1. Preliminary

1.1. Foreword

eco nom ics 1: a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services.[i] Starting with an attempt to define the subject under discourse is probably a good beginning. Most attempts to understand economics start from a level of human social interactions that aid men in their efforts to survive both singlely and collectively. At this level, many bright and cherished ideas have been put forward and many have endured the test of time and found practical application in social orderings. What is still apparently lacking is a sense of fundamental alignment of ideas that will impart a sense of order and relative value to them. This work is not meant to challenge any set of ideas, but merely to lay in a foundation of fundamental understanding that will allow that alignment of economic ideas into a more orderly integrated body of knowledge.

1.2. Past fundamentals

Plato contributed the idea that specialization of labor would result in people doing the things that they were best at and hence would result in higher net productivity when applied collectively. That doesn’t sound too radical today but in his time the most successful common people were those that could farm, hunt, kill predators and barter a few odds and ends to make life easier. Specialization in those circumstances was probably a highly risky venture that subjected you to political and religious forces that would make predator stalking the more rational choice.

Aristotle attempted to probe the concept of wealth and in so doing was forced to deal with the idea of value. He noted that wealth was created in a fundamental sense by the production of a basic commodity, but wealth could also be created in an unnatural sense by exchanging things. He also noted that money could enable deferred consumption which is at the root of capital formation.

Mercantilist thought dominated the 1500s and early 1600s with the ideas that gold and trade deficit for everyone but themselves was the road to national dominance.

Physocrats emphasized the acquisition and control of the fundamental natural resources that go into the production of things that man needs. While this intellectual mantle was used to justify the colonial expansion of the European powers, the physiocrats managed to contribute a fundamental concept to economics. They conceived that economics on a mass scale had a sort of natural order to it that paralleled natures survival of the strongest. (Darwin didn’t publish until about 150 years later.) From this emphasis on natural law was derived the concept of Laissez-faire economics in which matters proceed best with least political interference.

We shall close the past fundamentals here, somewhat arbitrarily. The concept of a natural ordering or natural laws being an interregnal aspect of basic economic theory is a shared concept with this work.

1.3. Classical Fundamentals

Adam Smith is credited with initiating the classical era with his publication of ....Wealth of Nations. Adam’s recurrent theme was that specialization and division of labor can produce greater value that a mere aggregate of numeric labor. The concept of value as a fundamental aspect in understanding economics was central to his work. Many economic philosophers challenged Adam Smiths work, and in so doing refined and lent more weight to it.

1.4. Summary of Fundamentals

So the extant fundamental ideas of economics have two basic aspects. First, the mechanistic concepts of labor, value and specialization. The additional concepts of absolute wealth in terms of natural resources and scarcity are also included in the mechanistic category. Secondly, the economic operant concepts include ‘the invisible hand’ and the physiocrats ‘natural order’ or natural law.

1.5. Adding to the Fundamentals of Economics

Economics dates itself as a distinct discipline to around the classical era initiated by Adam Smith. Prior to this time frame, economic ideas were largely in the hands of the philosophers. This division is still extant for the simple reason that when you plumb below the level of ‘value’ and ‘natural law’ you are navigating around the philosophical shoals of ‘what is the purpose of human activity’ or ‘why do people aggregate and then become partisan to their groupings?’

It would seem then that in order to add to the fundamentals of economics it will be necessary to walk the tightrope between what is currently understood in economics and the chasm which is philosophy. The balance beam that we can cling to commencing our walk will be whether the result is a better understanding of the subject as a whole, in the final analysis.

2. Stepping out

2.1. Lower common denominator

Speculation about the relationship between the fundamentals of life and the more macro studies of sociology and economics should be fruitful ground if one is not too wary of broaching the subject from a philosophical bent. If some simple fundamentals of life below the level of value and labor can be identified accurately then the extrapolation of this information to a description and increased understanding of life in its more complex manifestations, as in economics, should also be possible.

Trouble is that when you enter the philosophic arena you are reduced to the level of opinion and conjecture. What can be agreed upon below the level of value and labor? To answer that you have to ask what labor is doing and what how value is created. I guess a common denominator would be some sort of action. Action is involved in both labor and creating value. The ‘natural order’ of the physiocrats involves much action. Natural resources are not necessarily active unless value and labor become part of the calculation.

