Have you ever read something and been hoping the whole time that is was full of BS, but really found the argument well thought out and presented ? Thats how I find myself tonight. In the course of trying to read more on economic issues I was reading on the growing trend of the world to move away from the dollar ( the large French energy company Total advocating paying for oil in currency other than dollars in yet another move to that weakens the dollar as the worlds reserve currency. Yes the day the dollar is not the reserve currency is scary; but that wasnt the scary article. In the course of reading on the above trend; I ran across this article on Kondratieff Waves. I had never heard of them before but the theory seems to be gaining followers and if its true it does not bode well for what ahead in the short term for us. Anyway if anyone else wants to read it I would love thoughts on this. The theory argues that financial periods are cyclical and predictable. The K wave is a 60 year cycle (+/- a couple of years or so) with internal phases that are sometimes characterized as seasons: spring, summer, autumn and winter: • Spring phase: a new factor of production, good economic times, rising inflation • Summer: hubristic peak war followed by societal doubts and double digit inflation •Autumn: the financial fix of inflation leads to a credit boom which creates a false plateau of prosperity that ends in a speculative bubble •Winter: excess capacity worked off by massive debt repudiation, commodity deflation & economic depression. A trough war breaks psychology of doom. If we follow this thinking the US will be moving from a recession to a depression phase in the cycle in the near future and it should last until approximately 2017-2020. To quote one article I read on it that was written in 2013 the US is still in the deflationary growth plateau, characterized by falling interest rates, sharply rising stock prices, and profit growth but not as good as in the inflationary growth phase. The period also sees, sharply rising debt, a period of considerable technological innovation. What happens next of course is the real depression, with falling prices, rising commodity prices (particularly gold), stable interest rates, falling stock prices, falling profits and debt collapse. Many authors on this say the creation of currency from nothing is hiding some of the symptoms but not curing the problem and in fact will make the correction even more severe. As I said lets hope this is pseudo science and does not come to pass.. I really cannot claim to know enough to refute or accept this theory. I did find it interesting and would love to hear discussion from others on it. So its off to do more research.
Posted on: Tue, 08 Jul 2014 00:23:58 +0000
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