Economic depression cycle 13: 1929-1984?

CIM Bulletin, Vol. 73, No. 824, 1980

E.A. RYCHKUN Manager, Computer Services Placer Development Limited, Vancouver, B.C.

For the last 700 years of recorded economic history, man has been subjected to alternating inflationary and deflationary patterns. Through this period of time, a severe deflationary pattern has developed approximately every 55 years, creating 12 recordable occurrences. Through the last two centuries, this severe deflationary phenomenon has come to be known as a depression. As these depressions have repeated themselves regularly, they are cyclic. This in turn leads to the question of whether the 13th cycle will also repeat itself in the form of a depression. As this cycle is now 51 years old, we must consider the possibility at about 1984.In analyzing a 700-year record of consumer prices in Southern England, the 55-year cycle appears to vary in shape and intensity. This varying phenomenon is due to the effect of longer cycles upon which each one "rides". Because each cycle effectively rides on the next largest, which in turn rides on the next largest and so on, the combined measured effect of all cycles together at any point in time is always unique. This means that any one cycle can never repeat itself in an exact identical manner. The combined effect therefore is what we observe in the form of prices and, as cycles interact, variations in deflation are produced. The "science" of economics attempts to quantify and develop theory on situations which are never identical and hence can be conservatively classified as a useless predictive tool.This means that more unconventional approaches may be required to predict our economic future. In looking at previous depression cycles, it is possible to recognize similarities in human behaviour patterns and hence the resulting economic movements. These behaviour patterns create major events or influencing factors which set the scene for a major deflationary condition. The way in which these factors occur, however, is not predictable. As more and more of these similar events are identified in each cycle, we can increase our confidence on the probability of the last event occurring (a depression). By also unravelling the set of larger cycles, we can determine the potential combined effect at any point in the future. This paper presents a system of cycles ranging from 800 years to 3 years which appear to operate in our economic system. By so doing, a long-term projection into the next century can be made. Finally, the paper deals with the main controlling similarities within the depression cycle, to show that a comparison with our current cycle implies that a major deflationary collapse in the mid 1980's is virtualy inevitable.

Mots Clés: Economics, Mineral economics, Cycles, Depression cycles, Prices, Growth, Decay, Markets, Elliott Wave Theory, Climate.