Archive for January, 2008

Love and Infinity

Sunday, January 27th, 2008

In junior high school I was introduced to “infinity” in my mathematics class. That was a great place to begin my understanding. It was easy to see that there were an infinite supply of numbers. We concocted formulas using googol (1 with 100 zeros behind it) and googolplex(1010100), a much larger number. Yes, the Google search engine did not originate the term. Understanding infinity is difficult for most people. It requires us to discard our “finite” thinking that had served us well throughout our life. The earth appears to be a finite, self-contained planet. How could there be infinity within a finite realm? Through mathematics we found that you can divide a number by 2 an infinite amount of times since there are an infinite amount of numbers. The fraction 1/googolplex is a very small number but it can be divided by 2 (1/(2xgoogolplex)). This example is not to impress you with my mathematical skills but to increase your awareness of what is beyond our current understanding. You may never see the term “googol” again but it is important to understand that as we broaden our comprehension of infinity, we will better understand the Love of God.

We tend to put God in a box that we can control. The Book of Job (said to be the oldest book of the Bible) references the bigger picture that our Heavenly Father works in. God spoke to Job and told him that there was a bigger picture to consider than Job’s sphere of influence. “Where were you” questions were designed to provide Job with perspective. Our universe is in equilibrium. What happens to the sun affects us yet is is millions of miles away. Our minds would have us believe only in the finite (see, hear, touch, smell, taste) realm of perception. However, we have a connection with the Divine that supercedes our finite understanding. How can the Holy Spirit be everywhere at once? Is the Holy Spirit resident in a distant universe googolplex x googolplex miles away? (I just had to use the math term one more time.) The Holy Spirit operates in a realm above structure, an infinite realm. The finite realm is contained within the infinite realm. Yes that’s right, the Holy Spirit is not too busy to minister to each and every one of us at the same time.

Angels encapsulate the Word of God for specific needs. Each angel has a mission specific to the Word spoken by The Heavenly Father. They operate outside our limited structure. Jesus Christ operates outside our limited structure as well. He surely operates in this infinite realm without limitation of time and space. How was he able to appear and disappear? How was he able to walk through walls? Jesus has appeared to many diverse people over the course of human history.

Our views tend to be experience-based views. Men were convinced the world was flat because of their experience. Men assumed that the earth was the center of the universe since it is the place where they resided. Copernicus was the first scientist to publish the theory that the earth revolved around the sun which was fixed in position. Kepler saw that the stars moved in “zig-zag” patterns in the sky. He had an epiphany from God and discovered that the sun is also moving in the solar system and that it was not the center of the universe. This epiphany was in 1595. We can look back at these revelations and conclude that there is still more revelation to come. The atom was once thought to be the smallest particle of matter. With further study, smaller units have been found. What is between the smallest units of matter? Infinity. How is it commanded? By Love! Remember, God is love.

Romans 5:5 “Now hope does not disappoint, because the love of God has been poured out in our hearts by the Holy Spirit who was given to us.” Love is “poured out” by the Holy Spirit. Love is in the Spirit’s realm. Paul further explained in Romans 8: 37 Yet in all these things we are more than conquerors through Him who loved us. 38 For I am persuaded that neither death nor life, nor angels nor principalities nor powers, nor things present nor things to come, 39 nor height nor depth, nor any other created thing, shall be able to separate us from the love of God which is in Christ Jesus our Lord. There is no structure (height, depth, created thing) that is able to produce a separation. This is critical to our understanding. Love is indivisible. It cannot be separated. Love is spirit and can be in all places at once. What can contain infinity? Love!

Law and Order: Criminal Intent (Fraud, Part II)

Saturday, January 26th, 2008

The television show mentioned above takes place in New York City.  NYC is a vibrant, never sleeping city known as the financial center of the universe.  The waters around the city are shark-infested.  No, not those from the Animal Kingdom Phylum Class Order Family Genus Species, Animalia Chordata Chondrichthyes, this group is from the legalis attorneyicum class.  The lawyers are ready "to roll" in this derivative crisis.  New York City is suing Countrywide, Officers, and Underwriters. See

The executives of the company cashed out with bonuses of over $700 million.  As I wrote in a previous blog many pension funds can only invest in "investment grade" securities.  The ratings agencies define "investment grade" based on the data and information presented to them.  You can be sure that there will be a multitude of fingers pointing everywhere.  Individuals will "plead out" early in order to minimize the impact to their personal lives.  This lawsuit is just the tip of the iceberg.  There will be many more lawsuits to come.  The lawyers will be the winners.  Countrywide will lose, the pension fund will lose, Countrywide stockholders will lose,…

Greed produced this debacle.  Perception displaced reality among the lenders, underwriters, regulators, stockholders, Congress, and the Fed.  The rich and famous went for a joyride with our hard earned money.  In the end, the global taxpayer will pay for the ride.  If we run out of money, which is possible, there will be a calamity of Biblical proportions.  The people who have been running the monetary system are nearly out of tricks.  The courts will be busy for years to come.  The recent surprise rate cut was in response to the volatility of the the world markets.  The U.S. economy has been the economic juggernaut over the last sixty years.  Interest rate declines are inflationary and negative to the value of the U.S. Dollar.  Gold and silver will continue their climb to $1,600/$50 and beyond.  Inflation is the silent killer of the elderly’s savings.  The bigger the problem, the greater the cleansing.  Cleansing cycles are Biblical, whether is be 76 days, weeks, months, or years.  Cleansing removes the worthless and unproductive.  Pruning time is upon us.

Could Ben Bernanke, Fed Chief, be thinking, "Why didn’t I keep that job at the University?"


