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In the 1930's, Elliott, Keynes, and Kondratieff came up with the methodologies that are dealt with on this website - but they did so independently of each other, did not all know each other, and probably did not even know about each other.  Ralph Nelson Elliott was in California, John Maynard Keynes was in England (he was British), and Nikolai Kondratieff was in Russia. 

Let's start with Keynes - his most basic premise was that governments should do deficit spending during downturns to get the economy back on track and then eliminate the debt during the good times so that the system would be ready for the next time around. 

The problem with that notion is that societies do not get around to doing it - they deficit spend during the downturns to try to eliminate the downturn and then continue to deficit spend during the upturns because it feels so good, with the result that the debt continues to pile up until the society finally gets overwhelmed by it.  We are very close to that point now. 

Why is Keynes relevant to modern America?  Because America is the post-W.W.II successor, in terms of influence in the world, to the British empire and also has an economic system that is very close to that of Britain, compared to most other European countries (i.e., especially in continental Europe).  And, in fact, the economics that is taught at most universities in America is Keynesian economics. 

Now let's talk about Kondratieff.  My impression is that the Keynesian economists were so preoccupied with trying to avoid recessions, or at least get out of them as quickly as possible, that they did not take any time to look at the big picture - it took an outsider to do that, and as it turned out, Kondratieff was the one who did it. 

Why did Kondratieff do so?  The story is that Kondratieff, who was a Russian economist, was tasked by Stalin (in the 1930's) with proving that the West would not come out of the Great Depression and that the Soviet system would win in the end. 

Kondratieff went about studying the situation - and came to the conclusion that the West would not only come out of the Great Depression, it would thrive again afterward before another big downturn would arrive. 

Stalin did not like that conclusion one bit - so Kondratieff was exiled off to Siberia, where he died. 

But that did not change the fact that Kondratieff was right. 

I will note that Wikipedia has a different version of the story that may well be more correct, and it is under the name Kondratiev, which is probably a more proper English spelling of his name in modern times.  I will note that I have also seen his name spelled Kondratyev in the meantime, which may well be an even more proper English spelling of his name in the meantime.  I have known about the Kondratieff wave since the 1980's, long before Wikipedia existed or the internet was publicly available, and the version of his story that I just presented is the one that I remember, but the Wikipedia one is undoubtedly better-researched and probably has much more accurate information, now that the secretive Soviet Union has been collapsed for a long time and information about such things is probably much more readily available than it used to be.  When I was studying the Kondratieff wave in the 1980's, the Soviet Union still very much existed, the internet was still years away from being publicly available to do research, and I was getting my information from other people by way of paper newsletters.  Whichever version of the story is right, it does not change the basic point that I am trying to make on this website one bit. 

As for the Kondratieff wave itself, I will note that Wikipedia has a description of the wave under the title Kondratiev wave.  I agree with the first part of the description, and most of the rest of it, although I might add that, at times, it uses the terms in a slightly different way than I have been used to over the decades - I do not think that matters much, what matters is what is actually happening, and I provide a full description of that on this website - but I do not agree with their description of how deflation fits into the picture, which basically says that deflation is a thing of the past, and I do not think that expecting stagnation at this point is correct, I think the conditions for a deeper downturn are in place and I think that is what one should expect.  This website goes into detail to provide a description of why deflation will still be a part of it and why one should expect a deep downturn.  Wikipedia is written by volunteers and overseen by minders whose job it is to try to make sure that the information is both accurate and acceptable.  I am quite sure my view will not be acceptable to the majority, at least not, at minimum, until my predictions that are contrary to what they say in the Wikipedia entry actually come true, and I therefore do not want to change the Wikipedia entry myself to include my view.  I will leave my view of things on this website, where I control the information.

As noted at the top of the Wikipedia article about the Kondratieff wave itself, the theory is not accepted by current mainstream economics.  Current mainstream economics, at least in America, is (neo)Keynesian.  This website discusses the issues around Keynesian and Austrian economics at some length - see directly-related links, as well as the comment about Austrian economics that is at the bottom of this web page.  And in particular, as I note elsewhere on this website, the Kondratieff wave is compatible with Austrian economics, but not with Keynesian economics. 

Also, as noted at the top of the Wikipedia article about economics that is referenced at the top of the Wikipedia article about the Kondratieff wave itself, "A primary stimulus for the development of modern economics was the desire to use an empirical approach more akin to the physical sciences."  At the bottom of my link Keynesian economics vs. Austrian economics, I refute the idea in just a short paragraph (that is all it takes, in my opinion) that economics can be reduced to a set of equations.  My basic premise is that economics is a social science, not a hard science, and people cannot be reduced to a set of equations. 


Kondratieff showed his point about the West surviving the Great Depression by documenting a long-term cycle, lasting decades, in which capitalistic societies go through four phases - growth, stagnation, plateau, and depression (these are often called, in this context, the spring, summer, fall, and winter seasons of the economy).  In fact, the cycle seems to last about a human lifetime - and the conclusion drawn from that seems to be that the young generation ultimately does not learn from the old, it is doomed to make the same mistakes as its elders, apparently because by the time as much as 20-30 years has gone by, people just don't remember the (seemingly distant) fairly recent past anymore. 


