Nature has its own cycles. That is why we have different seasons occurring at a predictable rate. As this is the case with nature, economics is also part of nature. Economics deals with human behavior and we humans are part of nature. So if economics is part of nature, can we predict economic activity? The answer is yes, because most things in nature have a life span. If we can then, we also can see its effect on geopolitical issues by collecting data, using history, and, past economic performance; we can forecast future economic activity. Just as the weather man uses data and pattern to predict if tomorrow is going to rain or snow, some economist can do the same and be able to see if there is a recession/depression or growth in the near future.
In the United States for example depressions tend to occur every eighty years. In the 19th century financial panics occurred frequently and often because life expectancy was low. In the modern economy we have to adjust economic patterns to a higher living standard. In a modern economy like the United States, new generations come along about every 40 years and move up on predictable family cycle of earning, spending, and productivity. These people then do predictable things as they age from entering the work (age 20) to getting married (age 26) to having kids (age 28-29) to buying starter homes (age 31) to second homes (age 37-42) to peaking in spending (ages 46-50), then peaking in saving rates (age 54) and net worth (age 64). Most European and developed countries are peaking in demographic spending trends along with the U.S and that is one reason there is a global down turn. Japan saw its population peak in 1989 and since then the Japanese economy has been in a downward trend.The west and most of Europe saw its demographic peak around late 2007-2008 correlating with the global down turn that we are witnessing today.
The main cycles that are driving 21st century politics are the following.
In the United States for example depressions tend to occur every eighty years. In the 19th century financial panics occurred frequently and often because life expectancy was low. In the modern economy we have to adjust economic patterns to a higher living standard. In a modern economy like the United States, new generations come along about every 40 years and move up on predictable family cycle of earning, spending, and productivity. These people then do predictable things as they age from entering the work (age 20) to getting married (age 26) to having kids (age 28-29) to buying starter homes (age 31) to second homes (age 37-42) to peaking in spending (ages 46-50), then peaking in saving rates (age 54) and net worth (age 64). Most European and developed countries are peaking in demographic spending trends along with the U.S and that is one reason there is a global down turn. Japan saw its population peak in 1989 and since then the Japanese economy has been in a downward trend.The west and most of Europe saw its demographic peak around late 2007-2008 correlating with the global down turn that we are witnessing today.
The main cycles that are driving 21st century politics are the following.
- 250 year Revolutionary cycle
- Geopolitical cycle
- Commodity Cycle
Within a 500 year mega innovation cycles we tend to get two 250- year revolutionary cycles. This cycle creates a new environment for technologies to continue to advance human progress through more advantageous organizations at the broader political and business levels. The following are some examples.
- The protestant revolution in the early to mid 1500's. It promoted work and saving ethics.
- The American, French, and, Industrial revolution. It occurred mid to late 1700's.
- Today we are the early stages of the powerful 500 year cycle. In which we could see the second American Revolution, and, in the emerging world, this should mean the fall of corrupt, dictatorial regimes.
- (1966-1982) unfavorable cycle. Cuban missile crisis, Civil right movement, Vietnam war, JFK and Dr.King assassinated, worst inflation/recession.
- (1983-2000) favorable cycle. Peace and prosperity, soviet collapse.
- (2001-2018) unfavorable cycle. 9-11, Iraq-Afghanistan war, economic collapse, Arab spring, and more chaos to continue till 2018.
Last but not least is the commodity cycle which occurs every 29-30 years. Agricultural products, oil, gold, silver etc.. tend to deflate in prices on a 29-30 year cycle. The following years are years commodity prices peaked and started a downward trend. 1834,1864,1892,1920,1951,1980, and, 2008.Countries that are sensitive to commodity prices and, are dependent on commodity exports might see a continuous political turmoil. Today we see the Middle East, a region that depends on oil exports in a revolutionary path; we can connect this to the three cycles as one of the main reasons as a source of instability. What makes this an exciting decade is also the fact that commodity cycles are topping as well, where by 2012 oil prices could collapse and be below $20 per barrel despite the demand from the emerging world.
According to this cycles, these century should be the time where we can witness a new world order. If the forecast for oil prices do come true I’m afraid we will continue to witness civil unrest in the middle east. Especially countries like Iran, Saudi Arabia and Venezuela, unless they diversify their economics now, we shouldn’t be surprised if their people rise up against their respective governments. To recap we are seeing some fifty million productive citizens retiring in the U.S, therefore saving instead of spending. As well most of Europe and developed countries are peaking demographically. At the same time, in the very near future commodities should deflate in prices. This will directly and indirectly impact commodity sensitive nations. The three cycles are somewhat colliding in which we might experince short term pain, but in the long run we humans will continue to progress and make the world a better place.
