Thank you, Robert. Now I'm even more disturbed than I was before, which says quite a lot. I think deflation could hurt us real bad.

From the Model T, to the Edsel, to Bill Gates: Free Enterprize Capitalism is basically all about "Subject: Delusional thinking," Mr. Robert.

Except, of course, the science part called the bottom line, by some. :smile:

p.s. Which is why economists are always right and never wrong sometimes.

Subject: At Critical Point.

The figures for Total Aggregate Debt for the Third Quarter are posted at the Federal Reserve Website. Total Aggregate Debt is now 28.9866 Trillion Dollars. In the first nine months of 2001 we borrowed 1.9 Trillion Dollars. At annual rate this represents a 7.08 percent increase in Total Aggregate Debt. Last year's (2000) increase was 6.94 percent and the year before that was 9.57 percent. Of course the rate of increase in Total Aggregate Debt is the true rate of inflation. Anything under the long term average of 9.45 percent indicates we have fallen into recession (which of course is where we are now).

7.08 percent is about a 2 percent increase from last year. So we have had a slight increase in inflation over the last year. This indicates that Mr. Green$pan and his crew of friendly counterfeiters have been at least successful in halting the deflationary tendencies in the economy. Of course it took ten rate cuts to do it.

This is further borne out by the chaos in the Bond Market last week. Bonds fell and yields went up. Which is what you would expect in an inflationary environment.

I have the feeling we are at a critical point. Mr. G has arrested the deflation but business profits and employment continue to decline. We could go either way from here. This may be the Bottom or just a pause. We'll get some idea from Big Al this week. There's another FOMC meeting. If they cut again it indicates they are still queasy about the state of the economy. If they hold steady perhaps they have some confidence things are improving.

But nobody really knows what will happen from here. Only time will tell.

<font size=-1>[ This Message was edited by: Robert on 2001-12-09 17:49 ]</font>

On 2001-12-05 20:35, madscientist wrote:
Does anyone know how the GDP and personal incomes have be doing since 1973 in real dollars? And in relation to 1973, 1990, 1999, 2000, early 2000, what is the real income of the average person at this moment in time?

Try chart 745 at this website: http://www.census.gov/prod/2001pubs/statab/sec14.pdf

To get a long (100-year) perspective on the market, check the great chart on the cyclepro website (scroll down about 1/3 and click on the image under the 10/22 posting:

http://www.geocities.com/WallStreet/...00/Outlook.htm

This chart, more clearly than anything else I've seen, shows the difference between productivity-causes rises in the stocks (e.g., 1945-1966) compared to stock market bubbles (1920s, 1990s). The curves are completely different -- in one case they rise gently and level off, in the other case they rise in a fast power curve that would (if it could) go to infinity in a finite time. Interestingly, S & H Awakeings seem to start as the productivity-induced rises begin to level off.

While the current bear market might not be the 'great devaluation', we're not going to have a fast, 'v-shaped' recovery either. Most of the world is in recession now, which makes it unlikely things will pop up soon. The funky accounting at Enron likely exists at several other large US corporations (Sara Lee has been mentioned, of all things).

As as been pointed out by others here, we're hovering near real deflation, coupled with a huge credit bubble in the consumer and housing market. Prick them a little, and the recession will be long as housing and stock prices deflate. Overcapacity is still very high -- the drastic drop in machine tool orders last month indicates that nobody wants add capacity until the current oversupply works out.

Most likely we'll fall and will get back to sitting position only until 2003 or even 2004. After that, we may ignite a second bubble leading to the big one near the end of the decade. The next decline should be a whopper -- investment, retiring Boomers, and the beginnings of real decline in world oil production will all hit at the same time.

This article on JDS Uniphase in the New York Observer shows how big the problems in the telecom sector are...

http://www.observer.com/pages/story.asp?ID=4657

Even if part of the $47 billion write-off is "puff pastry", some has to be real investment money.

What economic crisis?

I have noticed the mood down here recently is very erriely similar to the 1920's in Americia, down right to one of the major parties being corrupt and politically illrevant to the era (The Labor party in Australia now, is similar to what the Democrats were in the 1920's).

Paul Kelly: Damning the doomsayers
By Paul Kelly, International Editor
12dec01

IN his most recent speech, Reserve Bank of Australia governor Ian Macfarlane documents
Australia's 1990s economic expansion ? a cycle that so far has run for 40 quarters ? and as
everyone knows has absolutely nothing to do with John Howard's Tampa-based election
success.