So the cycle repeats and repeats - and that is why Kondratieff predicted that the West would come out of the Great Depression (which was the winter phase of the previous Kondratieff wave), but would ultimately fall back into a depression again after going through a major more positive phase in the meantime (a major more positive phase which has happened in the meantime, over recent decades). 

In fact (see my model on this website), we have gone through the growth phase of the next Kondratieff wave, the stagnation phase, and the plateau phase, and are even into the next depression phase already (although most people don't know that yet - but they will soon, see below or my model). 

Now let's bring in Elliott.  He came up with his Elliott wave theory (which is a description of the markets, not the economy, unlike Kondratieff's wave theory) in the early 1930's after he got sick and had plenty of time on his hands.  He came from a financial background, then applied that to the markets when he was too sick to do his previous job anymore. 

He was a very observant person and came up with the observation that if stock market movements are graphed on semi-log paper, patterns emerge that are few in number and also fractal in nature, meaning that they replicate or repeat at different degrees of scale.  He wrote about it, but did not write a formal book about it.  Other people followed up on his work later, but a definitive book was not written until Robert Prechter did so with A.J. Frost in the late 1970's. 

The Elliott Wave Principle effectively documents bull markets and bear markets at various degrees of trend - from intra-day to even centuries and millenia.  In fact, using the Elliott Wave Principle, it is easily determinable, for example, that the stock market boom of the late 1920's would lead to the major downturn of the early 1930's, that there would be another stock market boom in the 1930's (happened in 1933-1937), that there would be another downturn after that, and that there would be another upturn, in waves, for decades after that. 

But the Elliott Wave Principle would have also predicted the major downturn after the stock market mania of the 1720's (the Mississippi and South Sea bubbles) and, in fact, also predicted (and still does) that a stock market downturn of similar magnitude is coming up. 

More specifically, the Great Depression (and several depressions before it in the history of the United States) was of Supercycle degree in Elliott wave theory, and because of where we are now in the Elliott wave cycle, a Grand Supercycle degree depression is due, one of similar scope and size to the stock market manias of the 1720's, i.e., what is coming up is the biggest bear market in almost 300 years. 

This has played itself out so far in recent decades and years in the context of implementing the primary emphasis of Keynesian economics, which is to minimize or eliminate recessions, in that in 1978 (probably in response to the recession of the earlier 1970's), a law was passed in America (a law called Humphrey-Hawkins) that called for full employment at low inflation (i.e., in the context of the times in which it was passed, it was effectively a law against recessions).  In other words, it is Keynesianism formalized into law.  The law could not be enforced right away (because consumer price inflation took off at about the same time that the law was passed), but it was enforced starting in the wake of the stock market crash of 1987 (when we were well into the plateau phase of the current Kondratieff wave in the meantime, no longer in the stagnation phase, and that is why the law could be enforced at that time).  The law actually expired in 2000 - just after, interestingly (and tellingly, in my opinion), the stock market had gone exponential (and the law could no longer nominally be enforced anymore - it seems the lawmakers of the 1970's had a gut feel about that), but the people running the system in 2000 decided that they liked the results of the enforcement of the law up to that point so much that they decided to keep enforcing it as if nothing had changed, and that is what they have done. 

It is my contention that the consequences of the enforcement of the law against recessions (especially for as long as that has been going on) are about to come home to roost. 

So how does this all tie together? 

The main two features of the plateau phase of the Kondratieff wave are that real economic growth is ever-slower during that phase than during the growth phase of the Kondratieff wave - but the stock market goes up more during the plateau phase than during the growth phase (thus causing most people to think that they are better off during the plateau phase than during the growth phase, even though they aren't).  In other words, the plateau phase feels better than the growth phase, even though it actually isn't. 

What the enforcement of the law against recessions, starting in the fall of 1987, resulted in was that the plateau phase of the current Kondratieff wave was extended for years beyond where it would have ended otherwise - extended for about 13 years, to be more precise, until early 2000 when the stock market finished its exponential and came back down again.  The stock market went far higher, in the process, than it usually does during the plateau phase. 

We have been in a bear stock market ever since early 2000 - nominally, in the depression phase of the current Kondratieff wave already. 

But the American public does not know that because the authorities managed to save the economy one more time in the early 2000's (during the massive stock market downturn coming directly out of the exponential) - I think mainly by taking advantage of the massive dose of positive perception coming out of the stock market bubble of the late 1990's (real economic growth was actually quite low by that time already - as the Kondratieff wave predicts would be the case). 

So the economy continued - even though the stock market was in a bear market in the meantime (and even though the stock market did go to a nominal new high in 2007 - which is actually a form of correction called a flat, in other words, that was a bear market pattern, not a bull market pattern). 

The economy did not crash until the second phase of the bear market started - and because the economy lasted that long, all people want now is for the economy to get back to the way it was before, which is not going to happen because we are now in the second phase of the bear market and just at the beginning of that (in the big picture) and the damage has been done, there is no way the economy can get back to the way it was before. 