The Accelerator Factor

Wednesday, January 23rd, 2008

When I was a Chief Financial Officer (CFO) our growth was dictated by a formula known as the "sustainable growth rate" formula.  Basically our growth was restricted by the amount of profit that was added to the retained earnings at the end of the year.  Retained earnings is a category of Owner’s Equity in the company.  Secondarily growth could be enhanced by improvement of asset turnover.  For instance, if you sold $50 million a year of inventory and kept $10 million of inventory in stock, your turnover rate is 5.  If you could reduce your inventory to $7 million and still maintain enough to satisfy customer demand, your turnover rate would exceed 7.  You would free up $3 million to help grow the business.  The sustainable growth rate formula took into account these factors in determining how fast we could expand the business.  Another factor was the debt to equity ratio.  If we had liabilities of $4 million and Owner’s Equity of $2 million, our ratio was 2.  Our bank watched these ratios as we did.  If we could increase our leverage thus expand our assets and liabilities by $4 million, then our debt to equity ratio would be 4.  Banks kept historical statistics by industry of acceptable financial ratios in order to compare the industry to our ratios.  This was the way they did business 25 years ago. It is not important for you to understand the financial terms, it is important to understand that the financial institutions have had plenty of tools to monitor their lending practices.

By relaxing credit analysis standards you accelerate expansion of the economy at an increasing rate of change- Accelerator Factor.  The sustainable growth rate formula restricted the rate of change of growth due to the consistent restriction of leverage.  What is leverage? It is the use of borrowed funds to complete an investment transaction. The higher the proportion of borrowed funds used to make the investment, the higher the leverage and the lower the proportion of equity funds.  We were restricted from growing our company too fast by over leveraging our assets.  Why is this a problem?  It is all about cash flow.  Cash pays interest expense.  Cash pays down the principal of you note to the bank.  Cash "makes" payroll.  Cash is the "oil" of the business to keep it running.  Too much investment in non-cash assets works against the ability to repay debt.

There are three types of borrowers.  The hedge borrower is one who can meet all his debt payments with cash. The second type is the speculative borrower who can meet interest payments but must constantly roll over his debt to be able to repay the original loan.  The third type of borrower is the "Ponzi" borrower; he can repay neither the interest nor the original loan. This borrower relies on the appreciation of the value of his assets to refinance their debt.  This type of borrower’s philosophy is a "greed" based philosophy.  This borrower hopes that the asset will continue to appreciate forever.  As long as his assets appreciates in excess of the original loan plus interest, he is in good shape.  This borrower wears rose colored glasses.  The sub-prime mortgage loans promoted this type of borrower.  The lending institutions virtually created Ponzi borrowers by appealing to the "greed" factor.  Why not buy a bigger house than you can afford?  The problem did not stop there.

Financial institutions allowed hedge funds to "leverage up" their assets by 20 to 30 fold in order to achieve unbelievable returns for their investors.  This avenue of lending raised the stakes of failure dramatically.  This accelerated the growth of financial instruments and funded excessive growth in various sectors of the economy.  The insatiable appetite of borrowers was welcomed by the lending institutions who threw out their "credit analysis" handbooks!  CEO’S of these institutions received large bonuses based on the yearend profit results of the institution.  Greed raised its ugly head again.  The underlying motivation of the Accelerator Factor is greed.  This motivation is the rocket fuel for the increasing rates of change in credit expansion through leverage.  However, this is a two edged sword.  The other edge is fear.

Once the market moves from greed to fear, the Accelerator Factor works in the opposite direction.  The Leverage Factor is reduced and the balance sheets shrink at an increasing rate of change.  Its like an accordion.  The Fed and other central banks are now trying to manage fear.  In the markets, fear tends to be a stronger emotion than greed, thus the ramifications of mismanaging fear on a global basis can have disastrous effects.  Since in the history of man there has not been a similar financial environment to compare, those in charge are forging new territory.  Are you ready to trust your financial future to them?


Federal Reserve Board Chairman Ben Bernanke pauses while discussing the near-term economic outlook during testimony before the House Budget Committee on Capitol Hill in Washington in this Thursday, Jan. 17, 2008 file photo. (AP Photo/Dennis Cook. File)

Brace yourself…

Monday, January 21st, 2008

The underlying economic issues I’ve been writing about are gaining publicity.  The following article from The Economist explains the latest problems:

All fall down?

Jan 18th 2008 | NEW YORK

Huge new problems in the capital markets?


AMERICA’S big bond insurers, which have underwritten some $2.4 trillion of private and public-sector bonds, usually go about their business largely unnoticed. But now they are looking distinctly wobbly they have started to attract attention. If one or more of them were to topple over, there will be a huge knock-on effect on banks and other financial institutions that rely on their guarantees. This in turn will further worsen the credit crunch and cause an even bigger headache for policymakers already grappling with a sharp slowdown in the American economy.

The threat of such a financial domino effect looms large. Moody’s, a credit-rating agency, has signalled that it might downgrade the AAA-ratings of two of the biggest bond insurers, MBIA and Ambac, in the near future. On Friday January 18th, Ambac said that it had dropped a plan to raise $1 billion of new equity capital to preserve its rating—making futher downgrades even likelier. In response, Fitch, another rating firm, cut Ambac’s rating.

MBIA, which recently managed to raise $1 billion of new capital on top of another billion that it received from Warburg Pincus, a private-equity firm, will almost certainly need even more money if it is to preserve its AAA-rating. ACA Financial Guaranty Corporation, another insurer, is in even direr straits. In December its single-A credit rating was cut to junk status. The firm begged its trading partners to give it more time to sort out its problems. But by Friday it had still not come up with a rescue plan. The state insurance regulator of Maryland, where ACA is incorporated, has already assumed responsibility for some of its operations.

Bond insurers in effect “lend” their top-notch ratings to lower-quality debt, raising its value in the eyes of investors. Any cut in those ratings may make it impossible for the bond insurers to take on new business and would reduce the value of the securities they have already underwritten. Such cuts are now a distinct possibility because the insurers have underwritten billions of dollars of mortgage-backed securities, including those notorious collateralised-debt obligations (CDOs) that have now gone sour…… 

In the Book of Daniel, The Lord gave Daniel, Hananiah, Mishael, and Azariah (Shadrach, Meshach, and Abednego) knowledge, skill, wisdom, and understanding.  The current economic problems stem from the fact that knowledge and skill were used to leverage investments against the market without wisdom and understanding.  Technical traders did not understand the fundamentals of investing and assumed that technical analysis was sufficient to beat the market returns.  The Derivative Instruments assumed theory to equal reality.  We are on the verge of a reality check!

