Quantitative Asset-Debt Saturation Macroeconomics: A self-assembly mathematically Patterned science
While money and credit growth (and contraction)by central banks and government spending is periodically irregular, equity and commodity composite valuations grow and decay by only two distinct time-based fractal patterns(mathematical laws): a three phase pattern: composed of three subfractals:1/2/ and 3 :: x/2-2.5x/1.5-2.5x – where x is the base first fractal time length in days, weeks, months, and years.
and a four phase pattern: composed of 4 subfractals: 1/2/3/ and 4 :: x/2-2.5x/2-2.5x/1.5-1.6x, where x is the base first fractal time length in days, weeks, months, and years.
The time length of subfractal 2 (2-2.5x) of the 3 and 4 phase fractal series often determines the ideal time length of subfractal 1 : (x’) upon which the lengths of sub-fractals 3 and 4 are based: e.g., the 4 phase fractal pattern’s time lengths become x/(2-2.5x divided by 2.5 = x’)/2-2.5x’/1.5-1.6x’. The overriding US hegemony Pattern is an 1807 maximum x/2.5x/2.5x/1.5x pattern of 36/90/90/54 years with a 90 year second fractal low in 1932 and a 90 year third fractal high in November 2021. The Fourth Fractal last 54 years is far beyond this author's life span. Update Outlook : SUNDAY JULY 9 2023 THE GREAT GLOBAL ASSET-DEBT VALUATION CRASH – 12 TRADING DAYS TO A MAJOR LOW ... Global corporate, private, and governmental debt has never been this great percentage of global GDP.
With transient consumer inflation secondary to covid governmental QE stimulation, supply chain interruptions, higher diesel and gas prices, avian flu poultry culling, Covid retiree surges, 7-8 % higher 2022 COLA’s to spend in the US service sector, and secondary transient labor shortages in the service sector to the 7-8% COLA increases, QT measures and interest hikes are smashing against recent European, Japanese, and US equity higher and lower high equity valuations.
Chinese equities and property valuations are at the cliff’s edge of precipitous falling, as Chinese workers over the last 5 months have received lower wages and defaulting on mortgages, reinforcing lower property valuations and building sector corporate defaults. The previous 2014 Chinese real property valuation peak of 101 (relative to wages) was only exceeded in 2021 to 113 with current decreases to 105 in the 4th quarter of 2022. The last 6 months have been terrible have Chinese home owners.
Qualitatively. this is a global asset-debt system of highly leveraged debt-propelled over-produced, over-valued assets – a house of cards synergistically collapsing.
The Asset-Debt Macroeconomic System integrates all of the system’s internal parameters – total debt, asset production numbers, asset ownership pool, asset valuations, ongoing interest rates, QE and QT programs, et. al. – and generates, in a self-assembly manner, the most efficient asset valuation growth and decay progression, in a highly-ordered, elegantly-simple time-based patterned fractal manner.
https://www.youtube.com/watch?v=s9YhX6rqDb4For the Bank of Shanghai the final fractal series is a 28 March 2023 11/28/22-27/4 of 16 days.
