Musings about an Economic Fractalist and Today’s Credit Implosion

admin | October 10, 2008 11:24 am

By Stormy

Gary Lammert’s prediction of a great crash may have been off by two plus years. Nonetheless, this economic fractalist, kept telling us to “expect the unexpected.”

While he spoke of vast fractals about to culminate in one great macroeconomic implosion and while his fractals seemed strangely divorced from anything I could understand, when he departed from fractal-mania, he was absolutely on target regarding the problem: Debt, debt, debt.

Here is his latest:

This nonlinear transformation will correspond to and represent a sudden implosion of the money supply. It will correspond to the timing of a credit collapse of debt that cannot be repaid, cannot be rolled over, cannot be remedied by further federal government debt, and will correspond to the realization that state governmental services that can not be maintained in the face of collapsing property values and property taxes and in the face of a rapidly collapsing private sector of the real economy. 9/22-23/22-23 is the daily fractal decay sequence that will rapidly introduce a realization that the Word’s greatest macroeconomic depression has arrived.

“Debt that cannot be repaid, cannot be rolled over, cannot be remedied by further federal government debt…”

I admire a good writer–and Gary’s baroque, yet balanced phrasing, is always a delight. I must confess that I am partial to those who handle the language with exquisite precision–a mark of a fine mind, I always thought.

Whatever you think about fractals or whatever you think about Gary’s making predictions two years too early, you should look carefully at his substance; forget the fractal-mania. Here is Gary three years ago:

The underperformance of the premiere summation American Index, the Wilshire 5000(TMWX), reflects the disproportionally negative integrative burden on the US macroeconomy of its valuation fractal determining elements – total quantitative personal, governmental, and corporate debt, the latter of which has become much more expensive to service under some behemoth’s new junk bond status; unpayable private pension funds soon to assumed by American taxpayers- of formerly great, soon to be bankrupt, US corporations; expensive war cost which have historically withered every prior major overextended world power, record lack of US collective personal savings used as a base for fractional lending, exhausted consumer discretionary spending running up against near record energy costs; outsourced high paying jobs and current wages not maintaining pace with inflation and debt servicing; siren enticing and predatory unregulated lending practices leading to asset consumption by a new group of extremely marginal buyers; rising short term interest rates; the cresting of valuations of the US ATM – equivalent asset, i.e., housing overvaluation; and recent massive forward consumption of corporate profitless US automobiles akin to a python eating its semiannual one time big pig bolus meal.

I would be the first to say that his fractals need a lot of work if they are going to be really predictive. But what economist is ever predictive? Only God could write an equation accurately predicting economic events. Strip out the fractals.

In one mighty baroque sentence, each item in the series hanging delicately and clearly after the last and each appositive carefully crafted, he manages to collect almost all the issues that have now bubbled to the surface. Perhaps the very exercise of doing fractal economics gave him insight, however murky.

In December, 2005, he warned that a crash might be coming:

Macroeconomic turning points are not caused by changes in mass psychology. Rather mass psychology is a dependent variable that is causally changed by the transitioning major economic conditions that exist and characterize the asymptotic saturation level and the money creation peak area of the cyclical complex debt-money-asset macroeconomic system. It is at this peak transition saturation and inflection area that the collective ongoing wages of the masses of earners can no longer support additional debt load to acquire overvalued and overproduced assets. It is at this point that retrenchment and devaluation occurs. It is here where fractal growth levels off or reaches a zenith point ….and thereafter decays usually with an incipient nonlinear deflationary crash….. Mass psychology then follows the macroeconomic mechanistic debt liquidation – asset deflation optimal fractal decay evolution.

On April 21, 2006, he issued his first of what were to be the first many warning: “More Than Ever… Expect The,,,, Very Unexpected …. The Unbalanced Global Macroeconomy …… And The US Long Term Debt Market.”

Gary nailed the problem, put it up there for everyone to see.

Unfortunately, many suspected that Gary saw fractals as causative, not merely descriptive.

Commentators laughed at his warnings, scorned his fractals, and finally left him to work alone and undisturbed. Put a comment up on his website and you will get no reply. (He did change websites.)

Although he framed the picture perfectly, I think finally he himself had to question whether even fractals could be perfectly predictive. (Off by a couple of years…oops.) In truth, I am not sure what he privately thinks about the fractal science he relentlessly pursues.

If publicly he had omitted the fractals–kept them on his working bench, using them only as his private tools–and then offered more conventional rationales of why the big picture he saw was so dangerous, he might have done better.

Instead, he pushed the core argument back to fractals, a mistake, I think. In trying to prove a mathematical point, he failed to deliver his message. Sometimes I suspect he sees the world as one giant mechanism, rolling along fractally-governed, predetermined lines. While this may be true, that vast fractal has to be beyond comprehension.

Be all this as it may. I find him to be one of the most fascinating and most interesting minds on the Internet.

Too many of us sound like each other. Gary stands brilliantly apart. Unlike many of our leaders, I am sure recent events have not surprised him.

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