So, basically, what has happened is that the law against recessions (a Keynesian concept) started being enforced at the right point in the Kondratieff cycle to make it possible for the non-depression part of the cycle to be continued, leaving the impression among Keynesians that recessions (and the Kondratieff cycle) had been overcome, i.e. eliminated. 

The problem is that any time a system is knocked out of balance - which is what happened when the Keynesians decided to try to overcome the depression part of the current Kondratieff wave (not that the Keynesians ever really believed in Kondratieff waves in the first place, they didn't, and don't - they are just trying to eliminate recessions and depressions at a general level) - something has to give, and what gave in this case is that the stock market just kept going higher and higher at a faster and faster rate until it could go no higher and faster anymore, i.e., it went into an exponential. 

That is, effectively, a replication of what happened during the Mississippi and South Sea bubbles of the 1720's - when the stock markets also went exponential, and on a far larger scale than the American stock market did in the late 1920's (with a Supercycle degree bear market following from 1929-1933). 

So that takes the Elliott wave prediction into account, too - the Elliott Wave Principle has been saying that we are due for a Grand Supercycle bear market and the combination of the Kondratieff wave and the enforcement of the law against recessions for as long as it was done (i.e., since 1987) effectively resulted in a situation where we have a stock market bubble that is as large as the Mississippi and South Sea bubbles of the 1720's, thus making us perfectly ripe for a Grand Supercycle bear market now (in the big picture). 

In other words, the combination of the Kondratieff wave and the law against recessions (enforced when it started to be enforced) has resulted in a situation where the Elliott wave prediction of a Grand Supercycle bear market can come true, in its fullest sense. 

So why was the law against recessions effectively unenforceable in 2000 already, when it nominally expired?  (The economy did keep going for several years afterward.)  The reason is simple - the stock market went exponential in the late 1990's/early 2000 and there is no possibility that a new bull market can come directly out of a stock market exponential.  So by definition, the rise coming out of the stock market exponential had to be a bear market bounce - and it had all the characteristics of one along the way and it was definitively proven to be one in the end when the market went well below the early-2000's lows (a market going well below the preceding lows after the bounce is over with is the final hallmark of a bear market bounce, it is the final defining characteristic that proves that the up-move was a bear market bounce).  As it happens, the bear market bounce coming out of the exponential was probably one of the largest ever in history, if not even the largest ever in history, due to the continued enforcement of the law against recessions (and was therefore going to be misinterpreted as a new bull market by the maximum number of people), but it was a bear market bounce nonetheless. 

Because it was a bear market bounce, it was virtually inevitable that the authorities were not going to be able to keep the economy going after it was over - and that is why the law against recessions was, effectively, not enforceable after the year 2000 anymore, simply because the authorities did not have to enforce it during the bear market bounce, but they weren't going to be able to enforce it again once the bear market bounce was over with (just that most people did not realize that anywhere along the way because the amount of time from the early 2000's until the economy actually crashed in 2008 was so long - it was too long for most people to be able to keep track of the situation). 

So most people were utterly stunned and shocked when the economy crashed along with the market this last time around - because due to Keynesian misinterpretations and the enforcement of the law against recessions (which is a Keynesian concept), they were, in the meantime (because the economy had held up for so long), utterly unprepared to have the economy go down in a big way.  They simply did not want to believe it, and so they didn't - until it was too late. 

So how does Austrian economics come into the picture?  Simple - Austrian economics holds that the economy has to be viewed as a system and that there is a reason for recessions.  In fact, Austrian economics holds that the recessions should be allowed to run their course naturally and everyone will be better off for it in the long run.  And Austrian economics even predicts under what circumstances recessions (and depressions) will happen - so Austrian economics is compatible with the Kondratieff wave.  Austrian economics does not hold that recessions and depressions should be fought, as Keynesianism does, it holds that they are there for a reason and serve a purpose and that that purpose should be allowed to run its course. 

That purpose is to reduce (in the case of recessions) and clean out (in the case of depressions) imbalances in the economy that have built up during the good times - an economy can't remain healthy in the long run unless those imbalances are wrung out of the system from time to time (i.e., sooner or later) along the way. 

What the Keynesians have tried to do in recent decades is to prevent that cleansing process from happening - because it is, in fact, not pleasant while it is happening - and so we have, in the meantime, a massive amount and set of imbalances present in the economy, so bad that it will take a massive downturn to clean them out again, and that is exactly what we are going to get because the imbalances are so massive in the meantime that there is no way the economy can continue to hold up under them.  And that is why we are only part-way through the current downturn, there is much more to come and the second part of it is going to be far worse than what has happened so far, both because there is so much in the way of imbalances to still clean out and because (in part due to the fact that so many people have gotten so used to good times for so long) people are utterly unprepared for a really big downturn to happen, so they are going to react in ways that are not helpful, at all, to the situation, thus making the situation worse. 

The purpose of this website is, in part, to try to counteract that to some extent by offering better alternatives with regard to what is going on and a more positive perspective on how to deal with the situation.