I recently wrote about MBIA and Ambac.  As of this writing, the world markets are responding negatively concerning the subprime crisis.  Many markets lost over 5% in one day.  Volatility will continue to be the norm.  The world’s central banks are in uncharted territory.  If you are highly leveraged, reduce your leverage immediately.  Raise cash, cash is king!  If you own commodities, don’t get rid of them.  The central banks will flood the market with cash which in turn will be inflationary.  Hard assets will rise.  Food and energy costs will rise.  Brace yourself!

No Greater Love

Monday, January 21st, 2008

In John 15:13 "Greater love hath no man than this, that a man lay down his life for his friends", we are given a perspective of the magnitude of love.  One of the primary qualities of love is the preference of others’ best interest over your own self interests.  The world would convince us that we must live in scarcity and fearfully hoard in order to make ends meet.  Wars are initiated over resources.  Men, women, and children are killed over oil, gas, real estate, gold, silver, and other resources.  Men are on a quest to acquire more only to find the next level of acquisition does not appease the appetite.

Jesus said "Blessed are the meek for they shall inherit the earth."  A better translation might be: "Blessed are those who live in moderation, for they shall inherit the earth."  Moderation is consistent with the teachings and actions of Jesus Christ.  He had access to all the wealth and resources of this earth.  He could multiply fishes and loaves of bread AS NEEDED.  He was an excellent finder of fish as the disciples found out before and after his resurrection.  When he fed the multitudes there was always sufficiency but no excess.  Similarly, when The Heavenly Father fed the children of Israel manna in the wilderness, there was always sufficiency but no excess.  Attempts to hoard the manna resulted in the manna going bad (it bred worms, and stank).  During the entire forty years in the wilderness, all the people had sufficient food.  The Heavenly Father had an infinite supply of manna but distributed it in moderation.

Moderation denotes a balance or equilibrium… not to little, yet not too much.  Moderation is relative to a person’s calling.  No two callings are alike.  Does a man who is called to be a gardener require the same resources of a man called to be an engineer?  Does a single man have the same housing requirements as a family of six?  It’s all about equilibrium and balance.  What is the factor that oversees equilibrium?  Love.  Love is the defining characteristic of a man who gives to his friends.  In John 15:14 Jesus called the disciples his friends.  Jesus knew that he was about to lay down his life on behalf of the disciples.  In John 3:16, GOD was laying down the life of His Son on behalf of the whole world.  The motivating force was love, the greatest love.

The Kingdom of God on earth will be established by moderation, balance, and equilibrium.  The current imbalances will disappear.  Men will be motivated by love to share the wealth of the land.  No longer will the quest of men be excess but balance and equilibrium.  Greed will dissipate from men’s hearts as love has taken command.  The attics and offsite storage buildings will be emptied and the contents will be distributed to those with needs.  The orientation of scarcity will be replaced by this "greater love" spoken in Scripture.  New friendships will be forged.

In contrast to this greater love is the man who uses people to get ahead in life then tosses them by the wayside.  How many of us have viewed a person by what he or she could do for us.  I must admit that I have.  How many of us looked at at rich man based on what he could do for us?  Let’s be honest.  The subtlety of scarcity has resided in the recesses of our soul for most of our lives.  Children want the toys of other children.  Teenagers compete for acceptance among their peers.  Adults compete for jobs.  The list goes on.  Giving is the basis of "laying down your life".  Jesus was given for our redemption.  The disciples gave their lives to spread the Gospel.  What are you giving today?  What did you give yesterday?  What will you give tomorrow?  Will you help somebody today with resources at your disposal?  You may say "I have nothing".  You have time!  Give a little time.  Write a little note.  Make a phone call.  Are you too busy?  What is controlling your time?

Another aspect of this Scripture is the recipient of the love- friends.  Prior to his death, the evangelist Lester Sumrall was reflecting on his life.  He was on a plane returning from another international journey.  He wrote an article about friends.  In looking back he said that he only had one or two real friends in his life.  Sure, he had many acquaintances but only a couple of friends.  Many had aligned themselves with him.  Many wanted to be associated with his success in ministry.  By the world’s standards this man was successful.  By his own standards his life was lacking.  Was the success of his profession worth the deficiency of love on a personal level?  The article was written in a tone of sadness.  Here he is flying on his private jet near the end of his life and with all of the memories his focus was on the lack of true friends in his life.  Many people want more friends but want to sit around and expect the friends to come knocking on their door.  This attitude insures loneliness.

In Luke 6:38 (Give, and it shall be given unto you; good measure, pressed down, and shaken together, and running over, shall men give into your bosom. For with the same measure that ye mete withal it shall be measured to you again.), typically the focus is the quest to receive wealth and riches.  People have held on to the promises in this Scripture for personal gain.  Formulas have been promoted from the pulpit.  Ministries have used the Scripture in their own quest for financial gain.  "If you want to be wealthy, give to my ministry."  Millions of dollars have been given based on this specific Scripture.  Our Heavenly Father is not against us being blessed materially.  However if our spiritual walk needs repair, He will not perpetuate the problem with "things".  The focus of the Scripture is the word "give" not "receive".  Giving is the prerequisite to receiving.  If you give love to a person, he or she will become your friend.  If you love your enemies, they will become your friends.  If you give a little love, you will get little love in return.  This is where the measure comes into play.  If you give much love, you will ultimately receive much love.  What would happen if you laid down your life?

The Depression Clouds are gathering

Wednesday, January 9th, 2008


I sincerely believe… that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale. – Thomas Jefferson

This is a lengthy and somewhat technical article.  It is not as important to understand the specific statistics as it is to get a perspective of the downward economic spiral that plagues the current economic system.  The numbers are large and history has shown that those in authority soon forget what previous generations learned.  The Great Depression was preceded by the Roaring 20′s.  The current environment has many parallel themes occurring.  The super-charged egos of those in charge believe that they can defy the compression aspect of economic cycles.  Compression is good.  Delayed compression can be life threatening.  We are currently at risk of an economic depression in the 2009-2010 time frame.  Read on…

The financial industry operates on leverage.  It loans other people’s money and collects interest income.  For instance, if you are paid 5% on your bank certificate of deposit (CD), the bank will use that money to loan out at a rate typically at least 2% higher.  The bank makes its money on the "spread" of 2%+.  Only the best customers receive the bank’s prime rate.  A standard savings account may receive 2-3% interest whereas the bank is loaning money at 7-12% interest.  The financial industry is inherently structured to make money.  The assumption of this model is that the lending and investment practices adhere to strict guidelines to insure minimal loan/investment losses.  Regulators closely monitor loan loss ratios.  They are also expected to closely review investment portfolio valuations.  This is currently where the problem lies.

