Tuesday, November 20, 2012

Is USA Doomed to Repeat 1921-1945: Prosperity, Depression, Totalitarianism, World War?

Is the USA Doomed to Repeat 1921-1945: Prosperity, Depression, Totalitarianism, Major War?

In a previous post, we speculated that there is an 84 year cycle which includes an 84 year Major War Cycle.

In 1921 to 1929, we had the Roaring Twenties, a time of great Prosperity.  There was great economic prosperity, the stock market had a large runup, and the 1920s was a decade of increased consumer spending and economic growth.  The Federal Reserve expanded credit, and set rates very low, and more people started buying on margin.

The Roaring Twenties was also a time of new products and technologies including Mass Production and Henry Ford's Model T, and the creation of infrastructure such as highways and expressways, funded by the government.  (Federal Income Taxes were created in 1913).

No one could see what would come on October 29, 1929, Black Tuesday, a Great Stock Market Crash on Wall Street, signalling the beginning of the Great Depression which lasted around 1929 to 1939 (or middle of the 1940s).

During this time of the Great Depression, there was a rise (in Europe) of more Fascist, Totalitarian regimes such as the rise of the Nazi Party in Germany from 1933 to 1945.

And the rise of Nazism helped start World War 2 (from 1938 to 1945).

Is it happening now?

2013 will be the 84th anniversary of Black Tuesday, the Major Market Crash in 1929.  There has been research and observation showing that there is a logical reason for the 84 year cycles, and it has to do with four distinct generations in a major 84 year cycle.

We've had great Prosperity (in the mid 1990s and the early 2000s), which reminds of the Roaring Twenties.

And there are many economic signs pointing to a long term economic stagnation, collapse or depression.   We may not be in the run of the mill downturn.  Demographics are against the U.S. as the Population is Aging, and there are less people to support an ever increasing dependent population, and this aging population has been shown to correlate with the Stock Market's Price to Earnings Multiple.

In addition, since the United States Federal Debt to GDP Ratio is now 100% and growing, there will be a long term debt overhang. There is a study by Carmen Reinhart (Peterson Institute for International Economics, NBER, CEPR), Vincent Reinhart (Morgan Stanley) and Kenneth Rogoff (from Harvard University and NBER) that shows those cases in history where debt to GDP exceeded 90%, experienced suboptimal growth lasting an average of 23 years.

Depressions can lead to Totalitarian Regimes (it may happen in other places such as Europe, which is going through their own economic upheaval including problems in the Eurozone, Spain and GreeceEven France had their credit rating reduced).

Finally, everything can culminate in a major war.

Possible Schedule:

Start Yr End Yr Past Event Start Yr End Yr Event
1921 1929 Roaring Twenties 1995 2013 Prosperity
1929 1939 Great Depression 2013 2023 Depression
1933 1945 Nazism 2017 2029 Totalitarianism
1938 1945 World War 2 2022 2029 Major War

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