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HISTORICAL PROOF OF CONTINUED DEPRESSION!

February 11, 2013

It is now anticipated that the U.S. will experience a new protracted, deeper recession than we experienced in the past 5 years. It is apparent to many that our government continues to fail to act when it should and meddles when it should not through incessant Quantitative Easing 4. Our government's unwillingness to extend tax breaks for the poor, middle class and upper class will cut discriminate spending even further than we recently saw during the most recent holiday season.  Business investment will also suffer due to increases in employment taxes which also had been cut during the Bush era.  Business owners continue to lament about increasing strangling regulation requirements, costs involved with the impending institution of Obama care, continued rising business costs, inability to raise prices in a down economy and an uncertain business climate where customers are hoarding their disposable incomes instead of spending it.

Also expected is a substantial drop in the stock market that has been on a tear since March 2009 by as much as 50%. Following this will be an uncoiling release in valuations of intrinsic metals as the populace searches for safe havens for their few existing assets. The larger population will finally recognize that their paper dollars are worthless in most all world economies with the exception of a few. It is just a matter of time before bond markets begin to deflate; rising interest rates will then crush housing valuations and so will continue the failed attempt to re-inflate housing bubble and the saga continues.

I base my prediction on the great economic teacher Nikolai Kondratiev whose economic theory of the early 1900's was the reason he was executed by Stalin's firing squad in 1938. This ordered execution was because Nikolai would not support Stalin's dictate to the world that the U.S.'s capitalist system would collapse as a result of the great depression of 1929.  Kondratiev's theory was suppressed for some 30 years before modern day economists discovered once again what spurs a capitalistic wave to catch on, grow and mature while finally burning out. This theory explains that capitalism naturally goes through a series of upward and downward waves every 60 or so years. In reviewing the history of maritime commerce since 900 A.D. one could count no less than 18 of these K-waves thoroughly examined and graphed. 

Kondratiev's theory explains that capitalism will always go through a depression as a normal part of an international mercantile credit system. The K wave is characterized as seasons: Spring: a new technology or method of production, increasing optimism, rising inflation Summer: peak of acceptance and sales followed by high inflation Autumn: authorities look for a financial fix for inflation, credit boom, false prosperity and security, bubble bursts Winter: production falls, debt becomes unmanageable, commodities deflate resulting in depression,  sense of doom, civil unrest or wars begin

Our U.S economy is currently estimated to be in year 5 of the "winter" of our current economic collapse and potential catastrophic international collapse. According to Kodratiev's theory we should emerge in another 5 years by 2017-2020. Most people can see when things are going well.  Sales are good, people are confident about the future, and unemployment is low.  When sales drop off, the immediate future seems gloomier, and unemployment increases. The Kondratieff wave is a longer version of a business economic fluctuation. Usually a technological innovation starts up this wave followed by expectation and acceptance in the larger world. Due to a K wave approximate 60 year period of time each wave also has some elements of peace time, war time and potential natural disaster or calamity to further affect it unlike a short term business cycle. Our current K wave started in 1949 when WWII soldiers returned home to start families, bought homes and filled them with modern conveniences from washing machines to console television sets. 

Precisely what drives a k-wave has been the subject of considerable dispute however it is usually agreed that a strong need or desire of the populace meets with technological changes which appear to be the main driver to start up such a wave. Credit and banking also play a role due to the fact that growth spurs initiative and risk taking. This encourages investment and lending and then economies expand rapidly. During modern times we have seen more meddling during each phase which appears to create more "unbridled euphoria" with bigger booms and bigger busts "prolonged sense of doom".  Today our cycles are becoming larger, more pronounced and exacerbated by the greed of big banks and the increased manipulation by governments and money printers. Today these K waves are more global than local and increasingly more political than economic. 

It would be logical if our political and economic leaders would accept the lessons of history and realize that based on economic evidence since the collapse of our world banking fiasco in 2007 that things are likely to get much worse before they get better. Such evidence also supports the idea that the U.S. Fed and the Euro ECB instead of prolonging the agony through 5 trillion of credit expansion should liberate the international market and let it do what it has done 18 times before and efficiently reset itself. 

The "TOO BIG TO FAIL" pleading from the banksters, who ultimately dictated that our government act with huge bail out stimulus, has ultimately desecrated the poor and middle class. The legitimate home owner's equity has been robbed through devaluation in the housing markets.  The small businessmen have lost their small market share abroad and stateside and it is predicted that ultimately the masters will implode their own creations with no poor or middle class populace left to peddle their wares to.  World banker's who lack the understanding of Kondratiev's theory are unable to deal with the crisis for what it is, the natural result of technological stagnation.  They jump in, panic and meddle in an attempt to fix it. They have evidently miss-diagnosed our current economic problems as a credit/monetary issue when it is NOT!  The finality of this fiasco will become self evident when both the FED and ECB go bust.  It is not a matter of "if" it will happen but "when" it will happen. When it does implode, with the magician behind the curtains attempt to control and minimize its effects, the catastrophic tsunami will be unimaginable as all countries and people suffer some more than others.  More than likely we can expect another 15 to 25 years of economic malaise because of their attempts to control the house of cards demise instead of the 10 years common after a "winter" begins. 

The only good news is that after the created destruction of the world's economy, a new world currency will be put into place backed by gold, silver or platinum. Everyone will be happy about the next technological boom to "spring" and to bloom. However, only a few will experience the proceeds of the new wave as, most countries will have been transformed into 3rd world countries never to recover.   That is the only good news!  Until then protect your family with precious metals!


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Spot prices accurate as of
Thu Dec 14 10:48:44 PST