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  • In the Great Window of Fractal Nonlinearity (Up for US debt instruments; down for Equities and Commodities) 1 comment
    Feb 28, 2010 8:32 PM
    The 8-9 October 1998 Great Wilshire 46: 92 month :: x/2x extension. ASSET NONLINEARITY AHEAD

    The 46/92 :: x/2x month extension to the 70/140 year :: x/2x US progenitor continuity stock-equity asset valuation marker of the macroeconomic system has occurred through three discrete credit-debt expansions.

    The first money debt expansion was via the 1998 - 2000 private computer and related software, hardware, and fiber optic cable malinvestment bubble.

    The second phase money debt expansion was via the Federal Reserve-financial institution-government service agency-real estate industry including assessors collaborative. In this second expansion, the Federal Reserve could have controlled the bubble by rapidly raising shot term rates to 8, 10, 12, 14 percent. The blood financial industries, real estate industries, and corrupt individuals in the government services Fannie agencies are what they are: blood sucking parasites with no moral compass and no concern for the citizens of the nation.


    The greatest debt-money-asset expansion occurred likely occurred in second phase with world real estate valuations increasing by over 25 trillion dollars.


    According to The Economist, "developed economies'" assets at the end of 2002 were the following:

    * Residential property: $48 trillion;
    * Commercial property: $14 trillion;
    * Equities: $20 trillion;
    * Government bonds: $20 trillion;
    * Corporate bonds: $13 trillion;
    * Total: $115 trillion.

    The average US price of residential property increased from 228 K in 2002 to 313 K in 2007 representing a 42 percent increase in real estate in 5 years or a 25 trillion.

    The third money debt expansion occurred principally by the Federal Reserve and world central banks as the lenders of last resort occurred from 2008 until present. The first beneficiaries of this debt expansion was the bankrupted financial industry which was rebankrolled with, for the sake of appearance of US foreign debt holders, future taxpayer's money.

    In reality the US Federal Reserve is now holding more than 50 percent of US debt and having the wherewithal to extend unlimited electronic credit and dwarf foreign US debt holders' ability to have a significant impact on the debt market. Western central banks and Japan's central bank can at will exchange large amounts of electronic money, a zero net sum proposition for the system and allow central bank participants via agreement buy each other 'sovereign' debt.

    This unlimited credit expansion maintains the salaries of a large portion of direct federal jobs and the jobs indirectly dependent on the flow of government funds: war industry contractors, medicaid, medicare, social security, et. al. which prevents massive unemployment and destitution and maintains both the remaining private sector and the continuation of interest payment to the large banks holding mortgages on overpriced assets.

    The Nash game with The Federal Reserve for nations holding large amounts of debt, especially China, is this. The Federal Reserve, western central banks, and Japan's central bank are generally non competitors for the raw commodities that China may acquire with its dollar holdings. The central banks will print money only to the extent of maintaining the system and preventing its otherwise certain sudden collapse through slow funding of quasi productive federal employee salaries, contractors, and federal entitlement programs. State and local government employees and their absurd pension plans will be allowed by the central banks to have their necessary implosion, death, or restructuring.

    The goal for the world central banks are the support of global macroeconomic system through controlled deflation and the restructuring of local government, state, and ultimately federal entitlements.

    Major qualitative deflation is coming. This is quantitatively aligned with the 46/92 month :: x/2x extension of the 70/140 year x/2x US equity fractal series ending (and beginning for the 46/92 month series) on 8-9 October 1998.

    The Wilshire's 92 month second fractal commencing on 24 July 2002 is composed of an interpolated 14/35/28/19 of 21-22 month fractal series.


    This is aligned with Nikkei fractal of 26/58 of 52-64 months. Historically low long term and short term US debt interest rates are ahead consistent with asset deflation following a 12/29/29-30 week fractal pattern with the low anticipated at weeks 29-30 of the third fractal and for US treasuries 21/43 of 52-53 weeks.
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    Author’s reply » Equity and Commodity Asset Nonlinearity: The Second Great Countervailing Money Rotation

     

    12 March 2010 and 11 October 2007 : The Wilshire's 10/25/25 day reflexic saturation fractal?

     

    The second phase of the spectacular nonlinear ratcheting down deflationary process of commodity and equity valuations will now occur as available money supporting those saturated owned and over valued assets now rotates into debt instruments. It is the science of saturation macroeconomics that defines the timing and the conversely the patterned saturation timing tat defines the new science of saturation macroeconomics.

     

    In a macroeconomy where forward based consumption, asset production and supply, and asset values were severely disconnected from the real economy of wages, needs, and job availability and were artificially created via federal reserve controlled low interest rates, by politically inspired government service agency inappropriate lending, via heartless, amoral, parasitic financial institutions engineering ways to disconnect the liability of debt repayment from the source of loan and with complete disregard for consequences, and via fraudulent collusion for appraising asset worth - in such a forwardly consumed, over valued, over supplied, free credit and debt laden economy - ratcheting deflation of non money assets must occur for the system to reach a new equilibrium.

     

    In such a forward consumption based economy, non money asset valuation and asset creation can only occur with the creation new debt. While the eastern and western central banks are the suppliers of new debt, the central banks' new debt will not result economically driven new asset production or increased asset valuation based on need. The new debt will modify a too severe deflationary scenario which could lead to social disorder and the disestablishment of the system.

     

    US debt instruments: TNX/TYX :: 12/29/24 weeks :: x/2.5x/2x with expectation of money flow into long term debt from equities and commodities

     

    CRB futures: 13/32/25 weeks ::x/2.5x/2x

     

    The Wilshire : 22-23/54 weeks 14 March 2010
    The 54 week second fractal is composed of 19/36 weeks or 86/172 days :: x/2x

     

    How can the central bank's moral hazard be quantified?
    Review the T-bill (IRX) valuation progression over the last few months. Review Ford's (F) blow-off valuation of the last 6 weeks and its gapped blow-off day: 12 March 2010.10-/24/24 weeks: x/2.5x/2.5x. During this tax preparation season the elderly and those on fixed incomes have reviewed their annual incredibly meager earnings from their savings accounts and have joined late at the blow-off equity bubble saturation area. This is the malinvestment that occurs with non market driven federal reserve manipulated artificially low interest rates. It is the common citizen who is doubly crucified while the bailed out recapitalized financial industry is doubly benefited.
    14 Mar 2010, 05:36 PM Reply Like
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