The Cause of the Kondratieff Cycle (reloaded)

[solojam]

kwave is 80 years about the length of avg human life

[diligentdavey]

The opposite, of course, is worse for both a couple and a nation. And, with all advanced economies (except Israel) being in sub-replacement mode in their birthrates, explains WHY we are in an economic depression NOW!

[diligentdavey]

Getting married, settling down, having children, especially a lot of children, is a sacrificial thing, of submitting one's self to the good of others. It also is much better for retirement. Having more children to take care of one in their old age, is better than having fewer, whether for a couple or for a nation.

[diligentdavey]

Self-centered-ness, and a flight to "live for the moment" (or, in other words, 'Eat, drink, and be merry, for tomorrow we die' - or, there is no God, and hence no judgement after this life, so since we only live once, let's live it up!) mentality grew and prevailed ever more in the lives of ever more individuals.

[diligentdavey]

The secularism of the 1920's, too, with the flappers, flauntingly ignoring the prohibition of drinking alcoholic beverages, combined with widespread fornication, contributed, apparently, to a decrease in marriage and hoiusehold formation.

[diligentdavey]

But, this is very unlikely to happen. Because women give birth for various reasons, all mostly personal. There is little 'esprit du corps' to do something as involving as having children for the good of the many.

[diligentdavey]

Following the crash, birth rates decline even further.

I think that the 'baby boom' following WWII (though, historically, the number of births was not extraordinary), is what in large part got us out of the Great Depression!

Hence, the answer to today's financial crisis would be to encourage another "birth quake"!

[diligentdavey]

He surmised, based on a HUGE decline in birthrates not during the 1930's, but in the decade before, that the birth rate decline itself was likely the major cause of the great depression. He pointed out how by 1926, demand for housing began to decline. And early in 1929, the demand for housing (in the US) dropped precipitously (like a rock)! Then, of course, in October of that year, you had the stock market crash (Black Tuesday).



[diligentdavey]

Ray,

I would agree that birth rates go down during an economic depression. However, in reading a paper written in 1978 by Clarence L. Barber, then an economist at the University of Manitoba (Canada), wrote a paper titled "On the Origins of the Great Depression."

[fightington]

if you're talking about a 2000 year period, people didn't live as long as today, so hypothesis fail

[FortNikitaBullion]

But people have children at much less predictable ages now; some have kids at 15, some at 45. Will this affect how the cycle works nowadays? May it dampen it somewhat?

[artynz]

@FortNikitaBullion The bumps in the population distribution are maintained at the average age of childbearing spacing. Interestingly, it seems that variations in age of parents at childbirth are strongly influenced by the cycle also.

[zsylvana]

Very welldone Ray.Thank you.In later years Kontradieff cycles also been used and devolopted by such eminent poeple as Dr Ernest Mandel in his work "Late capitalisIm" and "Long Waves in capitalism" and by Professor Immanuel Wallerstein at Yale in his World-System analyzes.I could recommend both of thm incase not read them.All the best to you.

[Alucardthedeadone]

seems like when an action is made it makes a reacation which is also an acation in its self which would cause a new reaction.

[Alucardthedeadone]

Such as if the action price of goods goes way to high, the reaction is people pay more for food, reaction people invest less, reaction bussiness have less money going bust, reaction govenerment bailsout, reaction higher taxes, reaction unhappy people, reaction new laws, reaction collapse, reaction war, reaction death, reaction take over and lost of land and new powers, reaction peace, reaction a new bull market.

This shows how everything is linked.

[artynz]

@Alucardthedeadone Yep - that is how the entire universe works. :-)

[DebtJunkie]

Hi Ray

Greetings from England.

I've enjoyed your videos on economic cycles. Any chance you can do a few more, in particular do you have a view on how Britain is in relation to its historical cycles?

Thank you + Cheers

Debt Junkie

[artynz]

@DebtJunkie Thanks for comment and suggestion. Recently I have been working on a program called CATS for Cycles Analysis & Timeseries Software. This is going to be released as a free product along with a bunch of time series, including series from US, UK etc. and it will be possible for people to answer all these questions for themselves. Or at least there will be some examples of common cycles on the CRI website added in the next few months.

[artynz]

@DebtJunkie ... ahhh I am overdue to do some more videos. I have been working on a new cycles analysis package and collecting a lot of data, which will produce a lot of new results in future. Hopefully some time soon ...

[Mike2008and2008]

everything has a rythum and a flow!

[ChristopherMarlowe]

IMHO the Kondratieff cycle is caused by debt. This last (winter) phase ends when all the bad debt burns out of the system. During the winter, things associated with debt go down in value; things with inherent value (gold) go up.

Jubilee year in the bible (49 years) absolved all debts. This would tend to level out the K cycle because people would start to back away from debt in anticipation of the Jubilee.

In our system we make the crash worse by ramping up the debts before the winter phase.

[artynz]

Yes, I was aware of the biblical Jubilee year. I don't think that debt is the ultimate cause, rather demographics. However debt exists at all times and add the rough part of the cycle there is every likelihood that bad debt will increase considerably.

[YogiToad]

Another informative gem Ray, thank you.

[miamistorm]

Great as usual Ray, however there is no sound for the last 20 seconds or so. You loose your audio feed just after the phone rings and we can not hear you speaking for the remainder of the video. Thanks, Kevin

[artynz]

Yes, I think there is indeed a bit missing. What it should say is "If we have a 1% increase in population due to immigration, then there is a 100% increase in the need to build new businesses, schools, homes and infrastructure such as electricity, water, etc.

I don't think that present standard economic theory even vaguely understands these important issues.

[vindog34]

Hi I live in the USA. The value of the dollar keeps declining over the last 100 years. Our central bank keeps printing money because they are always in a deficit. Could you explain how that concept mixes with the cycles. It seems whenever a boom leads to a bust, the dollar should go up in value because money is scarcer. Is the US' deficit spending/printing so great that it nullifies the dollar's possible increase in value?

[artynz]

I think that the huge property related debt exceeded any other causes in deflating the currency until the government starting handing out billions and trillions of dollars to bad businesses. All that plus middle east war spending is a lot of chickens to come home to roost. Don't expect the dollar to go racing up any time soon.

Of course other cycles superimpose on this other stuff. But that stuff is a part of the cycles.