The Whipsaw

Junction point. Stage 1 in the shape the roadmap wanted is unreachable, and not because anything is broken.

§11 wants a Kitchin peak over a 200 year run. But a firm population with no way out of death degenerates monotonically. Clearing ranks by price, rationing splits the shortfall by order size, so a firm that underbought its inputs puts in a smaller order next time and gets an even smaller share of that. Death is absorbing. There is no stationary state for a cycle to form around. Mathematically, not practically.

So the tier 2 to tier 3 exchange from §5.2 moves out of the later stages and into the first. It isn’t a prosthesis, expansion and crystallisation are already fully specified: thresholds 8×MES / 15% / 0.5×MES, hysteresis ×2.4, spin off arithmetic that keeps SFC. Credit stays in stage 2, because credit holds a firm up before death and drags banks and rates and defaults in with it, while expansion clears a firm away after and drags nothing.

The periphery is the same firm in the same arrays, flagged tier 3. §5.2 says it goes through the same tick phases, and it means that literally. No separate branch anywhere.

Then a flaw the theory could never have shown me: 36 expansions in year one and zero after. §5.2 measures capacity declining, and in stage 1 capacity doesn’t decline at all, investment and retirement are stage 2. So a firm that died of no working capital kept its full nominal capacity and never dissolved. While capital doesn’t wear down, “became too small” has to be measured against something that does. Expected sales.

After that the population lives: 5–14 expansions a tick, 5–7 crystallisations, tier 2 count settles at 35–50, tier 3 share of output holds 0.18–0.40, corridor is 20–50%, no vacuuming. And GDP stops falling monotonically: 31k → 38k → 51k → 65k instead of sliding to zero.

Headline writes itself. We turned off every rescue institution at once and watched how it dies. Turns out an economy without death can’t live.