Inflation runs in a 54-year cycle known as the Kondratieff cycle, or the “Long Wave,” which represents the changes in prices of products over time. Nikolai Kondratieff, a Russian economist of the 1920s, wrote several papers dealing with the question of long economic cycles. In his book, aptly titled Long Economic Cycles, he showed how several indices, such as commodity prices, interest rates, wages, and foreign trade, vary over time. From this data, a consistent and repeatable form emerged – a cyclical pattern of consistent length. This curve came to be known as the Kondratieff wave. This curve can be compared to the actual values of these indices over long periods of time and is shown to be predictive.
This 4th of July, declare YOUR Financial Independence!
Read What’s Next for the Economy and learn how to take advantage of the business cycle to minimize losses and maximize profits. If we can learn from history, we can take advantage of that knowledge for our own personal finance planning and decision-making analysis.
What’s Next for the Economy provides the answers you need to know now to protect your assets and secure your financial future. It provides simple tools to guide your financial planning and decision-making choices.
Is it safe to invest in the current stock market?
Should I buy or rent my next house?
When is the next recession coming?
What’s Next for the Economy provides an analysis of current events and an...
One if by land and two if by sea? Like Paul Revere’s famous ride, we should expect the next recession soon. Why is it coming soon, and how soon is it coming, you ask? Well, let me show you a chart of the most recent recessionary periods and when they occurred. Below is a figure of the growth of the US Gross Domestic Product (GDP) from the Federal Reserve website in St. Louis (FRED). Notice the grey columns, which represent recessions. Notice how they are spaced about 7-10 years apart.
This chart shows that it has been almost 10 years since the beginning of the last recession (The Great Recession), and on-average, the business cycle is about nine years long. Does this mean that the next recession is...
Recessions represent the downward phase of the business cycle. They currently occur about every nine years. I realize that, to economists, this statement is blasphemy. They will tell you that nobody can predict when the next recession will occur. And to some extent, they have a point. No predictions are exact, and there is variability in every cycle. However, it is a useful rule to keep in mind, and one that I have personally followed.
The fact that recessions are difficult to predict shouldn’t keep us from trying to anticipate their arrival. If you know a recession is coming, you can prepare for the storm, much as people prepare for a hurricane in the Southeast or a tornado in the Midwest. You just have to know what to look for and hav...
The Great Inflation started with the economic policies of the Kennedy and Johnson administrations in the 1960s, and it ended during the first term of President Reagan’s administration in 1982. Low levels of inflation, in general, promote price stability and a healthy economy. However, high levels of persistent inflation, such as those experienced during the Great Inflation, cause uncertainty and doubt – inflation takes away people’s faith in the future, because they don’t know what prices to expect or what price shock will happen next.
Robert J. Samuelson, in a book titled The Great Inflation and its Aftermath, provides a key concept: The reason for “The Great Inflation” of the 1970s was an idea. That idea was the concept of “full...