The descriptions become irresponsible at this point, as sociology and anthropology tend to look to biology for an explanation of basics, while biology is currently looking to chemistry for answers. Chemists look to physics for underlying principles. Of course, philosophy and religion have always been standing there with lots of answers but they are generally short of proofs.

It is a fairly obvious, and tame observation then, that action is a lower common denominator of economics than value and / or labor.

2.2. Action in action

Define action. At this level it is easy to launch right into a philosophical abyss of action defined as motion which relates to time and what is life anyway.....? But lets not take it that far. Lets stop at the point where we view the characteristics of motion. Now this is really interesting, if you freeze time at any moment you would find that everything had a specific location. Now if you skip ahead an instant you will find that things in motion have changed location. Motion is change in location.

Now how do action and motion relate. Well simply put, motion has physics and chemistry as a referent point and action has a more human quality of definition which makes it more acceptable in the realm of sociology and economics.

OK, so let’s say that action is motion in social terms. Now lets examine action. Like motion it covers a spectrum from the minute to the large scale. But what is involved in action? Some sort of change as in motion. You don’t need to go to the extreme and say altered location with time, but that is it essentially. But lets just keep it at: some definite change has to occur for action to take place.

Let us examine action as it is defined by various disciplines:

DISCIPLINE LEVEL OF FUNDIMENTAL INQUIRY

Quantum mechanics probable location - time - probable location

newtonian mechanics location - time - location

Physics initiating a change in location - changing location - arresting a change in location

physical sciences motion

economics cycle of action
work
value

sociology social systems
collective interactions

With change as the central quality of action, we are free to explore any possible peripheral qualities of action. What else is involved in action? We need some starting point, I dare say, and perhaps some ending point. That seems simple enough. Start somewhere with something, change matters toward some goal, and when the change is complete you have then stopped and completed your action.

The cycle then inherent in any action is the simple act of start then change then stop.

2.3. New fundamental

So here we have action as a new fundamental which exists below the level of labor and the creation of value. It seems obvious that labor requires action, and value in a labor or exchange sense, would require action as well. Action itself is simply doing something as in starting, changing and stopping. For most people the act of rising in the morning, doing what ever they do best that day, then retiring to bed in the evening would, in an economic sense, be a most basic cycle of action resulting in additional value in either a labor or exchange sense.

2.3.1. Action within action in microcosm

A cycle of action, existing at a very basic level, has even broader application. At the onset we should note and appreciate the fact that at a microscopic level, as in physics and the definition of motion, a cycle of action could conceivably consist of the change in location of a single object. But wait, even an object consists of molecules and atoms which are themselves in motion, and hence, any motion, or cycle of action, involves smaller cycles of action that are subsets of the major cycle of action that is under observation. A similar, even more obvious, relationship exists with our previous labor / worker example, in that a days work would necessarily involve a multitude of smaller cycles of action beyond rising, working and going to bed.

2.3.2. Action in macrocosm

Taking a broader look at cycles of action we can observe that a company has a cycle of action in the sense that it has an inception point, it creates value or products for a period of time, and in the end it most probably declares bankruptcy and ceases to exist. Likewise, a person is born, has a life filled with a multitude of successes and failures, and in the end, dies.

Cultures and countries have cycles of action as well, in that they have some historically problematic point of origin, they take center stage throughout some fit of cultural vibrancy, and in the end become weaker and are pushed from the stage of history by another culture.

2.3.3. Interactive actions

The salient point at this juncture is that not only do cycles of action have the quality of imbedded sub-cycles of action, but that independent cycles of action impinge on one another and thus alter the character of the observed cycle of action. Take as an example: you rise in the morning with some goal in mind, begin to execute that plan, then get called away on an emergency, then return to finish the days planned activities, then retire for the day. Your days cycle of action has been impinged upon by someone else’s cycle of action. Your day won’t be as orderly as you might wish, but you have completed your cycle of action. Now let’s use the same example, but of someone else who happens in harms way during the day. This theoretical person was at the wrong place at noon and dies. Has he completed his cycle of action? No. Has he completed a cycle of action? Yes. He started in the morning, he changed till noon and then he stopped abruptly.

