If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Devastating For The US

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,

Does the economy move in predictable waves, cycles or patterns?  There are many economists that believe that it does, and if their projections are correct, the rest of this decade is going to be pure hell for the United States.  Many mainstream economists want nothing to do with economic cycle theorists, but it should be noted that economic cycle theories have enabled some analysts to correctly predict the timing of recessions, stock market peaks and stock market crashes over the past couple of decades.  Of course none of the theories discussed below is perfect, but it is very interesting to note that all of them seem to indicate that the U.S. economy is about to enter a major downturn.  So will the period of 2015 to 2020 turn out to be pure hell for the United States?  We will just have to wait and see.

One of the most prominent economic cycle theories is known as "the Kondratieff wave".  It was developed by a Russian economist named Nikolai Kondratiev, and as Wikipedia has noted, his economic theories got him into so much trouble with the Russian government that he was eventually executed because of them...

The Soviet economist Nikolai Kondratiev (also written Kondratieff) was the first to bring these observations to international attention in his book The Major Economic Cycles (1925) alongside other works written in the same decade. Two Dutch economists, Jacob van Gelderen and Samuel de Wolff, had previously argued for the existence of 50 to 60 year cycles in 1913. However, the work of de Wolff and van Gelderen has only recently been translated from Dutch to reach a wider audience.


Kondratiev's ideas were not supported by the Soviet government. Subsequently he was sent to the gulag and was executed in 1938.


In 1939, Joseph Schumpeter suggested naming the cycles "Kondratieff waves" in his honor.

In recent years, there has been a resurgence of interest in the Kondratieff wave.  The following is an excerpt from an article by Christopher Quigley that discussed how this theory works...

Kondratiev's analysis described how international capitalism had gone through many such "great depressions" and as such were a normal part of the international mercantile credit system. The long term business cycles that he identified through meticulous research are now called "Kondratieff" cycles or "K" waves.


The K wave is a 60 year cycle (+/- a year or so) with internal phases that are sometimes characterized as seasons: spring, summer, autumn and winter:

  • Spring phase: a new factor of production, good economic times, rising inflation
  • Summer: hubristic 'peak' war followed by societal doubts and double digit inflation
  • Autumn: the financial fix of inflation leads to a credit boom which creates a false plateau of prosperity that ends in a speculative bubble
  • Winter: excess capacity worked off by massive debt repudiation, commodity deflation & economic depression. A 'trough' war breaks psychology of doom.

Increasingly economic academia has come to realize the brilliant insight of Nikolai Kondratiev and accordingly there have been many reports, articles, theses and books written on the subject of this "cyclical" phenomenon. An influential essay, written by Professor W. Thompson of Indiana University, has indicated that K waves have influenced world technological development since the 900's. His thesis states that "modern" economic development commenced in 930AD in the Sung province of China and he propounds that since this date there have been 18 K waves lasting on average 60 years.

So what does the Kondratieff wave theory suggest is coming next for us?

Well, according to work done by Professor W. Thompson of Indiana University, we are heading into an economic depression that should last until about the year 2020...

Based on Professor Thompson's analysis long K cycles have nearly a thousand years of supporting evidence. If we accept the fact that most winters in K cycles last 20 years (as outlined in the chart above) this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000. Thus in all probability we will be moving from a "recession" to a "depression" phase in the cycle about the year 2013 and it should last until approximately 2017-2020.

But of course the Kondratieff wave is far from the only economic cycle theory that indicates that we are heading for an economic depression.

The economic cycle theories of author Harry Dent also predict that we are on the verge of massive economic problems.  He mainly focuses on demographics, and the fact that our population is rapidly getting older is a major issue for him.  The following is an excerpt from a Business Insider article that summarizes the major points that Dent makes in his new book...

  • Young people cause inflation because they "cost everything and produce nothing." But young people eventually "begin to pay off when they enter the workforce and become productive new workers (supply) and higher-spending consumers (demand)."
  • Unfortunately, the U.S. reached its demographic "peak spending" from 2003-2007 and is headed for the "demographic cliff." Germany, England, Switzerland are all headed there too. Then China will be the first emerging market to fall off the cliff, albeit in a few decades. The world is getting older.
  • The U.S. stock market will crash. "Our best long-term and intermediate cycles suggest another slowdown and stock crash accelerating between very early 2014 and early 2015, and possibly lasting well into 2015 or even 2016. The worst economic trends due to demographics will hit between 2014 and 2019. The U.S. economy is likely to suffer a minor or major crash by early 2015 and another between late 2017 and late 2019 or early 2020 at the latest."
  • "The everyday consumer never came out of the last recession." The rich are the ones feeling great and spending money, as asset prices (not wages) are aided by monetary stimulus.
  • The U.S. and Europe are headed in the same direction as Japan, a country still in a "coma economy precisely because it never let its debt bubble deleverage," Dent argues. "The only way we will not follow in Japan's footsteps is if the Federal Reserve stops printing new money."
  • "The reality is stark, when dyers start to outweigh buyers, the market changes." It all comes down to an aging population, Dent writes. "Fewer spenders, borrowers, and investors will be around to participate in the next boom."
  • The U.S. has a crazy amount of debt and "economists and politicians have acted like we can just wave a magic wand of endless monetary injections and bailouts and get over what they see as a short-term crisis." But the problem, Dent says, is long-term and structural — demographics.
  • Businesses can "dominate the years to come" by focusing on cash and cash flow, being "lean and mean," deferring major capital expenditures, selling nonstrategic real estate, and firing weak employees now.
  • The big four challenges in the years ahead will be 1) private and public debt 2) health care and retirement entitlements 3) authoritarian governance around the globe and 4) environmental pollution that threatens the global economy.

