Yesterday I had an exchange of emails with a former colleague at the late University of Colorado Long Wave site in the later 1990's until about 2003 when it became such a rant site that UC closed it down. Initially that site discussed the history and progress of Kondratieff's economic long wave as it applied to macro economics and to crude goods prices, interest rates, wages and incomes and gross national product. It was eventually dominated by bearish equities analysts apparently looking for some academic exposure. The fact was and is that equities are not valid price series for measuring the ebb and flow of the economic long wave.
Most of the bears missed the fact that the great bull market from 1982-2000 took place during the disinflationary Kondratieff long wave declines of interest rates and commodity prices. Their concept was deficient and demanded an economic crash like 2008 to signify a "down wave". They kept trying to fit their beliefs into the Kondratieff wave by insisting that the wave was on hold for 20-25 years! In fact the inflationary wave had peaked from 1973 to 1980. The effect of all this pseudo-Kondratieff babble was to discredit the long wave. Several gold-sellers also adopted Kondratieff parlance to push gold sales and further discredited the very idea of a long wave.
Other than David Barker of https://longwavedynamics.com/ , there are now very few current long wave analysts compared to quite a few from the 1960's to 90's. I subscribe to Barker's very thorough newsletter. Barker has his own version of the long wave which owes a lot to the late P. Q. Wall who popularized the "seasonal" concept of spring, summer, fall and spring in each long wave, borrowing from Oswald Spengler, the popular gloom and doom German philosopher of cultural Armageddon in the 1920's and 30's. Barker's main thrust, regrettably, is stock market analysis of the much shorter Kitchin and Wall cycles, but it is useful for short and intermediate term stock traders looking for tradeable cycles. He sees the Kondratieff down wave from the 1970's not ending until 2013-14, which I see as far too long and an unacceptable distortion of Kondratieff's concept which described half wave cycles of approximately 27 years up in rates and crude goods prices and approximately 27 years down.
The 1949 Long Wave low led to the late 1970's high and suggested 2002-04 as the next low. Although some commodity prices made their bear market lows in 1998, most them gradually made their lows by 2003, and so too, seemingly at the time, did interest rates. All the metals, grains, meats, energy, and tropical foods have long since made lows and given major gains the past decade.
Bond yields broke with the Kondratieff wave in 2008 after having made their last previous lowest low on schedule in 2003. http://screencast.com/t/Rzr7CvXcDhX The liquidity panic of 2008 understandably caused a massive flight to safety, and only US Treasury bond markets had the size and depth to accomodate many trillions of panicked capital looking for safety. The rapid unwinding of this panic trade from almost 2% on the 20 year bond to 5% in a few months in 2009 promised to signal that the main Kondratieff inflation wave vehicles were back in synchrony. But continued panic by the US Federal Reserve and trillions of dollars of quantitative easing has kept rates near the 2008 lows and attracted much capital that concludes that things must be very bad indeed if the Fed is still panicked.
So we have a bifurcated economy with inflation in the private economies of the world but deflation in government economies. The large banks in North America and Europe are effectivly bankrupt and wards of the state. They are under enormous pressures to raise capital, cut non-banking operations (speculation), and loan, loan, loan. But their reserves are all they have, so they are leaving them safely back at the Fed. Despite Fed printing and "loaning" to the banks, only a small part is leaking out to speculative hedge funds. Governments themselves are increasingly seen as close to financial implosion.
Meanwhile, private corporations are doing relatively well and are self-financing or re-financing with very low yield bonds. World private inflation and growth proceeds, as it has since 1999-2003, with demand from emerging nations as well as from re-tooling in many industries. This dichotomy prevents, or at least has prevented, either the inflationists or deflationists from being correct overall. Nevertheless, gold and most prices are far above the 1999-2003 lows, so we may safely say that Kondratieff is still at the helm and will stay there another decade. Even so, and although inflation will continue, overall world economic growth will remain positive but modest for a few years. This will have a negative effect on stocks, moving from country to country in "confidence moves", until an all-out inflationary binge develops when bank reserves finally get loaned out.
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