Are you prepared for the fierce winter ahead
Nature functions in cycles, each 24 hour period can be divided into smaller cycles of morning, afternoon, evening and night. The whole year can be divided into seasonal cycles. Similarly, one’s life can also be divided into cycles. Cycles are abundant in nature, we just have to spot them, understand them and be prepared for them. Likewise, experts have noticed that the world also follows different cycles. The pioneer in the field was the Russian social economist Nikolai Kondratiev also called as Nikolai Kondratieff, a relatively unknown genius.
Who is Kondratiev
The geniuses defend their principles, even at the price of losing their life, they die but their legacy continues. Kondratiev was one such economist, who laid down his life defending his beliefs. He was the founder director of the Institute of Conjuncture, a famous research institution, in Moscow. He was involved with a five-year plan for the development of agriculture in the Soviet Union from 1923-25. He published his book, The Major Economic Cycles (1925), his policies were in contrast to that of Stalin. Kondratiev was arrested in 1930 and sentenced to a prison sentence, the sentence was reviewed and he was finally executed in 1938. What a shame to lose such a genius at a young age of 42, just because his study proved him right and Stalin wrong. Nonetheless, his legacy lives on and in 1939, Joseph Schumpeter, named the waves as Kondratiev waves also known as K-Waves. What are these waves which took the life of Kondratiev The Investopedia defines the Kondratieff Wave as ‘A long-term cycle present in capitalist economies that represents long-term, high-growth and low-growth economic periods’. The initial study by Kondratiev was based on the European agricultural commodity and copper prices. He noticed this period of evolution and self-correction in the economic activity of the capitalist nations. These waves are long cycles lasting 50-60 years consisting of various phases, which are repetitive in nature. They are divided into four primary cycles 1. Spring- Inflationary growth phase: The first wave starts after a depressed economic state. With growth comes inflation. This phase sees stable prices, stable interest rates and a rising stock market led by strong corporate profits and technological innovations. This phase generally lasts for 25 years. 2. Summer-Stagflation (Recession): This phase witnesses a war such as the War of 1812, the civil war, World War and Vietnam. War leads to a shortage of resources, which leads to rising prices, rising interest rates, higher debt and because of these, profits of the companies suffer. 3. Autumn-Deflationary Growth (Plateau period): After the end of the war, people prefer stability. The economy sees growth in selective sectors, the period also witnesses social and technological innovation. Prices fall, interest rates are low, leading to higher debt and consumption, the profit of the companies rise resulting in strong stock markets. All the excesses end with a major speculative bubble. 4. …show more content…
The criticism of the Kondratiev Waves
No principle in the world is left unchallenged, similarly, there are a few critics of the K-Waves, who consider it useful only for the pre-WW2 era. They believe that the current monetary tools at the disposal of the monetary agencies can alter the performance of the waves. There’s also a difference of opinion on the timing of the start of the waves.
The wave is being pushed ahead but the mood confirms a Kondratiev winter
A closer study reveals that the cycles are being pushed forward temporarily, any intervention in the natural cycle unleashes the wrath of nature, the current phase of economic excess will also end in a similar correction.
The winter started in 2000 preceded by the dot-com bubble. Many point that the stock markets are considerably higher compared to the levels in 2000, where’s the winter? The current stock market rise is fueled by the easy monetary policy of the various Central Banks all over the world. Barring a small period from 2005-2007 when the mood of the public was gung-ho, the whole winter has been spent with people in a depressed mood. The stock market rally from 2009-2015 has been the most hated rallies and the one laden with
Nature functions in cycles, each 24 hour period can be divided into smaller cycles of morning, afternoon, evening and night. The whole year can be divided into seasonal cycles. Similarly, one’s life can also be divided into cycles. Cycles are abundant in nature, we just have to spot them, understand them and be prepared for them. Likewise, experts have noticed that the world also follows different cycles. The pioneer in the field was the Russian social economist Nikolai Kondratiev also called as Nikolai Kondratieff, a relatively unknown genius.
Who is Kondratiev
The geniuses defend their principles, even at the price of losing their life, they die but their legacy continues. Kondratiev was one such economist, who laid down his life defending his beliefs. He was the founder director of the Institute of Conjuncture, a famous research institution, in Moscow. He was involved with a five-year plan for the development of agriculture in the Soviet Union from 1923-25. He published his book, The Major Economic Cycles (1925), his policies were in contrast to that of Stalin. Kondratiev was arrested in 1930 and sentenced to a prison sentence, the sentence was reviewed and he was finally executed in 1938. What a shame to lose such a genius at a young age of 42, just because his study proved him right and Stalin wrong. Nonetheless, his legacy lives on and in 1939, Joseph Schumpeter, named the waves as Kondratiev waves also known as K-Waves. What are these waves which took the life of Kondratiev The Investopedia defines the Kondratieff Wave as ‘A long-term cycle present in capitalist economies that represents long-term, high-growth and low-growth economic periods’. The initial study by Kondratiev was based on the European agricultural commodity and copper prices. He noticed this period of evolution and self-correction in the economic activity of the capitalist nations. These waves are long cycles lasting 50-60 years consisting of various phases, which are repetitive in nature. They are divided into four primary cycles 1. Spring- Inflationary growth phase: The first wave starts after a depressed economic state. With growth comes inflation. This phase sees stable prices, stable interest rates and a rising stock market led by strong corporate profits and technological innovations. This phase generally lasts for 25 years. 2. Summer-Stagflation (Recession): This phase witnesses a war such as the War of 1812, the civil war, World War and Vietnam. War leads to a shortage of resources, which leads to rising prices, rising interest rates, higher debt and because of these, profits of the companies suffer. 3. Autumn-Deflationary Growth (Plateau period): After the end of the war, people prefer stability. The economy sees growth in selective sectors, the period also witnesses social and technological innovation. Prices fall, interest rates are low, leading to higher debt and consumption, the profit of the companies rise resulting in strong stock markets. All the excesses end with a major speculative bubble. 4. …show more content…
The criticism of the Kondratiev Waves
No principle in the world is left unchallenged, similarly, there are a few critics of the K-Waves, who consider it useful only for the pre-WW2 era. They believe that the current monetary tools at the disposal of the monetary agencies can alter the performance of the waves. There’s also a difference of opinion on the timing of the start of the waves.
The wave is being pushed ahead but the mood confirms a Kondratiev winter
A closer study reveals that the cycles are being pushed forward temporarily, any intervention in the natural cycle unleashes the wrath of nature, the current phase of economic excess will also end in a similar correction.
The winter started in 2000 preceded by the dot-com bubble. Many point that the stock markets are considerably higher compared to the levels in 2000, where’s the winter? The current stock market rise is fueled by the easy monetary policy of the various Central Banks all over the world. Barring a small period from 2005-2007 when the mood of the public was gung-ho, the whole winter has been spent with people in a depressed mood. The stock market rally from 2009-2015 has been the most hated rallies and the one laden with