Kondratiev Wave Theory Deflation And The Greater Depression

Feb. 22, 2011 - PRLog -- Kondratiev wave theory is not well known, however, knowledge about it is important to you surviving deflation and the Greater Depression.  A Russian man named Nikolai Dmyitriyevich Kondratiev (aka Kondratieff) 1892 - 1938, came up with the Kondratiev wave theory about the 50 to 80 year-long wave cycle that capitalistic economies go through.   A spring (inflation), a summer (stagflation), a fall (deflation) and then a winter (depression).  According to the Kondratiev wave theory, just like nature the capitalistic economy is born again and rises up from a higher plateau than where the economy had started out.

That positive outlook toward capitalism did not sit well with Russian communist leader Joseph Stalin. Nikolai Kondratiev (aka Kondratieff) was arrested in 1930 and sent to the Gulag (prison in Siberia). Then in 1938, Stalin had poor Kondratiev (aka Kondratieff) shot by firing squad on trumped-up charges.

Now, few people believe that inflation will ease and go away.  Most economists are in denial that we have been in a deflation economy leading into the GREATER DEPRESSION since the 2000 dot-com stock market climax top.

Kondratiev wave theory points to previous long-term tops that were all evidenced by a major war and economic tops in the markets as follows:

1. The War of 1812, "to save the American way of life," led to the "Era Of Good Feelings."

2. The Civil War, "to make all men free" led to the "Reconstruction."

3. World War I and II, "to make the world safe for democracy," with the Roaring 20's between them. (World War II, the Korean War and the Vietnam War have not had their depression that usually comes after a wasteful war.  The government with the help of the Federal Reserve just kept papering over the problem with bigger and bigger spending and stimulus (Keynesian socialist monetary scientists).  Credit inflation never works out and always ends in a bust.

4. The Vietnam War, "to stop the spread of communism" with it's "Great Society" socialism.

The longest depression was the 10 years after the Civil War ending at the end of the Reconstruction.  The most severe depression, so far, was the 1930's great depression.  The Greater Depression will be three times larger and three times longer than that one due to elliott wave principle progression of cycle scale.

A long wave peak like we had in 2000 is an emotional top of positive mood. Deflation after the top then looks like prosperity because things calm down and the economy is somewhat stable.  Negative mood then grows according to Robert Prechter, who has written extensively about this in his several books about socionomics.  Socionomics is a study of waxing and waning mood swings of society in general due to the fact that man is a herd animal.  Robert Prechter is on record saying world war three started with the 9/11 World Trade Towers attack, the Dow will drop below 1,000, real estate will drop 90 per cent, unemployment will be over 30 per cent, gold will drop and the dollar will be strong.  "Cash will be King" in the Kondratiev wave winter.

There is actually a downward deflationary self-reinforcing spiral, which will last until the end of the depression. With interest rates declining in the post top period, each new business joining the competition gets the advantage over his predecessors of lower cost of money and new technology. So, he can lower prices. Overhead is fixed. Profits are under pressure. Business has to lower costs by laying off.  Those left on the payroll are more productive. This is where we are going now. Those left at the job are doing extra work.  Aren't they?  All the excess credit has to be wrung out of the economy.

Next, the "multiplier effect" in economics in reverse comes into play. Those laid off can't afford to buy as much  Businesses have to layoff more - and so on - in a snowballing vicious circle. This is the worlds future until things stabilize in year 2016-2018 or so.  We have to have a private gold based money or we will repeat the whole insane inflation again.  Only gold is honest.  Only gold is not someone else's debt.

My college professor in Economics 101 was explaining the "multiplier effect."  Each year, he said, 3 per cent more children are born and then when they graduate they get jobs in the workforce. The total economy grows at that multiple each consecutive year afterward. I raised my hand and asked, "What if that multiplier effect goes in reverse?" He told me not to worry. The government would not let that happen. That was in 1968. I have been wondering every since when he would be proven wrong.  This Kondratiev winter (Greater Depression) will be a big needed cleansing through defunding the bloated big government and excess credit inflation we have today.  Hopefully we will emerge from it with more freedom and our liberty intact.  This is your watch now.  Stop the Federal Reserve , federal government and Anglo financial power elite "Big Brother" one-world-government conspiracy.  IT'S TYRANNY!

"As government expands - liberty contracts"  -  Ronald Reagan

More at my website...

by Delwyn Lounsbury - THE DEFLATION GURU
Reprint rights and use allowed with attribution back to:
http://www.deflationeconomy.com

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