(Appendix 2: Dreams)
“Q: It is difficult to see how the Ego can be acting during the night things which have taken place long ago. Was it not stated that dreams are not subjective?
A. How can they be subjective when the dream state is itself for us, and on our plane, at any rate, a subjective one? To the dreamer (the Ego), on his own plane, the things on that plane are as objective to him as our acts are to us.
Q: What are the senses which act in dreams?
A: The senses of the sleeper receive occasional shocks, and are awakened into mechanical action; what he hears and sees are, as has been said, a distorted reflection of the thoughts of the Ego.
The latter is highly spiritual, and is linked very closely with the higher principles, Buddhi and Atma. These higher principles are entirely inactive on our plane, and the higher Ego (Manas) itself is more or less dormant during the waking of the physical man.
This is especially the case of persons of very materialistic mind. So dormant are the Spiritual faculties, because the Ego is so trammeled by matter, that It can hardly give all its attention to the man’s actions, even should the latter commit sins for which that Ego – when reunited with its lower Manas – will have to suffer conjointly in the future.
It is, as I said, the impressions projected into the physical man by this Ego which constitute what we call “conscience”; and in proportion as the Personality, the lower Soul (or Manas), unites itself to its higher consciousness, or EGO, does the action of the latter upon the life of mortal man becomes more marked.
Q: This Ego, then, is the “Higher Ego”?
A: Yes; it is the higher Manas illuminated by Buddhi; the principle of self-consciousness, the “I-am-I”, in short. It is the Karana-Sarira, the immortal man, which passes from one incarnation to another.”
H. P. Blavatsky
The Mark Of God: Understanding Your "I AM Presence" 