This leaves us with another quality of a cycles of action. From a particular point of view you can halt a cycle of action prior to completion. However, the act of halting the cycle of action is in of itself a completion of that cycle of action. In an absolute sense, if any change has occurred then a cycle of action will result. Once change is initiated, no matter how brief, no matter how altered, no matter how long, there will be a cycle of action at some point.

2.3.4. Unending actions

We have already ascertained that cycles of action are imbedded within or are subsets to larger cycles of action. For example, each day is a cycle of action within the larger cycle of action which is your life. But what of your life? Isn’t your life a subset of your mothers lifetime cycle of action? And since you will outlive her, is her demise a completion of her cycle of action, even while you, a subset cycle of action that she initiated, continue to act and exist?

The answer is that the apparent inconsistencies only seem to exist without adopting a sufficiently large context. You may execute one days worth of goals at work today but many of the things you start or change today may have a later completion date. And yet each is still a cycle of action that exists within the cycle of action which is your life.

By this logic then, all cycles of action are but subset cycles of action that have the big bang as a genesis and the great sucking sound at the end of the universe as a denouement.

2.3.5. Absolutes in action or inaction

A simple look at start, change, stop or a cycle of action seems to imply that the state of start and stop are points of inaction. In a theoretical sense they are since their absolute definition must be at variance with change or motion. But, previously we have defined all cycles of action as subsets of big bang, the universe, implosion cycle of action. So all definable cycles of action are born within the context of change, that is within the change part of a larger, or several larger, cycles of action. In a theoretical sense, you could assert that since any start or stop are not before or after the big bang, that absolute start, (no motion), and absolute stop, (no motion) are not attainable within a universe of constant change. The practical significance of the maxim that absolutes are unattainable is that it allows us to view start and stop in a relative sense as they relate to the change between them.

A practical example would be the start and stop of your day. When you wake, at the very least, you conceive of the goal that it is time to go out and put in a days labor. Now there isn’t much action involved, and it may not take long, but it does take a moment to decide to get going. Likewise, at the end of the day, you don’t switch off like a light, you have to prepare a bit before you go to sleep.

Even stated in terms of motion, as in the simple changing of location. At the start part of a change in location is the expenditure of energy to initiate motion. Likewise at stop of motion, energy must be utilized to overcome inertia.

Stated more concisely then, absolutes are unattainable, start and stop exist within the context of the change part of a larger cycle of action and hence must have some change as a defining characteristic. However, in a relative sense, start and stop can be viewed as no motion relative to the change that occurs between them.

2.3.6. Aggregate cycles of action and momentum

On average, if you decide to get up and go somewhere tomorrow, or if you decided to get your family up tomorrow and take them somewhere, which event would take longer in the start phase? If you’re like most, then the odds are that moving your family group out the front door usually takes longer than moving yourself out that same door. The start phase of your family outing day would be initiated when the first member of the group got up and end with the last member out the door. Each member of the group has its own cycle of action. Each member of the family has their own waking moment, a different routine for getting ready to leave, and they each leave out the front door at a different moment.

From this we can derive another quality of cycles of action. The rule is that aggregate cycles of action always have a duration greater than any of the component cycles of action. Any cycle of action that exceeds, in duration, the stop phase of the observed cycle of action is by definition a sub-cycle of action of a next larger cycle of action other than the one under observation.

Now, back to our example. During this start phase to your day, you and your wife as parents would have the most say, the most formative power in this brief start phase cycle of action out the door. The younger, energetic members of the family would likely be the most disruptive to the overall cycle of action starting your day, however, despite the disruptions and delays, you would still make it out the door as a group.

New rule. When you aggregate the cycles of action, they interrelate and affect one another in proportion to the energy, or volume of change, that they bring to the aggregate.

3. Permutations

We have looked at and dissected the qualities of a cycle of action, but what of its nature. That may sound like the same thing but there is a difference. A cycle of action has been viewed in its ability to make sense of the world of motion in which we exist, but we have yet to look at a cycle of action in the sense of its nature and characteristics.

A cycle of action consists of start-change-stop. What can we observe about the nature of start, change or stop. Well, start and stop are a dichotomy for one. Secondly, if start and stop are both relatively free of change or motion then start/stop and change also form a dichotomy. Interestingly then, the cycle of action is an interplay between two dichotomies.