Macfarlane, hardly an economic Pollyanna, pointed out that "the current expansion is a good
deal longer and smoother than its predecessors". For 10 years Australia's average annual
growth rate has been 3.8 per cent, a performance that began under Paul Keating but is
irrevocably linked to the Howard era.

The debate about aspirational voters is driven by the economic progress of the past decade.
It is about values, prosperity and ambition. Macfarlane says the total increase in Australia's
gross domestic product during the '90s has been 46 per cent, compared with 37 per cent in
the '80s expansion and 27 per cent in the '70s phase. It is a reminder about the big-picture
outcome under Howard: that most people, despite higher-pressured lives, are better off in
material terms, a reality often obscured by the intense media-induced debate about
inequality and the losers from globalisation.

The post-election analysis is focused on refugee policy, since this was decisive in the poll.
But would Tampa have saved Howard if his economic policy had been a failure? Howard's
border protection policy was built upon his economic recovery from the May budget onwards.
Newspoll showed Howard with a strong lead over Labor on the test of economic
management competence.

The new focus on aspirational voters constitutes a political turning point. Much of the
intellectual class spent a lot of the '90s attacking so-called economic rationalism. It
ploughed the field of victims ? the battlers, the disaffected, the losers from economic
change, older or retired citizens, struggling small business people and those doing it tough
in the regions. But Howard, through a mix of tax and welfare assistance, Tampa politics and
social conservatism, retained much of this vote at the 2001 poll, having seen off assaults
from both Labor and One Nation.

At the same time, Howard turned so-called economic rationalism into a majority position.
What does this theory mean? If it means anything, it means the aspirational agenda ? low
inflation, low interest rates, more home-loan repayment scope, tax cuts, budget surpluses to
be distributed, economic growth and more jobs than otherwise would be the case. The
aspirational voter has always existed in Australia. But the 2001 aspirational as discussed is
the product of the '90s growth phase and the key to the aspirational vote lies, above all, in
the future of the expansion.

This is where Macfarlane's analysis is relevant. In his speech last Thursday, Macfarlane
suggested that Australia can survive a global recession and that, by extension, the present
growth cycle (Howard's cycle) can continue. His analysis is relevant to the fate of Howard
and Opposition Leader Simon Crean.

Macfarlane criticised the notion of historical determinism. He tackled the view that what
happened in the past must continue to happen in the future, in this case, that if the global
economy falls into recession then Australia must also fall into recession: "People who would
answer yes to this question would point out that we have done so in the past, for example, in
the mid 1970s, the early 1980s and the early 1990s. Why should this time be any different?"

Macfarlane's answer is that the situation is different in three respects. First, inflation has
helped to make the '90s growth cycle more enduring. Average inflation was 11.2 per cent in
the '70s, 6.9 per cent in the '80s and 2.4 per cent during the past decade.

Although Australia went into recession in the '70s, '80s and early '90s, "much of the fault
was clearly of our own making". The higher consumer price index or high asset price inflation
of the earlier periods meant that interest rates had to be lifted on all three occasions to a
point where short-term rates were about 20 per cent. The contrast with the present outlook is
dramatic. Interest rates have been cut for the past year and the economy has grown 4 per
cent on an annualised basis.

Second, the economy is free of other factors that played a role in earlier recessions ?
excessive real wage rises, investment booms that bred over-capacity and an alarming
current account deficit in contrast to the current account, now at its lowest level for more
than 20 years.

Third, Australia's economy is more decoupled from the US than many believe. Our
sharemarket never reached the US bubble proportions. Macfarlane doesn't pretend Australia
won't be hurt by the US recession. But he argues the external impact as such won't be
enough to cause a recession. He also revises the orthodoxy of the Australian dollar as a
"commodity currency" hostage to global highs and lows.

Macfarlane argues that Keating's "banana republic" focus ? Australia's terms of trade (export
prices in relation to import prices) ? bottomed 15 years ago in 1986. Now there is a new
phenomenon. It is the fall in the price of Australia's imports ? many manufactured goods,
telecommunications, computing equipment, semi-conductors. Referring to these
manufactured goods, Macfarlane says: "In some sense these are now the commodities of
international trade." In short, Australia's export revenue can buy, in relative terms, more
manufactured imports than before.

His fear, which captured the headlines, is that Australian business will over-react to bad
news by forcing big staff lay-offs in an effort to appease the sharemarket at the cost of
intensifying the downturn.

