I think that dreams are your brains way of sorting information after you've gone asleep, you'll notice if you deprive yourself of REM sleep for a few months, you start to forget an awful lot of short term memory stuff. I did anyway, then once you allow yourself REM sleep your short term memory will start to work again.
According to my research, we have two major kinds of memories:
One is declarative memory , which are those that you can declare and you know, like the name of your friend or adding numbers and such. One type of memory that goes under declarative is called episodic memory, like the day you found out that your parents are separating, for example.
The other one is the implicit memories, which you have them without you actually being aware of knowing them. From the type of memories that goes under this type one is called the “procedural memories”. Procedural memories are memories that you have stored and use but you cannot explain how you know what you’re doing. Typing on the keyboard without looking down or riding a car or a bicycle for example is procedural memories.
Now as far as dreams are concerned when we sleep our brain uses a special kind of implicit memory called, Semantic memory or Semantic knowledge. Semantic memory is kind of mysterious in this sense that they have abstract knowledge that is capable of using symbolic forms to store information. For example if you look at a flower pot you might see a red rose but your semantic memory might be recording a symbolic form relating that flower to your mother, or a lover for example.
Semantic memory instead of hippocampus, it is mostly recorded in a part of the brain called Neocortex. Let’s say you go out with your father to learn how to drive. And let us also suppose that while your father is trying to teach you how to drive there are moments that things get heated and you start to feel that your father is criticizing you unjustly. Hippocampus records the date, place and individuals involved as episodic memory and procedural memory (learning to drive.) However, Neocortex unlike hippocampus records a symbolic form of this event. So your semantic memory might relate the car to your father’s harsh manners or your own embarrassment.
Therefore, anytime you see a car in your dream it might be a reminder of what kind of day you have had before dreaming. You might have had a friction with your father, teacher, father figure or anything else that Neocortex recorded as a semantic memory of events that involves car.
Personally when I have a bad argument with someone I usually dream that my teeth are broken inside my mouth. It is because as a child when I for the first time saw an argument, some people lost their teeth when the argument resulted in fistfight. My semantic memory has recorded that and when I go to sleep my brain uses it to review the psychology event(s) in my awaken life.
When we go to sleep our brain cannot access hippocampus that anchors us in reality, instead, it is heavily involve with Neocortex and semantic memories. Our brain in order to create a world so it can remain active uses all these very abstract semantic memories to elude us into a virtual reality. While you are in this twilight zone of symbols and conceptual abstracts, everything no matter how bizarre makes absolute sense.
Brain among other things it also needs constant flow of information in order to go on running. This flow of information also needs to have a story line because brain requires to cognate so it uses Semantic memory to create a mysterious Matrix like reality out of abstraction.
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