 4th subcycle of the shorter 3 and 4 phase cycles, respectively. The US Hegemony's Great 4 Phase 1807 36/90/90/54 year :: x/2.5x/2.5x/1.5x Asset/Debt Macroeconomic Fractal Series The US hegemony is undergoing a self assembly 4 phase 1807 36/90/90/54 year :: x/2.5x/2.5x/1.5x Asset/Debt Macroeconomic Great Fractal Series ending in 2074 with nadir valuation lows in 1842/43, 1932, and 2074 and a 90 year third fractal high in November 2021. 1932 represented the end of the second subcycle of this 267 year 4 phase Great Fractal series with a 90% 1929 peak to nadir devaluation. The second fractal valuation nonlinearity was profound. The 1982 Interpolated 13/31-33/31-33/18-20 year Fractal Series From 1932 a three phase 10-11/21/21 year :: x/2x/2x series brought the asset-debt system to 1982. In 1981 and 1982 interest rates were raised to 18-21% to control consumer based inflation. This resulted in significant business contraction with unemployment at 10 percent near the end of 1982. As interest rates dropped from their 1980-81 peaks, gains from previously held bonds entering equities offset a marked correction in equity valuations. The 1982 first 13 year fractal spanned from 1982 to 1994 and was composed of a 3/7/5 year ::x/2-2.5x/1.6x 3 phase fractal series. The 31-33 year second fractal contains two subseries. The first subseries was a 3/8/7 year fractal ending in 2009 containing credit expansions and collapses of the 2000 internet bubble and the 2007-8 housing bubble. The second series is more complicated with long periods of credit expansion and near zero interests and other QE programs punctuated with QT in 2018 and 2019. This was terminated with a Covid related unemployment spike to 13-14 %, which was offset by the greatest QE and money expansion program in history with free payments from the government that often exceeded working salaries. From the March nadir in 2009, the monthly fractal patterns for equities were 5/13/10/7; 3/8/6; 8/17/17; 10/26/16; and 8/18/13 of ?13; all following the 4 phase and 3 phase fractal patterns. 6 May 2010 showed single day second fractal nonlinearity with the crash devaluation occurring between month 10 and 13: 2X and 2.5x with a March 2009 base first fractal of 5 months. This daily second fractal crash was similar to the 19 October 1987 crash occurring at month 26 with a base fractal of 11 months. The March 2020 monthly fractal series has been under an umbrella of both extraordinary credit expansion by the central bank resulting in double digit monthly consumer inflation followed by an extraordinary acceleration in Fed Funds rate increases. These raTE hikes decreased the paper value of US debt instruments held by banks by 600 billion and likely several hundred billion of corporate bonds. What are the similarities between the inflationary situation in 1980-82 and the end 2021-23? In the ten to fifteen years following 1980 1500 commercial and savings banks and 1200 savings and loans failed, representing about 30% of all institutions. Bad real estate loans on overvalued property were the principal cause. Current valuations of real estate in terms of wages are not that far off. The total US debt to GDP in 1980 was about 180% whereas today it is about 360% with federal debt having grown from 30 to 120% GDP. It would appear that the difference between the two periods is one of scale. Banking collapses which were part of the post 1980 economic scenario with interest rate hikes affecting loans on overvalued real estate have started in an explosive fashion affecting 'overvalued' bonds and other overvalued asset classes dependent upon easy credit and excessively low interest rates that have encouraged speculation and discouraged savings. The Asset-Debt Macroeconomic system is deterministic in its time-based fractal self assembly of its composite asset valuation growth and decay.
There are two observable time based self-ordering simple mathematical fractal series: a 3 phase fractal series of x/2-2.5x/1.5-2.5x and a 4 phase fractal series of x/2-2.5x/2-2.5x/1.5-1.6x. The fractal subunits are defined by nadir valuations with the exception of the 4 phase fractal series whose 3 subunit terminus is defined by a peak valuation or lower high valuation.
For the US Hegemony, a 4 phase long term fractal series undergoing self-assembly is observable as an 1807 series of x/2.5x/2.5x/1.5x with the value x equal to 36 years. Nadir valuations occurred in 1807, 1842/43, and 1932. The 2.5x 90 year third subunit high occurred in November 2021 with an expected low in 2074 for a completed 1807 series of 36/90/90/54 years.
Interpolated in this large 1807 series is an 1981 13/32/32/20 year series ending in 2074. An abrupt ending in the 32 year second fractal of this series is expected.
QE and money printing since 2009 with enormous acceleration in March 2020 and thereafter unprecedented money supply contraction in March 2022 has set the asset grossly-overvalued system for a colossal abrupt 31-32 year second fractal nonlinear devaluation.
The Wilshire is following a 23 March 2020 28/71/68 of 70 week growth and decay fractal pattern with an expected crash devaluation in the next 11 trading days and ending on Friday 26 May 2023. The nadir devaluation dates defining the 28 week first and 71 week second fractals are 9/24/20 and 1/24/2022, respectively. The third fractal of 70 weeks starts on 24 January 2022 and is composed of three subseries: 7/15/18 weeks; 4/9/8/6 weeks and 2/5/3 of 5 weeks, The 4/9/8/6 week series starts on 10/13/22 and is composed of 16/38/30/22 days ::x/2-2.5x/2x/1.5x.
The final 2/5/5 weeks series starts on 3/13/2023 and is composed of 10/23/23 days. The final 23 day third fractal starts on 4/26/2023 and ends on 26 May 2023.
An additional 42 week lower low series would complete a 1993 – 2024 32 year second fractal and a March 2020 28/71/70/42 week series. Rapid lowering of fed fund rates are expected after the crash devaluation.