Cycles
Boom and Bust – The Future and Past
One of our great weaknesses, as thinking humans, is our inability to understand the world beyond our own experiences. A typical life span is about eighty years. We are influenced by our parents (and thus what they experienced), but that has nowhere near the impact of what we experience directly ourselves. For most of us, anything more than say sixty years ago is “ancient history” and doesn’t factor strongly into our expectations for the future.
The classic example now is the crash of 1929 followed by the Great Depression. My father was a young child in the depression and that seems to have given him a lifelong frugal nature. That kind of “save in case of a disaster” attitude seems to have been lost over the past sixty years or so.
Let’s take a moment to study history and see what it may be able to tell us about the future.
Hopefully everyone realizes that empires rise and fall. They never last forever, so there is no reason to believe the American Empire will last forever either.
Spain (Habsburgs Spain) – rose at the beginning of the 1500s and fell after 1620, eclipsed by the Netherlands (Dutch) around 1625. Spain had a pretty good run for about 150 years.
Netherlands (Dutch) – rose at the beginning of the 1600s taking world leadership in about 1625 and fell around 1770. Giving the Dutch a pretty good run for just over 150 years.
England (UK) – the UK was on a fairly steady rise from about 1550 but didn’t eclipse the Dutch until about 1750, peaking about 1870 and fell essentially at 1913 just before World War I. All in all, I’d give the British a good run of about 200 years.
USA – the USA started rising when it was formed with the revolutionary war and overtook England in 1913, reaching a peak just after World War II and has been falling ever since. The USA emerged from the pack (except for the UK which was the world leader at that time) about 1850 when the UK was at it’s peak. If we take 1850 as the start of our empire and expect a good 200 year run then we are due to be eclipsed around 2050.
If we look further back into the past, China has had many empires rise and fall. China is once again poised to be the leader of the world somewhere around 2050.
Something to note about all these previous falls, is that even though the curves can be quite steep, the falling nation takes 100 to 200 years to fall to relative insignificance. However that doesn’t mean the average person in those nations isn’t still enjoying a quite reasonable life and not poverty.
Within these empire cycles, we have what is termed a long economy cycle which I’m going to estimate at about 80 years. So if we take the 1930s as the start of our last long cycle, then it finishes about 2010 (which matches with the crash then). This is actually good news, the USA may be on the start of a long cycle improvement although we are still in the throws of recovering from the end of the last one which was basically 2007 to the present.
Within the long cycles we have short cycles of about seven to eight years.
Meddling of course can adjust the timing of these things. Often meddling is in the form of “kicking the can down the road”, which is something the USA has been doing for quite a while now. The result of this is to soften and slow the declines but results in a worse decline.
It’s my position that if the USA had faced it’s problems we could have had a much better future. But that isn’t what happened. The USA Central Banks (which remember are not the government but work closely with the government) bailed out the financial crisis of 2007-2011 and again bailed out the “pandemic” in 2020 and through the Biden regime to the present. This has created a huge amount of inflation.
My position is that inflation hurts the mainstream (middle class) person the hardest. The lower class isn’t impacted all that much because they are already living a financially miserable life with virtually no financial freedom. The upper class and the wealthy are able to take advantage of inflation and become even wealthier in general.
People and the news tend to judge the economic state based off “inflation” and the stock market. It seems to me there is a lot of confusion between inflation and interest rates. In modern times (and in history), inflation is the result of the ruling powers creating “money from nothing” to solve short term problems and stimulate the economy, then as inflation ravages the population, interest rates are increased to “cool down” the economy. These can be very hard economic times for the middle class.
High interest rates are good for banks (and the very wealthy), but bad for people and businesses. Unfortunately this is really too complex to simplify to a single sentence. Banks “fail” when they have too many low interest paying loans and not enough cash to pay customers that want to withdraw their cash. These transitions from low interest rates to high rates can be very disruptive.
The stock market can be rising and interpreted as “the economy is great” but this is nothing but “wealth on paper” and it can disappear just as fast.
In my opinion, the most important indicator to look at is the ratio of debt to productivity. On a national level this is the ratio of the national debt to the GDP. On a personal level it’s the ratio of your debt to your income. The USA is at a “worst case” situation. This is when it becomes unsustainable. On a personal level this is when you declare bankruptcy. On a national level, those in power have an alternative when using a fiat currency: print more money (and we face “hyperinflation”) to pretend everything is okay. This is when we are at greatest peril for all kinds of distractions like wars and pandemics which serve as an excuse for why money needed to be created from nothing. It’s also a time when tyranny rises.
We have a lot of “doom and gloom” prophets. If we want to take an optimistic viewpoint, we can say we were correct already and that’s what the pandemic was: a distraction for the cover of creating a ton of new money and the rise of tyranny. Are we past the worst of it?
What are we facing in the future?
In my view, there is almost nothing standing in the way of greater tyranny. The USA is marching very rapidly into totalitarian socialism. Unless we can shut off the censorship and cut through the propaganda, the future doesn’t look very good. But this will continue to be a gradual slide.
The USA dollar is slipping from being the world’s reserve currency. This basically means the USA will have less influence on the rest of the world. For the individual person, and businesses in the USA, this translates to less wealth. All those cheap trinkets from China are going to be more expensive.
The form of money used goes in a big cycle. From “hard currency” (precious metals) to “banknotes” (credit backed by hard currency) to “fiat money” (lots of credit but no credibility) and then when the crash comes the shift is back to hard currency (precious metals).
We are approaching yet another “New World Order”. So what happens every time this transition happens?
Debt crisis and restructuring (inflation, devaluation of the old currency)
Internal revolution (may be peaceful or violent)
(International) Wars
What can you personally do to best handle this transition?
Don’t have your wealth in cash (I’d advise either gold, the (long term) stock market or fully owned real estate – with gold being by far my first choice)
Avoid debt that you may not be able to pay when your personal finances take a downward turn.
Either be part of the solution (and risk being personally targeted by the opposition) or keep a low profile (just be “one of the people”).
Be mentally prepared for having less wealth.
Avoid living in conflict zones (major cities)
Attempt at a simple summary:
There are three cycles that national status and economic situation go through.
The “empire cycle” lasts about two hundred years
The “long cycle” is roughly the lifespan of a human (about 80 years)
The “short cycles” are about 7 to 8 years
The USA is in the decline of our empire cycle, the decline of the current long cycle and may have just finished the decline of a short cycle around 2022/2023.
Long term outlook for the USA is for things to get worse, but I suspect we may actually have some improvement for a few years until the current short cycle goes bad again.
Life and finances may be quite bad overall, in the USA in about five years
Individual situations do not reflect the overall situation of the nation. There will always be people that do well and those who do poorly. Do what you can (stay aware) in order to be one of those who does well through these troubling times.
Feedback would be greatly appreciated. In attempting to simplify this, have I just created a rambling mush? Certainly it deserves a book or two for detailed analysis.