Macfarlane's measured optimism is a risky declaration that won't be forgotten if he's proved
wrong. His message is that Australia is more in control of its destiny than it thinks. If
Australia avoids the worst of the global downturn, it will represent a powerful affirmation for
the aspirational voters.

There are worrying signs a deflationary spiral is beginging in Japan, In the USA and Australia I can see signs of a deflationary sprial starting if the economy gets worse.

We are entering a new economic age, the main threat is not inflation, however deflation. Anybody with a background on economics here, tell us what can happen to a economy if a deflationary sprial occurs.

Japan is in a deflationary spiral, policy board member says
TOKYO, Dec 11 (AFP)|Published: Wednesday December 12, 7:57 AM

The Bank of Japan (BoJ) should adopt more radical monetary measures, including inflation targeting and buying
more domestic and foreign bonds to prevent a worsening deflationary spiral, a policy board member said
Tuesday.

"I believe Japan has already entered the early stages of a deflationary spiral," the central bank's Noboyuki
Nakahara told a gathering of analysts.

"The bank should introduce an inflation target or a price-targeting system and indicate when it expects deflation
to end," he said, advocating measures at odds with the views of BoJ governor Masaru Hayami.


The central bank should raise its current purchase of
long-term government bonds to 800 billion yen from 600
billion to boost the growth of the monetary base, Nakahara
said.

He added the central bank should buy 200 billion yen in
foreign bonds each month.

"The US appears unopposed to the possibility of foreign
bond buying. The periodical purchase of foreign bonds,
mainly to raise the amount of available Japanese currency,
is different from market intervention (in the foreign exchange
market).

"It would not be aimed at stabilising the foreign exchange
market but rather to increase the supply of yen," he said.

In recent weeks the Bank of Japan has come under
increasing pressure to further loosen its already ultra-lax monetary policy as the world's second largest economy wallows in its third
recession in a decade.

State Minister for Economic and Fiscal Policy Heizo Takenaka has already warned Japan is on the brink of a deflationary spiral after
consumer prices fell for the 26th consecutive month in October, while the unemployment rate climbed to a new high of 5.4 percent.

Earlier Tuesday, he challenged the central bank to put the brakes on deflation.

"I want the BoJ to take on the challenge of a new monetary policy," Takenaka told a news conference.

The economy could spin into a vicious cycle as unemployment rises, further dampening consumer spending and pressuring prices.
This would depress already weak corporate profits and force firms to cut more jobs, said analysts.

"There are advantages and disadvantages in inflation targeting," Takenaka said. "It is necessary to take another step in considering
the matter. We need to start open discussions right now."

The Bank of Japan has already responded to Japan's deteriorating economic conditions by cutting interest rates effectively to zero and
increased liquidity in the money market by targeting its current account reserves at over six trillion yen (50 billion dollars).

BoJ governor Masaru Hayami remains reluctant to take further measures until the government implements a structural restructuring
program but Nakahara argued the central bank should raise the current account target to 10-15 trillion yen as the economy
deteriorates.

"I'm concerned that consumer spending will be sure to fall further as wages drop. I expect service prices will fall further because of the
weakening of salaries," he said.

"The only opportunity for economic recovery is exports."

if the world currency system still operated under a gold standard, or any metal or commodity standard of any kind, anymore then there might be a risk of serious deflation. but since that is not the case anywhere in the world anymore the worst you are likely to see is a very mild deflation or just steady prices. more likely is the continuing presence of a disinflationary environment with very low levels of inflation.

japan is currently seeing a contraction in its money supply despite lower interest rates. this has a lot to do with demographics as well as wrongheaded fiscal policy that has yet to be made stimulative enough to encourage enough growth in consumer spending. the u.s., on the other hand has no such problems yet. the money supply continues to grow at a nice clip and consumer spending has held relatively stable and should pick up soon anyway as the economy begins to improve over the next few years.

expecting deflation is expecting a redux of the 1930s and that is just not likely to be in the cards when there is no longer a specie standard to back up any currency in the world today. furthermore, we are only now in the early stages of the second half of a century long inflation cycle which, given the absence of a specie standard anywhere in the world today for the first time in history, is likely to take inflation rates in the developed world, after we get past the next peak war probably in the early part of the next decade, to levels only seen before in south american banana republics. then, when more conservative political forces come to power, they will severely contract monetary growth in a move that will at first be seen as a godsend but which will sow the seeds for a real 1930s style deflation and a century long cycle of stable to declining prices in the western world.