SIVs are investment companies that use short-term borrowings to buy a higher-yielding asset.  When I was in banking in the 1970′s, I discovered an opportunity- borrow at 7% for 36 months and invest in 30 year Treasury Bonds at 8%.  I would simply pocket the 1% profit.  I would use the Bond as collateral.  All is good.  However I had a couple of problems.  First, I did not have the capacity to borrow much.  1% on $10,000 would only yield $100 per year, hardly worth the effort.  I would need to be able to borrow $1,000,000 to create a notable return.  Since I knew that my balance sheet would not support that kind of loan, I dismissed the opportunity.  Things have changed in the financial industry.  Hedge funds raised large amounts of money and were able to leverage their investing by 20 to 30 times.  Additionally, they could justify their investments by buying "insurance" on the asset or its stated interest rate.  What a complex arrangement!  In simple terms, the risk was spread among multiple players.  The problem is that the investment was only as good as the weakest player.  If the security was devalued, there were problems.  If the insurer became weak, there were problems.  If the bank lost money and was required to reduce its lending and thus "call" the note, there were problems.  As you can see there are many things that could go wrong in these complex transactions that base "leverage" as the underlying fuel to high returns. If the SIV invested in subprime mortgage backed securities, all of the participants would be severely impacted if the valuation of the underlying asset (houses) substantially dropped.

The housing bubble is bursting in the developed countries.  Speculators were allowed to borrow money outside the normal, historical lending criteria.  The participating banks were not innocent in this fiasco.  The mortgage lenders (equivalent to bank loan officers) were also complicit in this fraudulent activity.  Technology has provided the lending institutions with plenty of "no brainer", "fill in the blank" loan/credit analysis tools to insure safe lending practices.  Credit reporting agencies provide an easy means to verify payment history.  Once again, corporate greed has raised its ugly head and will severely impact the global financial system.  There will be many to lose their home and any savings they have accumulated.  Those marginal families will be at risk of bankruptcy.

Another bubble of equal concern is the upcoming baby boomer retirement bubble in the U.S.  The unfunded liabilities on the U.S. Government’s Balance Sheet dwarfs any potential source of revenue.  How will the U.S. be able to survive this liability?  The Federal Reserve will cut down all the trees in the country to print money.  This will be hyperinflationary.  The elderly who saved their entire lives will suffer with reduced purchasing power of their savings.  Those who are marginally surviving will become welfare recipients.  The 2007 Medicare/Medicaid insurance trust fund report reveals an unfunded liability of $40.9 Trillion on Page 190 of their latest report.  See the following link:  In USA Today, the overall unfunded liability to the taxpayer was $59 Trillion.

The third bubble is peak oil.  The globe is not out oil, it is just more difficult to extract with the current, available resources.  "Peak oil" suggests that production from new discoveries no longer exceeds the production decline in output of existing fields.  The largest discovered fields around the world are in decline.  No new fields of a similar size/output have been found in decades. The world’s largest field Ghawar in Saudi Arabia was discovered in 1948 and put on stream in 1951.  With all of the technology available, oil companies have not found a larger field in the last 70 years.

The Derivative Crisis is the fourth bubble.  There are many other derivatives not tied to the subprime mortgage crisis.  In 2003, Warren Buffett warned that derivative securities were a "mega-catastrophe" and "financial weapons of mass destruction" in the annual letter to shareholders of Berkshire Hathaway, published in the Fortune Magazine:

[T]hese instruments call for money to change hands at some future date, with the amount to be determined by one or more reference items, such as interest rates, stock prices, or currency values. If, for example, you are either long or short an S&P 500 futures contract, you are a party to a very simple derivatives transaction–with your gain or loss derived from movements in the index…

…Large amounts of risk, particularly credit risk, have become concentrated in the hands of relatively few derivatives dealers, who in addition trade extensively with one another. The troubles of one could quickly infect the others. On top of that, these dealers are owed huge amounts by nondealer counterparties. Some of these counterparties, as I’ve mentioned, are linked in ways that could cause them to contemporaneously run into a problem because of a single event (such as the implosion of the telecom industry or the precipitous decline in the value of merchant power projects). Linkage, when it suddenly surfaces, can trigger serious systemic problems.

This derivative industry has grown into the trillions of dollars.  The Bank of International Settlements (BIS) report:

Data from the BIS Statistical Report Q4 2006
• OTC Notional Amount of Derivatives is over $414 Trillion
• 70% of Notional are Interest Rate Contracts
• Credit Default Swaps are the fastest growing product
– Over $28 Trillion
– 65% Single Name Instruments
– 35% Multi – Name Instruments

As of June, 2007 the Derivatives total stood at $516 Trillion. see:

Why would I put all of this information in this writing?  The average person will never hear about all of these global risks in a summary similar to the above.  The average person would not comprehend the inherent risk to his or her future that these bubbles represent.

These four bubbles combine to represent a perfect storm.  Tax hikes or other changes to the current global economy can affect the outcome, the timing, and the severity of the expected compression.  What should one do to prepare?  Reduce your leverage and borrowings.  Protect your assets from the financial institutions that may fail.  Take possession of your stock certificates (if you are fortunate to own stock).  Keep cash on hand.  Invest in gold and/or silver (hard money).  Tangible assets will ride out the storm.  People need a place to live, food to eat, and energy for heating, cooling, and transportation.  Will the severe compression take place?  A good businessman hopes for the best but plans for the worst.

