Well here we are. We are facing directly into the teeth of the Kondratiev Winter. Denial may make you feel better but you might want to take a few substantive steps for the end of the supercycle. We talked years ago about stagnation first then the cleansing. The Fed isn't finished with Stagnation and it won't be until you are in maximum pain. Which means printing is going to become extreme. This has all taken place in similar form before and Ben is very much aware of where we are. He knows exactly what the trouble is and he knows what he must do.However, stagnation does not always mean that markets are mature. Markets were temporarily oversupplied during the high growth period from the 1870s-90s, during which time there was also a lot of creative destruction in industries like iron, which was displaced by steel, and labor, which was displaced by machinery, but re-employed because of growth. The stagnation phase is characterized by a lack of good investment opportunities that leads to low interest rates. In the past, investments offering exceptional returns or low interest rates, or a combination, led to lowered credit standards which, in turn, created a speculative boom and high debt levels, followed by a crash and financial crisis. Past speculative excesses included canals, railroads, farm land, real estate and the broader stock market. Carlota Perez describes the roles of financial capital and production capital in the cycle. Perez also says excess financial speculation is likely to occur in the "frenzy" stage of a new technology, such as the 1998–2000 during the dot-com bubble.
This is the law of nature that must be obeyed and the only defense that the Fed and Ben have is to print. They can label it with whatever alphabet soup they wish but this is the winter. A price must be paid. Many pundits claim the Fed can print us out of this conundrum they have created by overleverage, hubris, slaughtering millions in the name of "nation building" and "fighting terrorism", laughing at the plight of tens of millions losing their manufacturing jobs, all while stacking the deck for themselves. That's right....by now most participants in the casino know its rigged. No longer do we have the arguments whether the game is rigged or not. We know it is. Of course some still cling to the notion this is a new phenomenon......it isn't.....its just completely in the open now. One thing is certain nature is coming. For every action there is an opposite and equal reaction. Stated another way....You screw nature and she screws you back just as hard...... We have all experienced the law of nature in our own personal ways. It may take time but eventually you reap what you sow.
Roughly two generations must pass before stupidity reigns supreme......60 years for the cycles
The technological cycles can be labeled as follows:
- The Industrial Revolution—1771
- The Age of Steam and Railways—1829
- The Age of Steel and Heavy Engineering—1875
- The Age of Oil, Electricity, the Automobile and Mass Production—1908
- The Age of Information and Telecommunications—1971
Another way to look at the above is the following
- 1. (1600–1780) The wave of the Financial-agricultural revolution
- 2. (1780–1880) The wave of the Industrial revolution
- 3. (1880–1940) The wave of the Technical revolution
- 4. (1940–1985) The wave of the Scientific-technical revolution
- 5. (1985–2015) The wave of the Information and telecommunications revolution
- 6. (2015–2035?) The hypothetical wave of the post-informational technological revolution
We are fooling with nature and predicting how man's creation of the "ultimate moral hazard" will affect the culmination of this cycle is beyond my pay grade. We are pushing on several extremes at this point, not to mention our perceived "freedoms" as a nation.
What I do feel is unavoidable is a price to pay. Another simple conclusion is the "tipping point". That is......when it becomes clear that counter-party risk is the key and loss of complete CONfidence occurs resulting in the so-called moment of recognition "panic" that drives billions and trillions into ANYTHING that is real or has no counterparty risk. If you can't see this train coming then just stand in the tunnel watching that light at the other end. gl...thanks wikipedia for your help.