Subject: Runaway Deflation or Runaway Inflation?

If there is no threat of deflation then why did Al the Pal cut rates for the eleventh time in a row? He must be worried about something. Not only that he intimated he would cut even more if necessary.

enjolais is wrong as usual, we are possibly at the beginning of a deflationary spiral BECAUSE the link to gold has been cut not vice versa. I direct your attention to Professor Fekete's essay once again:
http://www.gold-eagle.com/editorials...ete120701.html

<font size=-1>[ This Message was edited by: Robert on 2001-12-11 20:16 ]</font>

oh wrongbert...LOL... you crack me up.

the gold standard was dropped because it acted as a weight on the economy during times of recession causing depressions and deflation. it was jettisoned thinking that this would prevent the kind of deep depression and deflation like was seen in the 30s. and, so far, that goal has been achieved. we have had no depression like the 30s for more than 70 years now and no deflation to speak of, even though we did see a bottom in the last k-wave in the early 90s as we have followed the normal pattern out of such a trough to a t so far.

the model i use has proven very accurate under real time conditions for over 15 years now, thank you very much. i put my own money behind that model as well and plan on continuing to do so in earnest in the upcoming years. perhaps, since it seems to differ from your own world view, you find that threatening somehow. no matter. i am confident that future events will prove my forecasts to be as accurate now as they have been for the last 15 years. and if something goes awry, like any good trader, i will adjust.

as for your esteemed dr. fekete, i can only say that it is most likely that his pet theories of deflation will join the great dustbin of other economists who have likewise called for such an economic calamity long before the necessary catalysts were in place.




<font size=-1>[ This Message was edited by: enjolras on 2001-12-11 20:48 ]</font>

A YAZOO AFFAIR for the 21st Century from ABC News via FreeRepublic.com describes the public/private/public partnership that makes a Free Market so sublime to behold.

On 2001-12-12 14:57, Virgil K. Saari wrote:

A YAZOO AFFAIR for the 21st Century from ABC News via FreeRepublic.com describes the public/private/public partnership that makes a Free Market so sublime to behold.

The Rockefeller-Bush GOP is bringing back a "golden oldie" to rally their troops into "patriotic" ecstasy:

"...la-da-da-da...heute Deutschland, und morgen die ganze Welt!"

Subject: Kill the Messenger!

enjrdwlrus has (inadvertently I'm sure) made a good point. If you actually were to delve into the "dustbin of history", what you would find would be the debris of old financial manias. The Tulipmania in Holland, the South Seas Bubble in England, John Law's Mississippi Bubble in France, the Railroad Bubble in the 1870's United States, the 1920's Stock Market Bubble and other smaller manias too numerous to mention.

One of the main characteristics of these manias, then as now was that nobody wanted to hear any warnings about what would happen after the bubble popped. Anyone who criticized what was going on was characterized as an old fogey or out of touch. Needless to say they had the last laugh. All financial manias end in disaster just as this one will.

enjrdwlrus says that I feel threatened by him. Well I do feel threatened but not by him. (I don't think I have too much to worry about from someone who can't fathom the mysteries of his shift key.)

What I do feel threatened about, and what we should all feel threatened about is what has happened to the financial markets in the last 20 years. The financial markets which are supposed to be there to create new industries and businesses to keep our economy solvent have been turned into one gigantic casino. The touts, grifters and gamblers who throng Wall Street these days are playing craps with the future of America.

Sooner or later disaster will strike and there will be a giant financial crash and a horrific depression. ALL FINANCIAL MANIAS END IN THIS WAY WITHOUT EXCEPTION! Not one has ended happily. (Look in the dustbin of history if you don't believe me.) The Crash is bad enough but what happens after the Crash is even worse. The '29 Crash eventuated in World War II, the 1857 Wall Street Crash had a lot to do with the start of the Civil War, the Mississippi Bubble probably was the proximate cause of the French Revolution many years later. We are in the midst of the greatest mania of all time and I don't even want to think about what might happen when it crashes.

So yes, I feel threatened and if you are smart so should you.