In a practical sense, what does the observation that a cycle of action is an interplay between opposites yield? To answer that we will have to examine a number of dichotomies and see what results.

3.1. DICHOTOMIES

The dichotomy of a positive and negative poll as in a battery or generator would be an example of a hard sciences dichotomy not much subject to debate or opinion. One might observe that the increasing complexity of the computer has as its basis the on/off dichotomy state of each transistor. Similarly the dichotomy of start and stop presents little that is debatable. However, the more you move into the realm of human activity the more debatable the dichotomies become. Order verses chaos, for instance, would be somewhat subject to the opinion of the observer. Similarly, a debate on good verses evil would evoke a great deal of opinion and debate.

It can be said then that dichotomies run the gambit from the objective to the subjective. Generally, the objective tend to deal with the physical sciences and the more you approach human affairs the more subjective and open to interpretation the dichotomies become. Now lets put forth a series of dichotomies. The order is not absolute but the sequencing is somewhat intentional in that it slides down from hard science type agreed upon reality, down toward ever more subjective human type dichotomies increasingly subject to opinion:

STATICS (equilibrium or no motion) MOTION

START STOP

POSITIVE NEGATIVE

CHAOS ORDER

CREATION DESTRUCTION

CAUSE EFFECT

NOTHING SOMETHING

ABSENT PRESENT

Discussion of dichotomies may invite some debate, since at this level we begin to reach down from physics and motion and on into the various aspects of living and / or economics. When viewing an aspect of living in terms of a dichotomy we are in effect attempting to define that aspect of living by the extremes of its possible definition. Take, for instance the dichotomy of ORDER vs. CHAOS. In our personal affairs, we spend much of our time between the extremes of order and chaos. We are never so well organized as we would like and never completely unwilling to take on something exciting in spite of the fact that we haven’t put all our current projects to rest yet. So we end up constantly shifting within our comfort zone, which falls somewhere within the objective zone of complete order and complete chaos.

Since a cycle of action is formed from the dichotomies of start and stop, it follows that by examining other dicotomies we may avail ourselves of a fuller understanding of cycles of action and their permutations.

CONCEPTION DEATH

CONFUSION CERTAINTY

OBSERVER OBSERVED

SPACE MATTER

AFFINITY REALITY

SURVIVE SUCCUMB

DIFFERENTIATION IDENTIFICATION

BEINGNESS HAVINGNESS

IDEAS IMPLEMENTED

INTEREST AGREEMENT

FRIEND ENEMY

GOOD EVIL

GREED FEAR

3.2. Dichotomies forming cycles of action

Building on dichotomy as a basic definition or a definition by the extremities of a subject, one might observe that matter , for instance can be in varying states of order or chaos, that matter may be animate or inanimate, that it may be useful or useless. Approaching from another tack, (and risking a quick dip in the philosophical pond), it could be stated that the agreement or reality that we all share can be considered to be the dichotomy of the intrusive impulse of life bringing order to the chaos of matter and the tendency of matter to return to a state of lowest energy and highest entropy. Definition by extremes do not preclude or deny the existance of intermediate states, it simply isolates the essential parts of what we are trying to understand in its purest form.

When you add life to any of the extremes which are isolated as dichotomies you get variations between extremes. Describing an intermediate state between two extremes may have many gradient points of reference.

