Robert Prechter, President of Elliott Wave International, has written about a new study of socionomics in his book, The Wave Principle of Human Social Behavior and the New Science of Socionomics (1999). In the book he predicted a negative social mood change era evidenced by fear, xenophobia, pessimism, conservatism, thrift, savings and a general retrenchment. A waning instead of a waxing. He is also on record saying the GREATER DEPRESSION started in 2000 with the dot com bust and may last into 2016 with a 90% drop in most assets and 30% plus unemployment rate and finally that world war three started 09/11/2001.

Xenophobia is the fear and loathing of strangers. Xenophobic trends increase as economies regress into deflation and peoples attitude turns sour. In a deflation economy, people in general become afraid and therefore hateful of strangers. The mood of the total populace wanes. Pessimism rules.

People are rabidly against the Manhattan muslim mosque being built in New York City. A recent poll asked the question: Is it appropriate to erect a Mosque and Islamic Community Center close to the 9/11 site? 37% said ” yes ” , 62% said ” no. ” To me this mosque situation is a symptom of peoples mood change to pessimism. Fear and herding are both important socionomic factors. Man is a herd animal and the herd does not want the mosque there. President Barack Hussein Obama Junior is doing a ” Wag the Dog ” by putting so much attention on supporting the Manhattan Muslim mosque. To “Wag the Dog” is a euphamism for when a politician starts a war or does some other diversion to get the heat off his back. President Barack Hussein Obama has a sick deflation economy and his Democratic Party is in trouble in the 2010 midterm elections.

In addition to xenophobia, during a waning mood swing society does not start new businesses, loan money or invest. The retrenchment we are having is textbook Robert Prechter Socionomics. According to him, socionomics is a marriage of sociology and economics that sees societal mood swings from positive to negative and back again as the driving force behind booms and a deflation economy. Also, the likelihood of war increases in the down-swings like we are having now. Man is a herd animal so he can’t help following the herd. Not the way to invest, by the way. Buying more as prices go up and buying ” hand over fist ” at price peaks. Socionomics has to do with the change in the mood and minds of man from positive to negative. Man is a herd animal. So, he would get thrown out of the cave by the clan if he didn’t get along. Prechter also wrote the books: The ELLIOTT WAVE PRINCIPLE (1978), was written by Robert Prechter and A. J. Frost, C.F.A., about Ralph Nelson Elliotts discovery in the 1930s that prices trend up and then reverse in recognizable patterns. Robert Precther’s other books CREST OF THE TIDAL WAVE (1995) and CONQUER THE CRASH (2002) are both about deflation and the coming GREATER DEPRESSION.

Prechter says markets and indeed all nature is governed by the golden ratio or golden number (phi) .618. Prechter reports that the basis of this theory is in the study of Fibonacci numbers and fractal relationships. He has found evidence throughout nature – even down to subatomic particles that validates his discovery. Remarkably, he has found investment markets follow Elliott Wave, socionomics, Fibonacci(one number added to the previous number 1,1,2,3,5,8,13,21,34,55-and so on), and fractals in predictable patterns that can be used to make investment decisions.

FRACTICALITY, FIVENESS AND FIBONACCI
When analysts talk about the .618 retracement level they are referring to Elliott Wave and Fibonacci number ratio studies and points where markets often make a turn. Important Elliott Wave Fibonacci turning points are .382 – .50 – .618(phi also known as the golden number, golden mean or golden sextant ruling all) – 1.382 – 1.50 – 1.682. Not enough attribution is given to this important number although awareness is growing in the investment and financial world.

The socionomics book is an explanation of Elliott Wave Principle of (5 waves impulsive then 3 waves retracing) relating to Prechter’s marriage of sociology and economics.

Robert Prechter has found many instances of Fibonacci, and fractals in nature and in human relationships along with Elliott Wave Principle including:

1. Most anything that can have statistics gathered and then charted will show 5 waves with a 3 wave reaction.

2. Spirals in seeds, hurricanes, sheep horns, snail shells if you do the math are Fibonacci numbers.

3. Branches in trees, arteries, brain, lung, nervous system and vein construction. Phi apparently allows more efficiency and robustness.

4. Stock, bond & commodity markets in short and long time frames Since man is a (herd) animal and the stock market is a compilation of the work and industry of a mankind in total, the charts of these financial instruments show Elliott Wave Principles, fractals and Fibonacci in looking back and predicting future (retracement levels).

5. 5 pointed star or a spot on a line all math is Fibonacci.

6. Social man – self organizing progress ruled by Fibonacci mathematics because it allows the greatest efficiency and robustness. Precter has tracked use of words such as deflation and found they fit the 5 wave impulse and 3 wave retracement Elliott parameters and turn at Fibonacci ratio points.

7. Arboration. Not just the branching angles larger to smaller as one travels out from the plants base, but how stems and leaves both rotate around the base and spread to optimize the sunlight they receive. All are Fibonacci number based ratios.

8. Fractals – think broccoli – each small spear is a mirror image of the large bunch. Think tree – branch is image of whole. Think coastline – edge of tide pool looks same as if looking down from airplane.

9. Evidence clear down to subatomic particle behavior. Particles bouncing off walls of container look like coiled ferns which if you do the math are related to Fibonacci.

10. The limbic system in the brain relates to emotional feelings and guides behavior required for self-preservation and the preservation of the species. If early man did not get along with the clan he was thrown out of the cave to freeze to death or was stoned to death. Likewise, if he did not run with and follow his clan he was likely to get eaten by wild animals or get left behind and starve to death. So, now mankind invests the same way. Buying more and more as prices rise (evidence is the recent real estate top).

Socionomics says following the herd is not the way to invest. Like the lemmings (little rat-like rodents) all following each other to death over the cliff and into the sea to drown in a mass suicide. It is not the way for you to survive either. When the big cycle goes into reverse there is no stopping the pendulum and no amount of government money thrown at the problem will get it to swing the other way before it is ready too. The excess waste, credit, government, rules and regulation – all the darned excesses – will come back down to reality.

“Those who can not remember the past are condemned to repeat it.” George Santayana

We have only known inflation in our lives. We are in denial that deflation and depression can happen. Stocks are sliding down a slope of hope. People are worried and their mood is getting ugly. That is what socionomics is all about.

Socionomics describes the waxing (positive-optimistic) and waning (negative-pessimistic) of peoples mood and how they react en mass.

No matter how many trillions of dollars the government throws at the problem, they would be better off reducing taxes and letting business create the new jobs.

Better to be a contrarian investor now than to lose it all in the coming GREATER DEPRESSION.

There are new ways to invest to short stocks that for each one dollar invested you could get back many more. With the new, ETFs (exchange traded funds), as well as actual short the market mutual funds like BEARX or the URSA fund you never get a margin call or run out of time. But, you have to get in on these early and here in 2010 we are halfway into the greater secular bear market. Many of the short-the-market ETFs are property of Proshares or ishares.

Copyright 2010 – http://www.deflationeconomy.com – Reprint rights allowed with attribution back.

Author Bio: Delwyn Lounsbury – THE DEFLATION GURU. Get FREE DOWNLOAD of 90 page “Deflation eBook” at: http://www.deflationeconomy.com He is an Eagle Scout and has been a real estate agent in California since 1968. He published THE ECONOMIC SURVIVAL LETTER in the late 1970’s. email: delwynlounsbury@aol.com

Category: Finances
Keywords: socionomics,socionomic,robert prechter,crash,deflation, deflation economy,greater depression, invest