<font size=-1>[ This Message was edited by: Robert on 2001-12-16 20:06 ]</font>

my dear rugburnt,

if you delve into the "dustbin" you will most certainly find all the ashes of all the pundits and alarmists who predicted some major financial catastrophe BEFORE all the normal catalysts were in place. i fully agree that at some point there will be the kind of financial catastrophe which you seem to be so worried about at the moment, but my point is that the normal catalysts that have historically precipitated such a long lived and widespread financial disaster are not yet present.

after popular wars, such as the gulf war, you typically have a 20 year bull market, punctuated by a bear market in the middle, which is characterized by new innovations in the areas of transportation, automation and communication. this is exactly what we have seen since 1991, and the bear market occurred right on schedule. it is also the very same pattern that we have seen for the last 250 years. these long term bull markets have always been bookended by war, but the war that peaks the cycle has never occurred, to my knowledge, until the bull market has lasted for at least 15 years and more typically a full 20, so we should now be in the process of entering the second half of this long term bull market that began with the end of the post war recession after the gulf war. the next war, which will probably occur in the early part of the next decade and be decidedly unpopular, should then be followed by an extemely serious recession, widespread inflation, a deep monetary contraction and another very serious recession, rampant speculation in financial assets and THEN a final liquidation. those are the catalysts that precede the kind of catastrophic financial events which you seem to be looking for behind every corner now. that coupled with the fact that in another 25 years or so we will be reaching the end of a 100-108 year inflation cycle makes the coming liquidation period all the more potentially ominous.

personally, when these catalysts are in place i hope i am no longer living in the united states but have been able to secure a much safer abode for myself and my loved ones because i am not at all sanguine about what is to come. and frankly, if you truly are as pessimistic as you seem in your posts, i am surprised that you have not already secured for yourself a safe place outside u.s. borders, not to mention the requisite canned goods and shotguns...:wink:

we actually are in agreement as to what the ultimate outcome will be. where we differ is in the timing.

<font size=-1>[ This Message was edited by: enjolras on 2001-12-16 22:29 ]</font>

<font size=-1>[ This Message was edited by: enjolras on 2001-12-16 22:31 ]</font>

after popular wars, such as the gulf war, you typically have a 20 year bull market, punctuated by a bear market in the middle

Predicting economic cycles on the basis of wars strikes me as similar to tea-leaf reading, except where the wars themselves have a profound economic impact, as was the case with World War I. Incidentally, do you have other examples of this effect besides World War I?


World War I actually caused a recession, which came out-of-phase (in our pre-Depression economy, serious recessions occurred roughly once a Turning) as a result. This was followed by the boom of the '20s, during which the fundamental flaws in the economy were disguised by an orgy of speculative investment. After which, the deluge. The Depression itself was made worse by the international reparations mess arising from the war.


The Gulf War had no comparable economic impact. Its diversion of U.S. resources was too minor to be a cause of the recession of the late Bush years. Its aftermath is still with us, but the impacts of that aftermath are diplomatic, not economic (unless you live in Iraq). It was in no way -- scale of commitment, casualties, impact on world politics or economics -- comparable to World War I. Using it as an economic predictor based on what followed World War I is highly dubious.

personally, when these catalysts are in place i hope i am no longer living in the united states but have been able to secure a much safer abode for myself and my loved ones because i am not at all sanguine about what is to come.

If you think leaving the U.S. will protect you and your family, you don't really understand what is to come. The U.S. economy doesn't exist any more as an independent entity. The problems in the economy are global problems, and things will be at least as bad everywhere else as they are here.

On 2001-12-17 10:33, Brian Rush wrote:

after popular wars, such as the gulf war, you typically have a 20 year bull market, punctuated by a bear market in the middle

Predicting economic cycles on the basis of wars strikes me as similar to tea-leaf reading, except where the wars themselves have a profound economic impact, as was the case with World War I. Incidentally, do you have other examples of this effect besides World War I?


World War I actually caused a recession, which came out-of-phase (in our pre-Depression economy, serious recessions occurred roughly once a Turning) as a result. This was followed by the boom of the '20s, during which the fundamental flaws in the economy were disguised by an orgy of speculative investment. After which, the deluge. The Depression itself was made worse by the international reparations mess arising from the war.


The Gulf War had no comparable economic impact. Its diversion of U.S. resources was too minor to be a cause of the recession of the late Bush years. Its aftermath is still with us, but the impacts of that aftermath are diplomatic, not economic (unless you live in Iraq). It was in no way -- scale of commitment, casualties, impact on world politics or economics -- comparable to World War I. Using it as an economic predictor based on what followed World War I is highly dubious.

personally, when these catalysts are in place i hope i am no longer living in the united states but have been able to secure a much safer abode for myself and my loved ones because i am not at all sanguine about what is to come.

