Kondratieff was a Soviet economist who discovered the existence of long term, historical price ondulations. For me, cycles confirm Marxist dialectics but the Stalinists judged it subversive and he was condemned to death. Those were the times...!
Anyway, the world 2012 is going through a large increase of government generated credit with low or negative interest rate (Marc Faber says -5%). At the same time, governments are imposing evermore impossible regulations on every industry. The latest is in the water and food industry, one of the safest industries of all, with deaths per year that can be counted in a hand. This is happening not only in America but the European Union and Israel too. Here, it is becoming very difficult to receive a "food-producer" permit, and the minimum time to get it is a year. The economic cost is enormous and the benefit nil.
Now, what happens in an economy with easy and cheap credit and high regulatory costs and barriers? I think it kills small and mid enterprises, and investment tends to flow into large companies. The trend is to oligopolies and higher prices - inflation. Operative conclusion: Courageously assume loans and invest in large established corporations.
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Well only problem is that apparently we are in the last cycle.
The winter. And large economic contractions are predicted to happen. This means well that you can't pay back the loans if inflation does not help. And this "help " usually comes with increased interest rates, which combined with contraction can be fatal.
Kondratieff winter is a time when you should hunker down. And come out in spring to take loans and invest. If you survive the winter I mean. Survive as a possible investor not necessarily in a physical sense.
But DON'T invest in winter. Especially borrowed money.
Of course all the above is a purely theoretical analysis.
We have passed peak conventional oil. Human population is in massive overshoot. So all we need is a massive economic and political disruption. I don't think we will be interested about investments. Just like people in 1940s had other more pressing things to think about.
Great historical events are coming. What is probably the greatest tsunami of human history is coming. The mother of all winters is around the corner.
There is nothing I wish more then to believe in your optimistic view. But unfortunately I can't.
Society goes through cycles. Optimism would mean right now believing in a liniar evolution. And that is false. We are at the end of a cycle, the unpleasant part of it. And the new one is somewhere in the future for those of us still there.
Kondratieff was not shot for being subversive. But for being useless. He and the institute were supported with precious resources during a very accelerated industrial/urban development of the SU. The institute produced something completely useless for the country which didn't have resources to spare at great cost. The SU was trying to break the cycles and to create a new world. Details about the workings of the old one and thet it might be functional after all were a complete waste of resources. And that it might be functional was worse then useless, you are right.
Well J, to take your argument to the extreme ... in an economy full of oligopolies, you would see higher consumer prices, but also lower wages, since the oligopolies would have more leverage negotiating with labor (fewer places to work, and no option to go independent). Also, returns on capital would be lower, since there would be fewer options for investment. So not inflation ... low interest rates, high equity prices, low wages, high consumer prices, and high margins.
Fortunately, there are still many industries where barrier-to-entry is low for independents. But it does seem that food production is not one of them. In fact ... high margins, cheap borrowing, low wages ... that sounds like branded packaged foods in the USA today.
teo, If Kondratieff was not shot for being subversive but for being useless, then no macroeconomist deserves to live...;-)
Hmmm interesting idea.
In our days Djugasvili would give 2 possible interpretations based on results.
They are either extremely dumb and destroyed the country unintentionally, or they did it intentionately.
In both cases they should be punished harshly.
As time passes I start to understand the extreme brutality of soviet punishments.
Todays top management squandered society's capital resources. For decades. Cooked the books and appropriated an enormous amount of society's wealth on the basis of lies and corruption. Now we are all in deep trouble. After decades of squandering our capital resources a large and painfull correction was inevitable.
I believe that only Djugasvilli could give the correct answer about what we should do with our economic/political leadership. But allas he is long gone. :)
His attempt to break the cycles failed. And now we don't have him or FDR around to take care of us and to keep sanity on the planet.
Now we have poisonous midgets like Hillary " she didn't find a war she didn't like " Clinton instead of FDR. I wrote some time ago that violence " per se " is not the problem. FDR was one of the most violent political leaders ever. But they used violence for good purposes. They were rational and honest men. Now we have greedy corrupt imbecils like Hillary to lead us.
Poor us.
I just read something defining this point of view: "has turned the planet into a “free fire zone,” and considers military power its major asset, a first not a last resort, and the Pentagon the appropriate place to burn its national treasure. "
Not hat violence is not profitable sometimes. It usually is if done smartly. But if done in a primitive way , " gimme dah money or I break your neck ", the style of Bush or Obama - they were figure heads , but I had to put a face on the establishment - then it might not be too profitable in medium to longer term. In the short term it's great, it makes life simple, just like Adolf experienced a happy time in the first part of his robbery spree. Problem is what comes next, and whether you can keep the loot. It usually is pretty hard if you rely completly on violence and don't care to have at least some traces of legitimacy.
I write this from a very filo american point of view. It saddens me greatly to see how it has degenerated. And it makes me scared for our collective futures.
The guardian angel of morality and decency - not much but more then it has ever existed in human history - has become a danger for all.
We should cry for the passing of the great republic, for what we see today resembles more the fascists then the ones who put that murderous killing and robbing spree to an end. Just that now we are at the begining of the cycle, and nobody around resembles the great saviours of the past.
We are at the first snows of the Kondratieff Winter and the psychopats and criminals are here already, making sure that it's going to be a very very bloody winter. One to remember for ages.
Teo - your ranting makes no sense at all. Who has Bush or Obama extorted for money? On the contrary, acting as the world's policeman is terribly expensive. The only thing MORE expensive is NOT acting as the world's policeman and allowing a new Dark Age, of piracy on the high seas and terror in the skies, to begin and to destroy the global system that has made this generation the richest in all of history.
Europeans are cynical because they, starting with WWI if not before, took the gifts of science and the military arts and used them not to advance the forces of civilization against the barbarian hordes but to destroy each other. America (except for the decadent elite) still (maybe naively) still see themselves as a force for good in the world and they are not far wrong. To my father in his KZ lager, the soldiers of Patton's third Army might as well have been angels from heaven sent by God himself.
K
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