Electrodermal technology

Tuesday, January 8th, 2008


Acupuncture evolved from ancient Chinese observations of a correspondence between energy in meridians and the condition of organs and systems in the human body. The science of acupuncture views meridian dysfunction as an indicator of organ or system dysfunction. Acupuncturists observed that stimulation of points along the meridian was selective for correcting this dysfunction.

Ellis, Andrew, Wiseman, Nigel & Boss, Ken, Fundamentals of Chinese Acupuncture, Revised Edition (Brookline: Paradigm Publications 1991)

Robert Becker demonstrated that certain areas of the skin have a conductive response better than others. These areas of enhanced conductance lie in locations overlying the meridians. Becker, Robert O. & Selden, Gary, The Body Electric (New York: William Morrow 1985)

Becker, Robert O., Cross Currents (Los Angeles: Jeremy P. Tarcher 1990

Rheinhold Voll et al were able to demonstrate a response in the organ and system sites when they stimulated the corresponding skin points with a small electrical current. Their method was o place the subject in an open circuit with the subject holding the ground wire of the circuit. top


A painless voltage from a DC battery was introduced into the series circuit. The circuit was closed when the positive probe was touched to the skin surface. One of two outcomes could be observed. 1) The resistance of the skin would not change over the span that the probe was applied, and 2) The resistance would decrease over the span of time the probe is applied. The first condition was defined as an ‘indicator balance’. The latter condition was defined as an ‘indicator drop’. Using the Chinese acupuncture paradigm, the indicator status of the ‘balance’ or ‘drop’ was representative of changes occurring at sites correlating to the acupuncture point.



This paradigm held that electromagnetic indicator balance was representative of normality at that acupuncture point; whereas an indicator drop was representative of an abnormality.







Voll, et al also observed that indicator drops could be “balanced” by introducing certain substances into the circuitry. These observations, made initially by serendipity, developed into a robust system of site detection and voltage balancing. When first discovered, substances were simply held in proximity to the subject. Subsequently substances have been placed in proximity to an aluminum test plate that was part of the series loop of the detection device.

More recently information from a large variety substance has been digitized by analog to digital conversion and stored in a computer as a binary code. Most computers store around 4000 to 5000 signals. They can be placed in the series loop manually or blindly when selecting for signal balance. Coded signals include chemicals, pharmaceuticals, herbals, homeopathic remedies, sarcodes (organs), biologicals, metals, toxins, nutrients, and metabolic substances. A listing of these computer codes will be the subject of future web logs.

Detection of internal events by electrical changes in the skin is commonplace in medicine today. Electrocardiograms and electroencephalograms are two technologies that reflect voltage changes in the skin as a result of changes in voltage in the heart and brain respectively. Oximeters, pulse-rate meters, and digitized blood pressure are some of the other devices that are used extensively for rapid and continuous patient monitoring.

This web log is my attempt to address some of the problems of technique and language in electrodermal detection so as to make this technology understandable. Future discussions will focus on clinical conditions that can be addressed by most of you who are interested in this exciting new way of looking at medical problems.

The detection system consists of:

A closed loop circuit in series with:

A biological subject

A computer

A software program with digitized codes

An electronic device with: an analog to digital and a digital to analog integrated circuit A DC battery.

The system is connected in series with a test subject holding a negatively charged brass hand piece and an operator holding a positively charged probe. During the time operator touches the skin of the test subject with the probe an electromagnetic current is conducted through the system at 1.25v, 10-12 μ amps. The subject resists at 95 kilo ohms. One of two things happens to the voltmeter dial during this time of application: either the dial remains steady ‘Balanced’, or it drops ‘Indicator drop’. If the dial remains steady it implies that there is electromagnetic conductance through the system. It is “on”. If the dial drops, it implies that there is a decrease of conductance through the system. It is “off”. The application of a current generated in the device causes the biological host to respond. It is a bio-feed back reaction to an electric stimulus. The “indicator drop” is therefore a phase going from conductance to non-conductance. It is the phase of going from “on” to “off”. Since “on” is good and “off” is bad, an attempt is made to turn the system “on”, that is restore full conductance.

Restoring conductance is done by doing two things:

1) Select a code producing a balance by sorting through the software encoded signals in the computer.

2) Place a substance directly on a test plate that is in the series circuit if a computer is not used

An analog to digital integrated circuit converts the amplitude of the analog wave in the subject’s electromagnetic pathway to a square wave that is encoded in the computer software. The algorithm of this integrated circuit converts the amplitude of an analog wave to an equivalent width square wave.

During the detection process the stored digital codes, as part of the series circuit, pass through another integrated circuit, one that converts a digital to analog wave identical to the subject’s analog wave. It is this reconstructed wave that interacts with the subject’s analog wave that is conducting information from a site within the body to the skin surface.

Galvanic skin resistance is measured at the probe site on the skin surface. By Ohm’s Law, Resistance =1/Conductance, so in effect when we measure skin resistance we also measure conductance. The conductance pathway from a specific site within the body is determined by the site where the probe is placed.

Codes in the software are a sting of ‘1’s and ‘0’s (Reminds me of ancient Latin scripts without punctuation) but fortunately the computer programmers have been able to isolate the encrypted codes and have made provision for assigning the encryptions with a ‘plain language’ name so that we can identify them. The encryption and the plain language name can be catalogued for later use.

The name “Electroacupuncture” is somewhat misleading. Electrodermal detection is not invasive, skin is not being punctured and a current of injury is not being produced. Acupuncture is a therapeutic method, whereas, electrodermal detection is simply that – a detection method. It utilizes an information gathering device that measures skin resistance for detecting frequencies that originate in the body and are expressed or detected on the skin. These detection sites are aligned in linear arrays that generally correspond to the acupuncture meridia.

In acupuncture theory, energy flows through the meridia, but this theory has yet to be firmly established. One can see from the Atlas of Detection Sites a clear linear distribution of sites. These sites are discrete. Each detection site on the skin represents a discrete site of origin for a signal within the body. There are similarities and differences of the detection sites. Part of the signal causes it to resonate along the detection array on the skin surface but part of the signal causes it to be discrete enough to be detectable only at certain sites along the array

In an effort to make frequency detection more clinically relevant, I have developed a manual listing the currently known detection sites according to organs and systems and have indexed them so that they can be located on a page in the Atlas of Detection Sites. The atlas graphically illustrates the detection sites according to their location on the body. Since there is an overlap between acupuncture points and electrodermal detection sites, some still use the older acupuncture point terminology. I refer to ‘acupuncture points’ as ‘detection sites’ and ‘acupuncture meridians’ as ‘detection arrays’.