If you think leaving the U.S. will protect you and your family, you don't really understand what is to come. The U.S. economy doesn't exist any more as an independent entity. The problems in the economy are global problems, and things will be at least as bad everywhere else as they are here.

long wave cycles have typically been characterized in the past by trough wars and peak wars. there is no tea leaf reading about it, its just something that has typically occurred. previous trough wars would be the french revolution, the mexican war, the spanish american war, world war II and the gulf war. peak wars would be the napoleonic wars and the war of 1812, the american civil war and the crimean war in europe, world war I, vietnam, and whatever is next due to come probably in the early part of the next decade.

the foundation for the study of cycles did a study a few decades ago going back centuries and identified a cycle in peaks and valleys in general warfare of approximately 18-22 years, and if you go back and look at the timing of major wars in the history of the u.s. you will find that cycle continues to hold pretty steady.

the gulf war was a trough war. these wars are quite often fairly small, contained affairs and their economic effect varies except for the fact that they are normally followed by a recession afterwards. what the gulf war was however was a signpost. i use it as a "predictor" because it successfully fit into the normal pattern of events and "predicted" the likelihood of a 20 year long boom period. it was immediately preceded by the largest market panic in history, a massive monetary expansion, and then followed by the beginning of what is typically a 20 year technology based bull market, led by innovations in communications, automation, and transportation, that is punctuated in the middle by a bear market. this is the normal pattern that the long cycle follows and so far it has not veered from it.

as for leaving the u.s., my concerns are not over the economy so much. there are always avenues to make money regardless of economic conditions. my concerns have more to do with possible civil strife and actual warfare on our shores. i would suggest that in such an event, other parts of the world might be at least a tad safer on a relative basis since they would not be a target.

<font size=-1>[ This Message was edited by: enjolras on 2001-12-17 15:04 ]</font>

What if...

...income taxes were replaced with traffic fines? Can you imagine the scene? HUGE fines for speeding, running red lights...

Enjolras:

long wave cycles have typically been characterized in the past by trough wars and peak wars. there is no tea leaf reading about it, its just something that has typically occurred.

You need to suggest a causative mechanism behind this alleged correlation to have the prediction taken seriously. Why are your long-range cycles characterized by trough and peak wars? Does one cause the other, or is there a common cause behind each?


Regardless, I have a problem seeing the Gulf War in the same role as World War I. Both were wars. The Atlantic Ocean and my bird bath are both water. In what way are the two wars more similar than those two bodies of water?


Actually judging by the remainder of the paragraph, even the correlation doesn't hold up.

previous trough wars would be the french revolution, the mexican war, the spanish american war, world war II and the gulf war. peak wars would be the napoleonic wars and the war of 1812, the american civil war and the crimean war in europe, world war I, vietnam, and whatever is next due to come probably in the early part of the next decade.

All right, let's look at economic performance around each of these so-called trough and peak wars. I'm going to have to skip the French Revolution Crimean War, and Napoleonic wars, though. Perhaps someone who knows more about European economic history can address them.


Following the Mexican war, the economy went into a recession, then a sputtering recovery punctuated by civil unrest, culminating in the Civil War.


Following the Spanish American War, the economy went into a grim, sharp depression, then a boom of sorts that lasted until World War I, then another recession arising from the war, then the fairly long boom of the 1920s, then the Great Depression.


Following World War II, the economy took off in the biggest economic boom in the history of the world.


The Gulf War took place during a recession, and was followed by a recovery that was recognized too late to save the first Bush presidency.


The Civil War was followed by a boom. World War I was followed by a recession. Vietnam was followed by the oil crisis and stagflation.


Where's the pattern you're seeing? I sure don't see it.

On 2001-12-18 16:13, Brian Rush wrote:
Enjolras:

long wave cycles have typically been characterized in the past by trough wars and peak wars. there is no tea leaf reading about it, its just something that has typically occurred.

You need to suggest a causative mechanism behind this alleged correlation to have the prediction taken seriously. Why are your long-range cycles characterized by trough and peak wars? Does one cause the other, or is there a common cause behind each?


Regardless, I have a problem seeing the Gulf War in the same role as World War I. Both were wars. The Atlantic Ocean and my bird bath are both water. In what way are the two wars more similar than those two bodies of water?


