Many mainstream economists want nothing to do with economic cycle theorists, but it should be noted that economic cycle theories have enabled some analysts to correctly predict the timing of recessions, stock market peaks and stock market crashes over the past couple of decades – and there are many economists who believe that…the period from 2014 to 2020 is going to turn out to be pure hell for the United States.
The above are edited excerpts from an article* by Michael Snyder (theeconomiccollapseblog.com) entitled If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States.
The following article is presented by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (sample here) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.
Snyder goes on to say in further edited excerpts:
Nikolai Kondratiff Predicts:
“One of the most prominent economic cycle theories is known as “the Kondratieff wave” developed by a Russian economist named Nikolai Kondratiev whose economic theories got him into so much trouble with the Russian government that he was executed in 1938 because of them…
In recent years, there has been a resurgence of interest in the Kondratieff wave. The following is an excerpt from an article by Christopher Quigley that discussed how this theory works:
Kondratiev’s analysis described how international capitalism had gone through many such “great depressions” and as such were a normal part of the international mercantile credit system. The long term business cycles that he identified through meticulous research are now called “Kondratieff” cycles or “K” waves. The K wave is a 60 year cycle (+/- a year 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.
Increasingly economic academia has come to realize the brilliant insight of Nikolai Kondratiev and accordingly there have been many reports, articles, theses and books written on the subject of this “cyclical” phenomenon…
What does the Kondratieff wave theory suggest is coming next for us?
Well, according to work done by Professor W. Thompson of Indiana University, we are heading into an economic depression that should last until about the year 2020…
If we accept the fact that most winters in K cycles last 20 years this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000. Thus, in all probability, we will be moving from a “recession” to a “depression” phase in the cycle about the year 2013 and it should last until approximately 2017-2020.
Harry Dent Predicts:
The Kondratieff wave is far from the only economic cycle theory that indicates that we are heading for an economic depression. The economic cycle theories of author Harry Dent also predict that we are on the verge of massive economic problems. He mainly focuses on demographics, and the fact that our population is rapidly getting older is a major issue for him.
The following is an excerpt from a Business Insider article that summarizes the major points that Dent makes in his new book…
- Young people cause inflation because they “cost everything and produce nothing” but young people eventually “begin to pay off when they enter the workforce and become productive new workers (supply) and higher-spending consumers (demand).”
- Unfortunately, the U.S. reached its demographic “peak spending” from 2003-2007 and is headed for the “demographic cliff.” Germany, England, Switzerland are all headed there too. Then China will be the first emerging market to fall off the cliff, albeit in a few decades. The world is getting older.
- The U.S. stock market will crash. “Our best long-term and intermediate cycles suggest another slowdown and stock crash accelerating between very early 2014 and early 2015, and possibly lasting well into 2015 or even 2016. The worst economic trends due to demographics will hit between 2014 and 2019. The U.S. economy is likely to suffer a minor or major crash by early 2015 and another between late 2017 and late 2019 or early 2020 at the latest.”
- “The everyday consumer never came out of the last recession.” The rich are the ones feeling great and spending money, as asset prices (not wages) are aided by monetary stimulus.
- The U.S. and Europe are headed in the same direction as Japan, a country still in a “coma economy precisely because it never let its debt bubble de-leverage,” Dent argues. “The only way we will not follow in Japan’s footsteps is if the Federal Reserve stops printing new money.”
- “The reality is stark, when…[sellers] start to outweigh buyers, the market changes.” It all comes down to an aging population, Dent writes. “Fewer spenders, borrowers, and investors will be around to participate in the next boom.”
- The U.S. has a crazy amount of debt and “economists and politicians have acted like we can just wave a magic wand of endless monetary injections and bailouts and get over what they see as a short-term crisis” but the problem, Dent says, is long-term and structural — demographics.
- Businesses can “dominate the years to come” by focusing on cash and cash flow, being “lean and mean,” deferring major capital expenditures, selling nonstrategic real estate, and firing weak employees now.
- The big four challenges in the years ahead will be:
- 1) private and public debt
- 2) health care and retirement entitlements
- 3) authoritarian governance around the globe and
- 4) environmental pollution that threatens the global economy.
- Harry Dent Sees Dow 3,000
- Since Harry Dent is Calling for Catastrophe, Maybe It’s Time to Buy! Here’s Why
According to Dent, “the crisis will occur between 2014 and 2023, with the worst likely starting in 2014 and continuing, off and on, into late 2019.” …
…Of course there are many, many other economic cycle theories that seem to indicate that trouble is ahead for the United States as well. The following is a summary of some of them from an article by GE Christenson and Taki Tsaklanos…as posted on munKNEE.com.
Charles Nenner Research
Stocks should peak in mid-2013 and fall until about 2020. Similarly, bonds should peak in the summer of 2013 and fall thereafter for 20 years. He bases his conclusions entirely on cycle research. He expects the Dow to fall to around 5,000 by 2018 – 2020.
Kress Cycles (Clif Droke)
The major 120 year cycle plus all minor cycles trend down into late 2014. The stock market should decline hard into late 2014.
Elliott Wave (Robert Prechter)
The stock market has peaked and has entered a generational bear-market with a crash in the market around 2016 – 2017.
Market Energy Waves
A 36 year cycle in stock markets is peaking in mid-2013 and will cycle down for 2013 – 2016…[with] equity markets should drop 25 – 50%.
A peak in confidence in August 2013, a bottom in September 2014, and another peak in October 2015…[with] a world-wide crash and contraction in economies from 2015 into January 2020.
Cycles per Charles Hugh Smith
Four long-term cycles – Credit expansion/contraction cycle, Price inflation/wage cycle, Generational cycle, and Peak oil extraction cycle – will bottom in the 2010 to 2020 period.
Does history repeat itself? Well, it should be disconcerting to a lot of people that 2014 is turning out to be eerily similar to 2007 but we never learned the lessons that we should have learned from the last major economic crisis, and most Americans are way too apathetic to notice that we are making many of the very same mistakes all over again. Just in the last few months, for example, there have been a whole host of indications that the next major economic downturn is just around the corner.
Let’s hope that all of the economic cycle theories discussed above are wrong this time, but we would be quite foolish to ignore their warnings. Everything indicates that a great economic storm is rapidly approaching, and we should use this time of relative calm to get prepared while we still can.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://theeconomiccollapseblog.com/archives/if-economic-cycle-theorists-are-correct-2015-to-2020-will-be-pure-hell-for-the-united-states (Copyright © 2014 The Economic Collapse)
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