The Hang Seng Index is the premiere proxy index of the Global asset-debt system. From the March 2020 low 33/72/70 of 73 weeks. The final 73 weeks is composed of a reflexive – x. maximal decay 2.5x, maximal growth 2.5x, decay 1.6x – :: 10/25/25/16 week fractal series. 18 June 2023 Update: THE NIKKEI’S LOW TO HIGH MARCH 2020 TO JUNE 2023 X/2-2.5X/2X :: 33/72/66 WEEK FINAL VALUATION BLOW-OFF GROWTH – AND EXPECTED VALUATION COLLAPSE The Global macroeconomy is tightly interwoven with the use of central bank debt to create job growth and maintain forward prosperty. The Japanese Nikkei has expanded in valuation since the global banks’ unprecedented QE program following the Covid pandemic. Nikkei valuation growth since March 2020 has followed a perfect self-assembly Lammert fractal growth pattern first described in the 2005 face page of this web site. A three phase growth fractal series of x/2-2.5x/2x :: 33/72/66 weeks is easily observable in the above Nikkei March 2020 to June 2023 weekly charts with the 3 fractal series delineated by green curvilinear lines. The three fractals making up this series are a series of sub fractals: 33 week first fractal: composed of a 6/15/14 week: x/2.5x/2-2.5x fractal series 72 week second fractal : composed of 14/30/30 week: x/2-2.5x/2-2.5x fractal series with a second fractal characteristic nonlinear lower low gap between week 71 and 72, corresponding to between week 29 and week 30 of the third subfractal and described in the 2005 face page. 66 week third fractal composed of a 15/30/23 week fractal series; the 23 week final third fractal is composed of two weekly subseries: 3/6/4 weeks and 3/7/6 weeks. A 7 week crash devaluation would complete a 15/30/30 week third fractal and result in a 33/72/73 week decay series dating from the March 2020 low. A final 42 week self assembly would complete a 33/72/73/42 week :: x/2-25x/2-2.5x/1.5x’ fractal series and complete the Global QT equity phase ( as interest rates are lowered during the phase of job loss, macroeconomic recession, equity and commodity decline) The Nikkei’s final 23 weeks of growth of 3/6/4 and 3/7/6 weeks correspond to 11/25/16 days :: x/2.5x/1.5x and 11/27/27 days :: x/2.5x/2.5x. The Nikkei’s final 3/15/2023 11/27/27 day blow-off growth fractal corresponds to a 3/13/2023 Wilshire 12/27/30 day ::x/2-2.5x/2.5x final growth fractal. From its March 2020 low the Wilshire grow in a QE 15/37/38 week x/2.5x/2.5x fractal series to its November 8 2021 1807 36/90/90 year :: x/2.5x/2.5x fractal series growth high valuation. Consumer-inflation- fighting QT began 4 October 2021 with an 18/38/36 week :: x/2-2.5x/2x reflexive second fractal decay and third fractal high matching the Nikkei June 15/16 2023 high. A wilshire subsequent decay fractal of 18/38/43 weeks would match the intermediate ending of a Nikkei 33/72/73 week decay series, the third 73 week subfractal made of a 15/30/30 week series. Global equities can be expected to collapse over the next 7 weeks and in a fractal manner. Fractal decay possibilities include a 7/15-17/17-15 day decay series :: y/2-2.5y/2-2.5y or a 8/18-20/12 day decay series :: y/2-2.5y/1.5y. Chinese, US and European real estate valuations and equity valuations are grossly overpriced compared to ongoing mortgage rates, US ten year bonds, wages, and outstanding composite private, corporate, and individual debt to GDP ratio’s. Be prepared for a 1981-1982 13/30 year first and second fractal x/2-2.5x nonlinear second fractal corrective nonlinear devaluation reckoning. 18 March 2023 Update 360% total 2022 US total debt to 2022 US GDP is one thing with US fed fund rates at near zero percent; but something quite different at a 10-11 month rapidly ratcheted 4.25 to 4.5% US fed funds rate. The reactive large sequential raises by US and western central banks to control consumer inflation are weighing heavily on entities which are required to roll-over debt. Those entities include sovereigns, zombie corporations, and individuals with credit card and variable interest rate loans. This new debt load required to support the system's current valuations and the massive quadrillion dollar derivative positions involving those assets (and subject to margin calls) represent dynamic components operating within a nonlinear system. Expect a sudden and dramatic nonlinear decline in asset valuations. limited ... I am riding on a limited express, one of the crack trains of the nation. Hurtling across the prairie into blue haze and dark air go fifteen all-steel coaches holding a thousand people. (All the coaches shall be scrap and rust and all the men and women laughing in the diners and sleepers shall pass to ashes.) I ask a man in the smoker where he is going and he answers: "Omaha." Carl Sandburg Quantitative asset-debt global saturation macroeconomics Assets, the valuation of those Assets, and the valuation of Debt AS an Asset are all interconnected and globally