Actually judging by the remainder of the paragraph, even the correlation doesn't hold up.

previous trough wars would be the french revolution, the mexican war, the spanish american war, world war II and the gulf war. peak wars would be the napoleonic wars and the war of 1812, the american civil war and the crimean war in europe, world war I, vietnam, and whatever is next due to come probably in the early part of the next decade.

All right, let's look at economic performance around each of these so-called trough and peak wars. I'm going to have to skip the French Revolution Crimean War, and Napoleonic wars, though. Perhaps someone who knows more about European economic history can address them.


Following the Mexican war, the economy went into a recession, then a sputtering recovery punctuated by civil unrest, culminating in the Civil War.


Following the Spanish American War, the economy went into a grim, sharp depression, then a boom of sorts that lasted until World War I, then another recession arising from the war, then the fairly long boom of the 1920s, then the Great Depression.


Following World War II, the economy took off in the biggest economic boom in the history of the world.


The Gulf War took place during a recession, and was followed by a recovery that was recognized too late to save the first Bush presidency.


The Civil War was followed by a boom. World War I was followed by a recession. Vietnam was followed by the oil crisis and stagflation.


Where's the pattern you're seeing? I sure don't see it.

wars have occurred at or near the peak and trough of every long wave cycle for the last 250 years. they are signposts that we are probably on the verge of entering the next phase of the cycle. the stock market crash of 1987 occurred 58 years after the 1929 crash, right on schedule with the normal 50-60 year cycle of market panics occurring at the end of the long wave cycle. this was followed by a massive monetary expansion and then the gulf war as a trough war, again right on schedule.

i do not compare the gulf war and world war I. the gulf war was a trough cycle war. world war I was a peak cycle war. the gulf war would be more directly comparable to the mexican war and the spanish american war. world war I would be more directly comparable to the war of 1812 and vietnam. the american civil war and world war II are more directly comparable, even though the civil war was a peak war and world war II a trough war, because they were both 84 year crisis cycle wars.

actually, world war II would be more directly analagous to the american revolution since both were 84 year crisis cycle wars that occurred at or near long term cycle troughs. the american civil war would be more directly comparable to the glorious revolution, and even more so the the rioting that occurred in the american colonies at the time that woodrow wilson later referred to as the "first american revolution."

the pattern is the following:

1. massive monetary expansion phase.

2. popular trough war, followed by normal post war recession.

3. technology based boom: typically lasts for 15-20 years and is led by innovations in communication, automation and transportation, and has a bear market in the middle around the 10 year mark, before it resumes the second half of its upward trend.

4. unpopular peak war: the post war recession after this is usually very deep and severe.

5. inflation

6. massive monetary contraction: often coincides with another severe recession and political turmoil.

7. speculation in financial assets.

8. liquidation.

i have used this model since 1985 to successfully anticipate the 1987 crash, the subsequent monetary expansion and drop in interest rates that followed, the likelihood that the gulf war would be a small, contained and popular war, and that the war would indeed be followed by a massive technology based boom, lasting 15-20 years, that would begin shortly after the gulf war and which would be punctuated in the 2000-2001 period by a bear market before resuming its second half. i have made successful predictions using this model for over 15 years now so these are not some ivory tower speculations based on some interesting idea i came up with last month. all that remains to be seen now are whether what it now predicts for the future course of the economy and markets will indeed occur...another 10 years or so of prosperity for the economy and financial markets, an unpopular war probably in the early part of the next decade, a serious post war recession, widespread inflation, a massive monetary contraction and another very serious recession, widespread speculation in financial assets, and then the final liquidation phase which should then usher in a 100-108 year period of disinflation and deflation according to the paired cycle theories of robert degersdorff.





<font size=-1>[ This Message was edited by: enjolras on 2001-12-18 21:10 ]</font>

<font size=-1>[ This Message was edited by: enjolras on 2001-12-18 21:19 ]</font>

the stock market crash of 1987 occurred 58 years after the 1929 crash, right on schedule with the normal 50-60 year cycle of market panics

I really don't think much of your model if it equates those two events, the earlier of which signaled massive problems in the underlying real economy, which developed into the worse depression in history, while the later crash was purely a stock market correction for overvaluation. Following the '87 crash, the market quickly rebounded to new and unforeseen heights; following the '29 crash, it recovered only slowly and remained in the doldrums for years.