START CHANGE STOP

CAUSE DISTANCE EFFECT

CHAOS CONSTRUCTIVENESS ORDER

OBSERVER OBSERVING OBSERVED

POSITIVE FLOW NEGATIVE

ABSENT APPEARING PRESENT

SPACE ENERGY MATTER

CREATION CONSERVATION DESTRUCTION

CREATE SURVIVE SUCCUMB

CONCEPTION LIVING DEATH

BEINGNESS DOINGNESS HAVINGNESS

DIFFERENTIATION ASSOCIATION IDENTIFICATION

CONFUSION UNDERSTANDING CERTAINTY

INTEREST COMMUNICATION AGREEMENT

IDEAS IMPLEMENTATION EXPLOITATION

GOOD SITUATION ETHICS EVIL

FRIEND LAWYER ENEMY

GREED LONG TERM INVESTOR FEAR

preparation production consumption

capital accumulation capital usage capital consumption

Any impulse toward change in physical reality involves a cycle of action. A cycle of action is a dichotomy with an intermediate phase. The intermediate phase is the impulse of life to attain a new reality. The intermediate phase does not actually exist, since beingness at location, (a point of view, a viewpoint of dimension, you), consists solely of the consideration that one is a particular point of view. The intermediate phase is a composite of smaller cycles of action, which in turn are composed of smaller cycles of action. Recall from the discussion of duality that "Alternating ones' beingness between two or more viewpoints .... produces the illusory result that time is a byproduct of change when in fact time is the byproduct of the alternating of beingness at differing locations. It may also be noted that the change in location of beingness will create the illusion that the points being viewed have moved." In human terms, changing ones' point of view doesn't require time unless you do a lot of thinking, in which case you are engaged in smaller cycles of action. If you have ever tried to get something done and found that before you could get it done you first had to _____ , and before that was possible you needed a form, but that is only available from this person who is on vacation.... - well you know all about time. Life in the physical universe, at an action level can be observed to assume the 2 pole properties of this universe and obey the physical laws of Newton and Planck.

If you understand time and change then you have a handle on the bridging state between dichotomies. Taken together, a dichotomy plus its bridging characteristics have three aspects. The most basic definition of dichotomy plus bridging state is the Cycle of Action which has three phases. These are START - CHANGE - STOP. Start - change - stop is a basically mechanistic look at what occurs when someone or some group tries to get or achieve something, when the intrusive impulse of life attempts to put some new form or order into physical reality.

Viewing a mechanistic cycle of action in more human terms would involve re-describing the start - change - stop cycle in terms that would equate to more nearly human qualities. In the human arena, in terms of groups or individuals, the most descriptive equivalent would be BE - DO - HAVE. Descriptions of a cycle of action with varying applicability to human activity might be:

BE DO HAVE

CHAOS CONSTRUCTIVENESS ORDER

DIFFERENTIATION ASSOCIATION IDENTIFICATION

IDEAS IMPLEMENTATION EXPLOITATION

CREATION CONSERVATION DESTRUCTION

CONCEPTION SURVIVAL DEATH

CONFUSION UNDERSTANDING (verb) CERTAINTY

Now that we have several diametrically derived descriptions of life's impact on the physical environment we can begin to find the threads that link the basics of life to the more complex social and economic studies.

Understanding and extrapolation of a basic frame of reference for life and its activities must lead to a greater understanding of more complex issues involving social trends and economic patterns.

Most patterns of research or speculation involve the sifting of large volumes of data in an effort to find patterns and rules that may yield a more basic understanding of the whole. The effort is to travel from a complexity toward a simplicity. Most great discoveries are made in the manner of arriving at a fundamental and simple understanding of a complex set of facts.

In this study we are trying to trace relational lines between a pre-discovered simplicity and the more complex economic patterns, which by the nature of those patterns, point insistently toward simpler basics.

That which follows is a review of the basics of life followed by a review of the relevant economic patterns. Finally we will attempt to find the common threads that will enhance the understanding of the latter.

FIBONACCI

All of the forgoing can be described mathematically. Before reality as we know it life has a preexisting, uniform or all encompassing nature. From that point life reduced to a singularity, re-expanding on an not knowing basis to duality, expanded on to the cycle of action, then to infinity via multiple imbedded cycles of action which create the illusions of time and change. Stated mathematically we get the genus of the fibbonacci number sequence which is simply 1,1,2,3........

TRANSITION TO ELLIOT

The cycle of action of life is the desire for beingness of a new dimension point, shifting point of view to the new dimension point, being the new dimension point, abandoning responsibility for the former dimension point that was previously occupied by the process of "it's over there" (which is viewpoint of dimension), and I'm not there. (or not have / not be, which is the elliont wave correction.).

