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To: Buggman
My dad was predicting a Kondratiev recession in 1985, and virtually every year since.

The problem with such theories is that the frequency of recessions is such that one can attribute anything to the phenomena. There are too many powerful variables at operation to render wave functions explicit causes, whether wars, politics, or technological discontinuities. "All other things" can't be held constant.

15 posted on 02/26/2009 9:17:21 AM PST by Carry_Okie (The environment is too complex and too important to manage by central planning.)
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To: Carry_Okie
True enough, though I wonder why your dad counted up from 1935 instead of, say, 1945, when we started recovering our prosperity after WWII.

Human history actually contains a number of predictable cycles--predictable in terms of order-of-event, not necessarily exact time, because while one can predict that continually adding weight will eventually break the camel's back, there are too many variables to predict exactly which straw will do it.

Shalom.

19 posted on 02/26/2009 10:16:47 AM PST by Buggman (HebrewRoot.com - Baruch haBa b'Shem ADONAI!)
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To: Carry_Okie

That’s the problem with those who want to apply the wave theories based on time and not parameters.

There are a lot of wave theorists who want to say “The K-wave is exactly 54.6 years long...” and they want to try to time the market.

I don’t view the K-wave in this manner. I look at his theory from the conditions in the economy, not the exact period of time between cycles. And in so doing, one sees the similarities in the works of Fisher, Minsky, Kondratieff, Schumpeter, et al. The wave adherents want a clock that chimes every “X” months or years, and in the months/week/day, you call your broker and move everything in or out of the markets.

I say that this is silly, and that while economics does move in cycles, it is the conditions, relative debt levels, economic structure, etc that build up and repeat - at whatever rate they choose - that bring on these conditions. The K-wave cycle might turn in 56 years - it might be 60, 70, 80, or whatever years. It is all affected, as you say, by the exogenous events - wars, politics, Fed interventions, etc. But these rarely disturb the larger overall economic pattern.

This is why so many economists get their prognostication wrong - they keep looking for this stuff to be deterministic to the second decimal point. It isn’t. It never will be. It is all we can do to notice and change large patterns - and the pattern this time was the amount of private sector debt relative to the GDP. It is always thus - when a society starts to live large on credit, ALL of the economists I’ve cited agree that at some point, the whole thing comes crashing down around our ears. It has to. The bubble of debt cannot be inflated forever - at some point, some people are so deeply in debt that they cannot service the debt and the “tower of debt” as Minsky called it, collapses. The amount of time could (and was) easily disturbed by Federal Reserve interventions.

For Kondratieff, this averaged out to re-occur about 60 years or three generations to accumulate at a level where it causes a collapse and a whole generation to then withdraw and become incessant savers. That’s all his cyclic theory really says.


24 posted on 02/26/2009 10:51:41 AM PST by NVDave
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