Posted May 29, 2015 by Martin Armstrong
There are actually three dimensions to the Economic Confidence Model and no, I have never published the third for security reasons. This is the dimension that identifies the sector coming into focus. The wave function of the ECM is far more than just two dimensions, for it is this third dimension that introduces complexity and tests the mind of reason. Comprehending that there is complexity is the first step. How to unravel the complexity takes an ability to see multiple dimensions in your mind, looking through them like a transparent veil to make out the image on the other side.
Those who cannot grasp that there is a business cycle seem to lack the understanding of multiple disciplines. Cyclical wave patterns occur throughout nature, which includes ocean waves, sound waves, and light waves just to start. This is how energy moves, for this is the lifeblood of everything since energy can neither be created nor destroyed.
Next, we must understand the wave function. Altering the wavelength produces a different effect in nature, which also applies to human society embedded within this third dimension. Consequently, panic cycles have different frequencies from benchmark cycles and then we have positive and destructive inference within a wave formation that can alter the amplitude creating a Phase Transition or cancelling everything out to produce the absence of an event.
Those who refuse to acknowledge that there are definitive wave motions within human society which materialize as our business cycle representing human interaction, are generally ignorant of the work in physics that applies to everything. They cannot understand wave motion and thus are unable to see complexity. They simply declare that the business cycle is not inevitable and assume they have the power to alter the world.
To understand cycles, we need to understand the basic formation of a sine wave or sinusoid, which is a mathematical curve that describes a smooth repetitive oscillation – a cycle. It is named after the function sine. The wave occurs often in pure and applied mathematics, as well as physics, engineering, signal processing, and many other fields including economics. Its most basic form as a function of time (t):
- A = the amplitude, is the peak deviation of the function from zero.
- f = the ordinary frequency, is the number of oscillations (cycles) that occur each second of time.
- ω= 2πf, the angular frequency, is the rate of change of the function argument in units of radians per second
- ℘=the phase, specifies (in radians) where in its cycle the oscillation is at t = 0
(When ℘ is non-zero, the entire waveform appears to be shifted in time by the amount ℘/ω seconds. A negative value represents a delay, and a positive value represents an advance.)
The sine wave is tremendously important in physics for it retains its wave shape when added to another sine wave of the same frequency and arbitrary phase and magnitude. This is where the complexity arrives, for each instrument possesses its own unique frequency. In this respect, the Economic Confidence Model is a composite of all frequencies at the global level, making it incredibly important internationally. The sine wave is the only periodic waveform that has this property to retain its wave shape. This property leads to its importance in Fourier analysis and makes it acoustically unique as well.
Yet, there is such complexity in mapping the world economy it bends one’s perspective of the world and compels you to open your eyes to see the whole rather than the prejudice of the domestic view. Yes we have the fixed transverse appearance of the Economic Confidence Model that represents the global business cycle. Then we have the oscillations and correlations of the individual nations and individual components (markets/economics) .
The oscillation of an undamped spring-mass system around the equilibrium is a sine wave. However, at the same time we have a longitudinal wave with interesting complex patterns. So we have many variations of cyclical formations combining to produce a new view of the world around us. It is time to open out mind and our eyes to a new age of understanding. Instead of the Atomic Age, we need to embark on the Cyclical Age as the next frontier of exploration.