The state of havingness (5th wave) is the state of responsibility for 2 points of view and responsibility for all the sub-cycles of action)

ELLIOT

The BE phase, or wave 1, has the characteristics of "beingness" or the search for and coalescence of a sense of identity. In terms of the United States, (I'm thinking of that SRC century chart that has a nice 5 wave pattern in the top left corner that is a price chart of the United States from inception to the present.), this would involve the shift in a sense of identity from being English subjects to the new sense of "American" as a new and unique identity in the world. This coalescence of identity should also involve the laying down of a fundamental legal framework, social notions such as work ethic and democracy which define group and personal interactions and the notion of ownership of other individuals, which was not finally settled until the completion of wave 2. On a business enterprise level wave 1 would involve the definition of objectives/products/organizational structure and socially the definition of the corporate culture which would all involve the sense of identity of that company. On a personal level one would start any acquisition cycle by visualizing oneself owning that new car, or having that position in the company - basically realizing that something is possible or attainable.

The DO phase, or wave 3s, would be characterized by the greatest amount of change. There is a large amount of willingness on a national level to accept change in the form of improving infrastructure, (the railroads of the 1800s and the national highway system of the 50s), implement the sense of national destiny, (the great white fleet, the Spanish/American war, WW1 to save democracy for the world), and industrially there is a great willingness to invest in the means of production, (agrarian to urbanization shift and the industrialization of the 1800s). On a corporate level the strategy shifts from a wave technical/innovation strategy to a wave 3 marketing/volume production/economies of scale type strategy. On a personal level one would finish school (wave 1, I am now a ............), get a job and commence one's climb up the corporate ladder (wave 3).

The HAVE phase, or wave 5, would be characterized by the complacency that accompanies the feeling of having already made it. On a governmental level the cost of new infrastructure is too high as the factors involved all escalate in a growing sense of ownership run amok, (excessive legal activity, high asset valuations for land and resources). The cost of international status, (foreign aid, large defense establishment, overseas military bases), rises as the declining productive capacity (relative to the competition) is reflected in a declining currency and a trade deficit. Debt is assumed on the pretext of growth but the social context reduces the effort to a shoring up of current expenses. On a business level corporate strategies shift from a longer term wave 3 market share strategy to a shorter term margins strategy. On a social level people begin to spend more of their infrastructure, (savings), and begin to take on debt. Savings assume the aspect of having a tangible asset such as real estate. Education undergoes a type of inflation where you get more high school graduates while an ever larger percentage can't perform the basics as well as a yesterdays 8th grader, (having a degree becomes more important than the doingness implicit in a good education). Job hopping becomes the norm and a life of dedication to anything, other than the acquisition of wealth is scorned as people try to have it now rather than sacrificing for or investing in a better future. Social participation in the form of voting declines since it demands a certain forward looking aspect more nearly approximation the social moods of waves 1 and 3. The social contracts that were formed in wave 1 and tempered in wave 2 begin to show cracks.

So there you have it. I remember on your tape interview you talked about being a bull market icon. If you look at the five wave 200 year history of the US. or even the five waves from 1930, in terms of icons you will find that the wave 1 icons tend to be the philosophers, statesmen, artists, scientist/inventors and other innovators all of whom help mold the sense of identity and delineate the possibilities for greatness that characterize wave 1. The wave 3 icons tend to be those who bring about the greatest change in the implementation of the national goals which were defined in wave's 1 and 2, the industrialist, the scientist/engineer, the political leader who skillfully shepherds the changes in international standing that the new economic power makes possible, the highly productive company and or worker (the middle class does the best in the middle wave). The wave 5 icons tend to be the manipulators who create a sense of ownership or "having" on the basis of deals, buy outs, accounting changes and inflated real estate values and deals. MBAs become the sought after degrees. Buy outs the means of corporate "growth". The public flock to seminars that tell them how they can have everything without working for it. Everyone wants to have, nobody wants to do and the sense of beingness begins to disintegrate into the correction.

The Corrective Wave

The corrective wave is essentially a partial and phased reversal of the dichotomy that formed the previous impulse wave. If you choose BE and Have then the correction becomes NOT HAVE and NOT BE. If you chose Differentiation - Identification then the correction would best be described as the reducing certainty of Identification and the desolving of cohesiveness of approaching differentiation. If you choose chaos - order then the correction becomes resisting disorder and the coming unglued" aspect of embracing chaos.