I made a manual of electrodermal profiles for clinical conditions. This is my attempt to fit electrodermal detection into a scheme that may be used for medical care management as a complementary tool or as a ‘stand alone methodology’. There are patterns of electromagnetic signals associated with clinical diagnoses. These patterns are very complex and change over time. In this series, I hope to demonstrate that modification of electromagnetic signals parallels clinical improvement. It is not hard to do.


Becker, Robert O. & Selden, Gary, The Body Electric (New York: William Morrow 1985)

Becker, Robert O., Cross Currents (Los Angeles: Jeremy P. Tarcher 1990)

Tsuei, Julia, Lam, Fred M. K. & Chou, Pesus Clinical Application of the EDST (IEEE Engineering in Medicine and Biology Magazine pp 67-75, Volume 15, Number 3 1996)

Tsuei, Julia, Science of Acupuncture-Theory and Practice (IEEE Engineering in Medicine and Biology Magazine pp 52-57, Volume 15, Number 3 1996)

Yeargers, Edward K. Basic Physics for Biology (Boca Raton: CRC Press 1992)

Werner, Fritz, Electro-acupuncture Primer (Uelzen: Medizinisch Litarische Verlagsgesellschaft mbH 1979)

Wolfgang, Larry D., Understanding Basic Electronics (USA: The American Radio Relay League 1992)

Bechtloff, Friedrich, Electroakupunctur nach Voll: EAV; eine Darstellung in Bereichen (Uelzen: Medizinisch Literarische Verlagsgesellshaft 1991)

Brügemann, Hans, Bioresonance and Multiresonance Therapy (Brussels: Haug 1993)

Carpenter, David O. & Ayrapetyan, Sinerik, Biological Effects of Electric and Magnetic Fields, Volume 1 & 2(San Diego: Academic Press 1994)

Chen, Kuo-Gen, Electrical Properties of Meridians (IEEE Engineering in Medicine and Biology Magazine pp 58-63, Volume 15, Number 3 1996)

Chu-Andrews, Jennifer, & Johnson, Robert J., Electrodiagnosis: An Anatomical and Clinical Approach (Philadelphia: J.B. Lippincott 1986)

Dempster, John, Computer Analysis of Electrophysiological Signals (London: Academic Press1993

Ellis, Andrew, Wiseman, Nigel & Boss, Ken, Fundamentals of Chinese Acupuncture, Revised Edition (Brookline: Paradigm Publications 1991)

Gerber, Richard, Vibrational Medicine (Santa Fe: Bear & Company 1988)

Hecker,Hans-Ulrich, Steveling, Angelica, Peuker, Elmar, Kastner Jörg & Liebchen, Kay, Color Atlas of Acupuncture (Stuttgart: Thieme 1999)

Kenyon, Julian N., Modern Techniques of Acupuncture Volume I-III (Willingborough, Northamptonshire England: Thorsons Publishing Group 1985)

Leber, Douglas C. Acupro II System™, Computronix Corporation, 1991

Petzold, Charles, Code (Redmond: Microsoft Press 1999

Pohlmann, Ken C., Principles of Digital Audio, 3rd Edition (McGraw-Hill 1995)

Popp. Fritz-Albert, Warnke, Ulrich, König, Herbert L.& Peschka, Walter, Electromagnetic Bio-Information 2nd Edition (München-Wien-Baltimore: Urban and Schwartzenberg 1989)

Richer, Paul, Anatomie Artistique, Paris, 1889. Translated and edited by Hale, Robert B., Artistic Anatomy (New York: Watson-Guptill Publications 1971)

Serway, Raymond A.,and Faughn, Jerry S., College Physics Vol 1& 2, 5th Edition (Fort Worth: Saunders College

Publishing 1999)

Wolfgang, Larry D., Understanding Basic Electronics (USA: The American Radio Relay League 1992)

Vincent J. Speckhart M.D.


Basic biophysics for biology

Monday, January 7th, 2008


The subject of this discussion is taken from the title of a book written by Edgar K. Yeargers PhD, a professor of biophysics at Georgia Tech. His book was written so that student of physics would be able to understand that the rules of physics for nonliving systems also apply to living systems.

Our discussion will involve understanding the interaction of electric charges. By convention a proton is assigned to be a positive charge and an electron is assigned be a negative charge.

Material substances are mostly neutral in charge but are composed of large fixed positive and negative charges. If there is an imbalance in the charges, the material it is said to be “charged” with each charge exerting a force on the other- “unlike charges attract, like charges repel”.

On the other hand, charges that are opposite in sign and equal in magnitude, when aligned along a common axis, are called an electric dipole. When dipole charges move, they move independently of each other. When oscillating up or down along their axis, they pass each other going in opposite directions. In doing so, a variable electric force and a corresponding electric field effect develops. The field effect can be propagated some distance away from the oscillating dipole and can be detected on the skin by an electromagnetic sensor.

In the laboratory dipole antennas generate large (macroscopic) radiations

Below is an oscillating electrical dipole:



On a submicroscopic scale, as in living systems, the antenna is replaced by an oscillating emission source that cannot be measured directly. There is evidence that dipole generated radiations do exist and that they come from nuclei, electrons, light and chemical bonds and numerous other sources. It is postulated that oscillations in living systems produce propagated electromagnetic waves.

Electromagnetic radiations (waves) have:

Amplitude (height of the wave)

Amplitude is proportional to strength of the electric force

Amplitude may be positive or negative coinciding with the direction of the electrical charge resulting from the dipole movement

Frequency (rate of change of a charge in oscillating from positive to negative


Is proportional to the wavelength of the oscillating wave

Short wavelengths have higher energy than long wavelengths

Electric field effect

May be local, at the site of the oscillating dipole

May be propagated at a distant site such as, the skin or a secondary detection site

Propagation of the electric field is at the speed of light

Remember that a wave is a variable electric charge. It is not a line on a piece of paper that is represented as a sine wave.