linked. the manipulative expansion of debt by central banks both creates new assets and elevates the valuation of new and existing assets. Observably, There is a maximum (peak)and a minimum(NADIR) of the Asset-debt macroeconomic system's total asset and debt valuation that is observabe to operate qualitatively in cycles. It is the hypothesis of this website that the system's cyclical peak and nadir total valuations operate quantitatively in a deterministic, observable, and predictable behavior which is characterized by elegantly simple time-based mathematical fractal patterns. These self-assembly, self-ordering simple mathematical equations confer on the system the status of a patterned science. All social-political history occurs under the umbrella of the great asset-debt valuation cyclical patterns. An earlier three and four phase nomenclature The asset debt macroeconomic system generates two self-ordering composite simple growth and decay asset valuation mathematical fractal patterns labeled as a 'type A' 4-phase fractal pattern and a 'type b' 3-phase fractal pattern TYPE A: Xy/2-2.5Xy/2-2.5Xy/1.4xy-1.6xy: a four phase fractal series and Type B: xy/2-2.5xy/1.5xy-2.5xy: A three phase fractal series X = y = xy as fractal time unit (hours, days, weeks et. al.) x represents growth y represents decay xy represents a combination of valuation growth and/or decay The US 1807 36-37/90/90/54 year great fractal pattern is a type A 4-phase pattern: xy/2.5xy/2.5xy/1.5xy US INItiATING FRACTAL 1790/92-1807 16-18 YEARSUS FIRST GREAT FRACTAL. 1807-1842/43 36-37 YEARSUS SECOND GREAT FRACTAL 1842/43-1932 90 YEARSUS THIRD GREAT FRACTAL 1932- Nov 2021 90 years (wilshire peak) US Four Great fractal 2021-2074 54 years The US initiating 16-18 year fractal started near the time of the buttonwood trading agreement in 1792 and ended with the panic and depression of 1807 with a nadir in commodity prices. the Lousiana purchase served as the basis for the US Great first 36-37 year Fractal with independent state and federal bank debt expansion and a correlative increase in land and commodity prices. This price expansion peaked with the panic of 1837 and ended with a nadir in commodity prices in 1842/43. the 90 year US great second fractal had two major subfractals with debt expansion for the civil war and later railroad building. The latter peaked and collapsed with the panic of 1873 and nadired in 1877 with falling commodity prices until near the turn of the century. commodity prices peaked again in world War I followed by a commodity price nadir. in the 1920's debt expansion occurred for both production and for consumption of newly available mass produced technology and for equity speculation with 10 cents buying a dollar's worth of equity position. The total system's valuation peaked in 1929 and nadired to a low in mid 1932. THE UNITED STATES' 1932-2021 90 YEAR GREAT THIRD FRACTAL cycle occurred in two subseries: a 1932-1982 51 year FIRST SUBFRACTAL of 11/22/21-22 YEARS and A SECOND SUBFRACTAL SERIES OF 40 years :: X/2-2.5X ::13/28 YEARS from 1982 to a peak in November 2021. (8 November 2021) FOR THE LARGEST US equity COMPOSITE, the WILSHIRE 5000, WORTH 48- 49 TRILLION DOLLARS THIS third fractal 90 year valuation peak OCCURED on 8 NOVEMBER 2021 WITH A PEAK VALUATION OF 48.95251 TRILLION. Bitcoin in US dollars also had its average daily peak valuation on 8 november 2021. The US 54 year Fourth Fractal began on 8 November 2021 and is expected to last for 1.5x of the 1807 x/2.5x/2.5x/1.5x fractal series with an 'x' value of 36 years or 54 years ending in 2074. While the future absolute Wilshire value may exceed the november 8 2021 value, the inflation adjusted wilshire value will likely not be exceeded. GOING FORWARD THE NEXT 54 YEARS OF THE US HEGEMONIC asset-debt system GReat FOURTH FRACTAL (36/90/90/54 YEARS) will present a GREAT RUB FOR MONETARY POLICY DECISION MAKERS. This conundrum IS captured IN THE time MICROCOSM OF THE CRB VICE the COMPOSITE EQUITIES from sept 2021 to June 2022. DURING THIS TIME THE CRB INDEX HAD RISEN BY OVER 50 PERCENT WHILE THE WILSHIRE had lost ABOUT 20 percent of valuation. KEEPING INTEREST RATES TOO LOW and for too long a time period TO CONTROL CRB RELATED INFLATION HAS RESULTED AND WILL in the future RESULT IN FURTHER VALUATION INCREASES OF THE CRB dIRECTLY HURTING CONSUMERS, THE real BASE OF THE ASSET-DEBT MACROECONOMIC SYSTEM PYRAMID. Monetary policy makers will be forced periodically to have interest rates sufficiently high to control commodity inflation for the system's base population.
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. 8/18/18 of 18/ 10-11 months :: a x/2-2.5x/12-2.5x'/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 outlook 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 33/72/74/4 of 42 week 4 phase growth and decay fractal pattern with an expected crash devaluation in the next 15-16 trading days