This last example of resisting disorder and embracing chaos brings attention to an interesting parallel phenomena in the physical sciences. If you examine the characteristics of an explosion you will find that an explosion consists of a series of alternating concentric spherical pressure/vacuum waves. Explosions do not simply result in a linear expansion of pressure from a point of origin. A passing explosive pressure wave would, in slow motion, be viewable as a series of condensation - rarefaction waves.

The resistive - embrasure nature of corrections are legend amongst unsophisticated investors. During wave A they tend to use denial or "take a long range view", As the value of their holdings of havingness erodes. During the wave C phase the embrasure nature of PANIC sets in as the investor loses all sense of identity as a competent investor - in effect he actively or embracively abandons his sense of beingness. The embrasive nature of wave C has additional support in the fact that wave C tends to be the longest wave and always subdivides to a 5 wave sequence. The embrasive nature of the C wave means that life is embarking upon a goal - actively moving from a state of beingness toward a state of not beingness. The result of this effort by life, groups or an individual to change results in a cycle of action and explains why a C wave must always subdivide into a 5 wave sequence.

The A wave can subdivide into a 3 or 5. The determining factor here is the response to the deteriorating circumstance. If the response is active, say the individual attempts to cut his loss by averaging down - then the a wave will be a 5 wave sequence. If the response is passive, i.e. taking the long range view or "knowing it will recover eventually", then the pattern will subdivide into a 3 since the movement from have to have-not is other-determined and requires no volition or change, hence you do not see the 5 wave sequence.

The basic principle is this: wherever you see life being cause you will find a cycle of action and a 5 wave sequence and wherever you see life being the effect you will find a 3 wave sequence

ECONOMICS

The simplest observation in the field of economics that can be made as a result of the forgoing deliberations, is that economics consists of the gross activity of a grouping of living entities.

gross activity = economy

The very bottom line is that we all get up every morning and do something and the net result of that is our collective economic output.

Fortunately this profundity can be further broken down into simple parts before one reaches the complexities of economic theory as taught in the local university. The first subdivision of this would be that gross activity is subdivisible into action plus intelligence.

physical actions + intelligence = gross activity

Physical actions can be subdivided into constructive or destructive actions. Examples of destructive actions would include graffiti, industrial accidents, strikes, anything that inhibits the flow of goods or communications such as regulations and tariffs, gridlock traffic, inadequate infrastructure such as telephone, power and roads. Some actions are constructive while being generally viewed as destructive, such as removing an old building before replacing it with a new one. Some actions are destructive while being generally viewed as constructive: government spending to create jobs is more than offset by the destructive effects of higher taxes.

Intelligence can also be dissected. Intelligence has as one of its primary characteristics the willingness of a population to accept change. This aspect of intelligence is of critical importance to increasing the efficiency of the physical actions that make one economy more valuable than another. Another aspect of intelligence is the confidence level of the individual. Confidence level will determine how hard an individual will work now for a future benefit. Government plays a critical role in this area as it represent the level of agreement between individuals that allows them to make predictions of the future and increase there willingness to work now toward a future benefit.

(destructive actions + constructive actions) + (optimizing system + future oriented + increasing confidence level) = economy

Which brings us to the critical role of the very misunderstood concept of savings. The value of savings is NOT in having a high level of savings. Savings represent a no activity. Spending is action. The very real benefit of savings is in the effect of savings as it is increasing. As the rate of savings is increasing the economic or gross activity effect is that people are working now for a future benefit. That means that there is systemic improvement occurring. That means there is an increase in capitol goods accumulation. That means that the means of production is increasing. That means that the industrial infrastructure is being improved. It is an increase in the intelligence aspect of the equation. Increasing savings rate is a growth in the system that the physical activity uses to create economic output. A decreasing savings rate is a cashing in of the system. Its putting a mortgage on the car. Its selling your most productive assets first. A high savings rate is an overhang on an economy. Its like overhead supply on a stock. Recall the high savings rate of the Soviet Union as the communist era was ending. Most economist at the time viewed that savings rate as rational for predicting an optimistic transition to a competitive economy when hyper inflation was a more likely outcome.

Capitol accumulation and increasing savings both have little to do with money in the bank. The critical nature of each is the cultural attitudes that affect how people work: how hard they work, how accepting of change and inovation they are in their work.