Characteristics of electromagnetic waves


One of the characteristics of propagating waves is that they interfere with one another.

When the peaks and troughs of two identical waves meet, they are said to have a condition of constructive interference because the arithmetic sum of the resulting wave is bigger (more intense) than either of the two contributing waves.

When the peak of one wave coincides with the trough of another identical wave the arithmetic sum of the resulting wave is zero. This is a condition of destructive interference.

By using the electromagnetic model in the study of biology we use a paradigm built upon the most essential elements in our physical existence:

1. Oscillating dipoles producing variable electric fields

2. Variable electric fields propagating at a distance from the dipole source.

These two elements are found at all levels of structure.

They are found in:

Subatomic particles



Hydrated molecules essential in biology such as sols and gels





Each level of structure has dipole depicted waves that are derived from components that make up structure, the result of constructive and destructive interference. For example, waves from subatomic particles are the components that make up an atom. Waves from atoms are the components of molecules, etc.

Locally, at the site where the variable electric field originates, a charge has its own amplitude, frequency and energy, that is, bits of information that gives the charge an identity. In that sense this model can be understood as being information technology. When applied to a living system it is information technology in biology.

Electric fields from each level of structure radiate distally. The ability of variable electric fields to radiate distally is the characteristic that is of most interest to us. In addition to having amplitude, oscillating frequency and energy like the charge at the site of the oscillating dipole, radiating electric charges have an additional characteristic of being able to be propagated to a distal site and to be detected at the site of termination.

In propagating, the electric field, depicted graphically as a wave, results from all of the constructive and destructive interferences it encounters from other sources as it propagates along its conductance pathway. The net result is that portions of some propagating waves are amplified and some portions are neutralized.

Radiating electric fields do not scatter but are modified by forces from the mix of surrounding electric fields to form discrete propagation pathways.

The distal site of propagation, in our model, is the skin.

The propagation pathway conducts both energy and bits of information.

The basis for our evaluation is to match analog wave information from the test subject with digital information in the form of pulse codes stored in the computer.

The propagation pathway is not an anatomical structure such as a nerve, but is a

non-anatomic electromagnetic channel carrying energy and information from a site of origin to a site of detection.

In the acupuncturist model energy is conducted through conductance pathways called acupuncture meridians. Our electromagnetic model detects information imbedded in the energetized conductance pathway

Our next discussion will focus on the instruments used in doing an analysis.


Yeargers, Edward K. Basic Physics for Biology (Boca Raton: CRC Press 1992)

Vincent J, Speckhart MD, MD (H)

Love your enemies

Sunday, January 6th, 2008


The Sermon on the Mount was taught to the disciples, not to the multitudes.  Jesus shared much revelation concerning the Kingdom of God in this sermon.  This sermon revealed a revelation of The Law that had previously been hidden.  The Jews had identified 613 commandments and statutes to live by.  Further, they added their own interpretation of understanding.  Jesus summed up the Law in two commandments: Love God and love your neighbor.  However, he did not stop there.  He expanded our understanding of the Kingdom by including a new group of people to love: our enemies.

Mat 5:43
Ye have heard that it hath been said, Thou shalt love thy neighbour, and hate thine enemy.

Mat 5:44
But I say unto you, Love your enemies, bless them that curse you, do good to them that hate you, and pray for them which despitefully use you, and persecute you;

Mat 5:45
That ye may be the children of your Father which is in heaven: for he maketh his sun to rise on the evil and on the good, and sendeth rain on the just and on the unjust.

This revelation went against all that they historically understood.  The children of Israel had been in many battles over the centuries.  The Jews were expecting a "conquering" messiah, not a prince of peace.  "Love your enemies" created a reality that required you to love everyone, independent of the situation.  It placed love above all conflict on earth.  It placed a focus on love that had not been emphasized in the past.  Why did this shift occur?  Jesus had arrived and he went about all Galilee, teaching in their synagogues, and preaching the gospel of the kingdom, and healing all manner of sickness and all manner of disease among the people (Matt 4:23).  The gospel was truly good news, especially for our enemies.

For the kingdom of God to arrive on earth, division has to cease.  A kingdom divided against itself cannot stand.  Once the revelation of love comes forth in earnest, wars will cease.  Who will bring forth the revelation of love?  It will be the sons of God.  In the Sermon on the Mount, Jesus revealed who the peacemakers were:

Mat 5:9 Blessed are the peacemakers, for they shall be called sons of God.

The peacemakers will have the revelation of love and will bless those that curse them, do good to those that hate them, and pray for those which despitefully use and persecute them.  At some point the enemy will be converted to a neighbor.  If you are to love your neighbor and enemy, who else is there?

The Kingdom of God is all about blessing, abundance, restoration and reconciliation.  Babylon is about scarcity, control, manipulation, and division.  As we proceed forward and gain revelation in love we will cease viewing others with envy or judgment.  If there is truly plenty for all, why be envious of another’s station in life?  Man looks at structure and judges there to be scarcity.  God looks at infinity and observes there to be abundance.  Judgment is behind most if not all of the conflict that arises.  "You have what I want" or "I want what you have".  "You don’t deserve what you have so I am going to take it away".  "We need that oil for national security".  The list goes on.  The power of love will open up a new understanding of abundance.  Love will cause judgment to evaporate and allow us to see our adversaries for who they really are.  Can a man change?

