Jack Smith has mentioned Kondratieff Waves/ and economic long cycles before. These are generally 55+ years in duration. Kuznets, another esteemed economist of an earlier age, had the economic cycles shorter. Hopefully neither cycle is even close to a natural "law" but more like an amusing anecdote.
Is there now in 2009 a better planning model for this long cycle and one which transcends the blips, and on which BO is basing his moves? Can the Admin effectively overcome, or short-circuit, the natural down cycle with pro-active legislation and spending- even if they get all the numbers right ? Obama's advisors, including the creme-de-la-creme obviously think we can "tempt fate" and come out ahead. Here is an older article that looks now to be prescient: http://www.safehaven.com/article-3452.htm Anyway - the Great Depression started with the stock market crash on October 29, 1929, AKA "Black Tuesday". Adding 55 to 1929 gives 1984 and it is one of the reasons for the hysteria about that year as epitomized in "Nineteen Eighty-Four" the dystopian novel by George Orwell. The K-cycle was way off then as far as planning goes. That novel was published in 1949. Subtracting 55 from 2008 takes us back to 1953, the year Truman announced we had developed the H-bomb... meaning absolutely nothing <g> except that the long cycles are not particularly exact for anything like planning purposes, so why even give them lip-service? Except maybe to say that we are long "overdue" .... The World economy is caught in several deflationary feedback loops now due solely to lower demand. These dynamics reinforce each other, making the dollar/euro seem stronger than either of them should be - but adding more cash will change things quickly - and could increase demand prematurely. "Balance" must be maintained, possibly with dreaded price controls. The down cycle "should" last at least a decade, that is: if the past were a true indicator - so what happens if we can short-ciruit the effects and pull-out of the down cycle in a couple of years? Has the model changed for good? The big worry for me is will a "Newer New Deal" necessarily be inflationary? It wasn’t inflationary following great depression #1, but some of that was due to the War - which actually should have made it worse. It didn't. Why would spending (via printing money) be more inflationary now, with a War almost behind us, and if so, why would thinkgs be different if we merely cut a decade out of the normal cycle by clever use of the money supply ? In a word: China. A billion plus consummers can fire up demand for any commodity rather quickly. Time will tell. Jones