Upon what was the 1980s economic expansion based? There was no war around the decade's start, and the Iran hostage thing was hardly a popular event.

Many people seem to forget that the current (or not-current) technological expansion had similar players in the 1980s (IBM, Microsoft, Sony, Lotus, Broderbund). Not to mention that "technology" was the buzz word way back in 1982.

I think that the 20-year expansion has nearly ended. The three components of the computer industry-as-we-know-it have pretty much been decided: [HARDWARE] IBM-compatible PCs for most, Apple PCs for less, and Unix-related machines for even less (it was like this by around 1987/8); [SOFTWARE] Microsoft for, hell, everything. Other companies release independent titles, but all under Windows-operablity (achieved by 1995); [INTERNET] AOL, Microsoft, SBC dominates servers and a similar number of core shopping (Amazon), search (Yahoo!), and news (CNN) sites (achieved this past year).

This could be compared to the auto industry in the last Unravelling. By the 1930s, the big players were already established, and would remain virtually unchallenged for the next 30 years.

Subject: Economic Expansion

The economic expansion of the last 20 years was fueled by inflation and its associated debt and NOTHING ELSE.

On 2001-12-19 06:47, Brian Rush wrote:

the stock market crash of 1987 occurred 58 years after the 1929 crash, right on schedule with the normal 50-60 year cycle of market panics

I really don't think much of your model if it equates those two events, the earlier of which signaled massive problems in the underlying real economy, which developed into the worse depression in history, while the later crash was purely a stock market correction for overvaluation. Following the '87 crash, the market quickly rebounded to new and unforeseen heights; following the '29 crash, it recovered only slowly and remained in the doldrums for years.

the similarities between the 87 crash and the 29 crash are that they occurred during the final stage 8 liquidation phase of the long cycle. beyond that they stop because 87 occurred at the mipoint of a 100-108 year inflation cycle while the 29 crash occurred at the end of a 100-108 year disinflation cycle.

the aftermath of the 87 crash was relatively mild as is typical of mid cycle liquidations. you could say it was most comparable to the kinds of mini panics that we have throughout much of the 19th century, the difference being its timing within the cycle. the 87 crash is probably most analagous to the panics of 1884 or 1893.

the 29 crash, however, occurred at the end of a long disinflation cycle and these liquidation phases usually have the most far reaching and damaging consequences. the panic of 1837 occurred at the end of the last long inflation cycle and would be comparable to the 29 crash. the south sea bubble burst in 1720 around the end of that disinflation cycle and would be even more comparable to 1929. tulipomania occurred at the end of the prior long inflation cycle in the 1630s.

if you are truly interested in understanding then i suggest that you make haste to your local library and research robert degersdorff's article in the july, 1979 issue of cycles magazine, published by the foundation for the study of cycles, titled "long cycle timing of inflation", which covers his basic ideas concerning paired k-wave cycles of inflation and disinflation.

On 2001-12-19 08:50, Chris Loyd '82 wrote:
Upon what was the 1980s economic expansion based? There was no war around the decade's start, and the Iran hostage thing was hardly a popular event.

Many people seem to forget that the current (or not-current) technological expansion had similar players in the 1980s (IBM, Microsoft, Sony, Lotus, Broderbund). Not to mention that "technology" was the buzz word way back in 1982.

I think that the 20-year expansion has nearly ended. The three components of the computer industry-as-we-know-it have pretty much been decided: [HARDWARE] IBM-compatible PCs for most, Apple PCs for less, and Unix-related machines for even less (it was like this by around 1987/8); [SOFTWARE] Microsoft for, hell, everything. Other companies release independent titles, but all under Windows-operablity (achieved by 1995); [INTERNET] AOL, Microsoft, SBC dominates servers and a similar number of core shopping (Amazon), search (Yahoo!), and news (CNN) sites (achieved this past year).

This could be compared to the auto industry in the last Unravelling. By the 1930s, the big players were already established, and would remain virtually unchallenged for the next 30 years.

the expansion of the 1980s occurred after a massive monetary contraction (stage 6) following an inflation stage (stage 5). the 80s were the speculation period (stage 7) which leads into a final liquidation phase (stage 8 ), which took place in the form of the crash of 1987. the 80s expansion was set up by the contraction phase which brought inflation under control and made financial assets undervalued again since inflation was now subdued.

<font size=-1>[ This Message was edited by: enjolras on 2001-12-19 12:40 ]</font>