One of the best examples of this transformation is Jacob.  Jacob’s name means "supplanter",  one who wrongfully or illegally seizes and holds the place of another, a usurper.  In Scripture, names always represented the nature of the person.  Jacob was not the first born and thus was not to receive the family blessing or birthright of the firstborn.  Jacob’s mother Rebekah loved him.  They both thought the God needed help in assuring Jacob of a blessing.  Jacob supplanted Esau twice.  Once Jacob received the birthright, they became enemies.  After twenty-one years of serving Laban in order to receive his wife Rachel and finances, Jacob was to encounter his worst enemy- Esau.  However after spending twenty-one years in servitude and encountering angels of The Lord, Jacob received the revelation of love.  He wrestled with the Angel of God- Peniel (the face of God, Who is Love) AND LOST.  Only then was his name changed to Israel.  Once he finally submitted to God Jacob’s nature changed thus evoking the name change.  When he encountered his brother Esau, he "beheld the face of God".  He was finally able to love his enemies.  Immediately Jacob proceeded to Succoth, a representation of the Tabernacles revelation.  Could it be that we must receive the revelation of love to enter into Tabernacles?

The Process of Healing

Saturday, January 5th, 2008

When we think of healing we usually think of wound healing. In this type of healing, there is a complex sequence of events that occur immediately after the injury, all carefully orchestrated by a cascade of biochemical reactions that end in repair of the injured site.

These phases are:

Inflammatory phase:

Formation of a cascade of clotting factor to stop bleeding

Platelets aggregation forming a mass (plug) by sticking to one another

Vasoconstriction-an initial narrowing of blood vessels to stop bleeding

A subsequent vasodilatation, to increase healing factors into the wound

Polymorphonuclear neutrophil influx (White blood cells) which:

Help to digest debris and bacteria

Kill bacteria by releasing oxygen free radicals

Clean the wound by secreting enzymes that degrade damaged tissue Undergo apoptosis-a process of programmed cell death

Macrophages (immune white cell) which:

Engulf and degrade white blood cells

Stimulate cells that cover the wound with skin

Create granulation tissue, connective tissue and tiny blood vessel on the surfaces of a wound during the healing process

Lay down extracellular matrix-a gel-like complex sugar that binds cells together

Proliferative phase (a phase of rapid production of new cells and substances)

Angiogenesis-the making of new blood vessels needed for healing

Fibrin and fibronectin-cross-linked fibrous strands to trap proteins and particles

Deposition of collagen-the main protein of connective tissue

Formation of fibrous connective tissue

Epithelialization phase

Final stage of healing with formation of skin over the wound


Shortening of the scar

You may pass off your injury with the comment “Oh, it’s just a cut” but you can see from the above outline that the process of healing is incredibly dynamic and complex.

Repair of other types of tissues like bone, nerve, tendon, muscle etc. require similar complex interactions. Viruses, fungi, bacteria and parasitic infections can cause disease and have to be controlled to maintain a state of health as do chemical toxins and toxic metals. There are unique processes in place for healing in each of these areas.

I want to emphasize the word process. That is, there is a beginning, an intermediate phase and an ending. Healing events take place over time, not instantaneously.

As noted above the process of healing can be influenced by a variety of factors including infections, nutritional and immune deficiencies, age, chemicals, toxic metals, heat, coldness or organ failure. And that is just at the physical level.

Influences at the level of the soul, consisting of the intellect, the will and the emotions, may also influence healing, suggesting an interrelationship between these two levels of the body’s design.

Lastly, there is the influence of the spirit, not conventionally included as being important in the healing process, when, in fact, it may be one of the key elements in this process.

Since we are spirit, soul and body, true healing can only take place with harmony at all three levels of organization. I will expand on this topic with a discussion the complexity of the human living system in a future journal entry.

Our discussion will deal with the physical level first. We will show how computer generated electromagnetic signals alter skin resistance and how these electromagnetic altering signals initiate the healing process and sequentially track the healing process until it is completed. It is a wonderfully organized and integrated process.

Scientific discovery yields information that varies with the model that is being used. A model is a representation of “reality” based on tools and observations used in conducting such a study.

A surgeon, studying wound healing, may use a model based on wound closure with sutures, clips or bandages.

A forensic pathologist may use a model based on the kind of wound, whether it is a laceration, a puncture wound by a knife or bullet.

A microbiologist could use a model based on infectious processes that may affect wound healing.

A molecular biologist may want to use a biophysical or biochemical model to determine the sequence of events taking place during the wound healing process.

Our model is a biophysical model in which we compare information that is radiating through a biological system with information stored in a computer system. As an example, detection of an electromagnetic signal representing a bacterium in a skin wound would be useful in establishing an association with a wound infection.

There are two models for electrodermal detection (see my posting: “Treatment Priorities in Electrodermal Testing”).

In the first model, all of the signals stored in the computer are compared with all of the abnormal signals in the biological system.

This model is a general search for abnormal signals

Is not specific for detecting the sites of abnormal signals

It cannot be used to construct an electromagnetic profile for a clinical condition

Does not lend itself to be used in detailed sequential analysis

Disregards priorities set by the biological system

Your body is aware of sites of injury. Just hit your finger with a hammer and it will not take you very long to discover the priority your body has set for pain in the nail you just injured.

The electrodermal system will detect abnormal signals at sites of injury as well.

The second model focuses on biological specificity.

It is the method we have chosen

It is a more targeted method of analysis, one based on the sequential analysis of specific sites over time

This model is an iterative or a repetitive analysis at the same site

It is directed at altering abnormal signals until they can no longer be detected

The relationship between electromagnetic profiles and medical profiles (diagnosis) can be made easily

For example, you can identify the signals that are associated with rheumatoid arthritis or cancer or many other conditions and you can observe the electromagnetic changes that take place during the healing process

Changes can be tabulated for statistical review

Both of these models are electromagnetic in character. For practical purposes we can disregard the magnetic aspect of the signal and concentrate our discussion on its electrical characteristics only. In order to do this, an understanding of the role of physics in biology is necessary. This will be the subject of our next journal entry.

Textbook of Pediatric Emergency Procedures, Henretig, F, King, C (Eds), Williams and Wilkins, Baltimore 1997. p.1141.

Midwood K.S., Williams L.V., and Schwarzbauer J.E. 2004. Tissue repair and the dynamics of the extracellular matrix. The International Journal of Biochemistry & Cell Biology, 36(6): 1031-1037.

Stadelmann W.K., Digenis A.G. and Tobin G.R. 1998. Physiology and healing dynamics of chronic cutaneous wounds. The American Journal of Surgery, 176(2) 26S-38S.

Vincent J. Speckhart MD