According to Dent, "You need to prepare for that crisis, which will occur between 2014 and 2023, with the worst likely starting in 2014 and continuing off and on into late 2019."

So just like the Kondratieff wave, Dent's work indicates that we are going to experience a major economic crisis by the end of this decade.

Another economic cycle theory that people are paying more attention to these days is the relationship between sun spot cycles and the stock market.  It turns out that market peaks often line up very closely with peaks in sun spot activity.  This is a theory that was first popularized by an English economist named William Stanley Jevons.

Sun spot activity appears to have peaked in early 2014 and is projected to decline for the rest of the decade.  If historical trends hold up, that is a very troubling sign for the stock market.

And of course there are many, many other economic cycle theories that seem to indicate that trouble is ahead for the United States as well.  The following is a summary of some of them from an article by GE Christenson and Taki Tsaklanos...

Charles Nenner Research (source)
Stocks should peak in mid-2013 and fall until about 2020. Similarly, bonds should peak in the summer of 2013 and fall thereafter for 20 years. He bases his conclusions entirely on cycle research. He expects the Dow to fall to around 5,000 by 2018 – 2020.


Kress Cycles (Clif Droke) (source)
The major 120 year cycle plus all minor cycles trend down into late 2014. The stock market should decline hard into late 2014.


Elliott Wave (Robert Prechter) (source)
He believes that the stock market has peaked and has entered a generational bear-market. He anticipates a crash low in the market around 2016 – 2017.


Market Energy Waves (source)
He sees a 36 year cycle in stock markets that is peaking in mid-2013 and will cycle down for 2013 – 2016. “… the controlling energy wave is scheduled to flip back to negative on July 19 of this year.” Equity markets should drop 25 – 50%.


Armstrong Economics (source)
His economic confidence model projects a peak in confidence in August 2013, a bottom in September 2014, and another peak in October 2015. The decline into January 2020 should be severe. He expects a world-wide crash and contraction in economies from 2015 – 2020.


Cycles per Charles Hugh Smith (source)
He discusses four long-term cycles that bottom in the 2010 – 2020 period. They are: Credit expansion/contraction cycle, Price inflation/wage cycle, Generational cycle, and Peak oil extraction cycle.

So does history repeat itself?

Well, it should be disconcerting to a lot of people that 2014 is turning out to be eerily similar to 2007.  But we never learned the lessons that we should have learned from the last major economic crisis, and most Americans are way too apathetic to notice that we are making many of the very same mistakes all over again.

And in recent months there have been a whole host of indications that the next major economic downturn is just around the corner.  For example, just this week we learned that manufacturing job openings have declined for four months in a row.  For many more indicators like this, please see my previous article entitled "17 Facts To Show To Anyone That Believes That The U.S. Economy Is Just Fine".

Let's hope that all of the economic cycle theories discussed above are wrong this time, but we would be quite foolish to ignore their warnings.

Everything indicates that a great economic storm is rapidly approaching, and we should use this time of relative calm to get prepared while we still can.

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Fidel Sarcastro's picture

Elliot Wave & Prechter?  Gimme a f*cking break!

localsavage's picture

Wait...we can't just keep printing our way to sucess?

chumbawamba's picture

Predictable in the broadest sense, yes (it will go up and then go down, rinse, repeat).  Cyclical?  Of course.  All is cyclical.  That is Reality 101.

I am Chumbawamba.

chumbawamba's picture

Follow the 70 year cycle of international bankruptcy:

1789 Ratification of U.S. Constitution + 70 =

1859 Beginning of U.S. War Between the States + 70 =

1929 Beginning of U.S. Great Depression + 70 =

1999 Beginning of U.S. Dollar Destruction

= Cyclical by Design.

I am Chumbawamba.

chumbawamba's picture

It's silly to believe there is but one cycle upon which the economy rides, when in fact there are multiple and numerous cycles, and of course cycles within cycles, which all combine to make those squiggly lines you see on the charts.

What ISN'T cyclical around you?  Day & night, awake and asleep, inhale and exhale, etc.



NoDebt's picture

"If we accept the fact that most winters in K cycles last 20 years (as outlined in the chart above) this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000."

Wait, so this is the "depression"?  Shit, this ain't so bad.  Markets keep going up, poor people still doing.... whatever it is that poor people do.

Hell, I thought this was as good as it gets, all downhill from here.  So you mean it gets BETTER than this?  SIGN ME THE FUCK UP!  I am totally buying this guy's newsletter or whatever he's hawking.  I need a quarterly pep talk.

Mistress Raindrop's picture

Sometimes I feel like Linus in the pumpking patch.  When will the big ball drop?

centerline's picture

lol.  Sort of feels the same as the Elliot Wave folks claim the "big one" was upon us... the mother of all primary waves down into the abyss.  Oops...

Timing is motherfucker.

New Ordnance's picture

The Bard reminds:

“There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.”


knukles's picture

The greatest cyclical transition has been from "It's Bush's fault" to "It's Weather's fault"
Now how fucked does that tell us we are?

Dick Buttkiss's picture


The universe doesn't seem to be — http://en.wikipedia.org/wiki/Metric_expansion_of_space — and instead seems to have expanded exponentially for nearly 14 billion years now, with no end in sight.

As for the so-called "business cycle," there is no such thing.  Rather, there is simply a boom-bust cycle due to relentless state intervention in a would-be free market.

The universe and the free market are expansionary, in other words, because they are natural processes.  

The state is not.

It can therefore kiss my oh-so-natural ass.


James_Cole's picture

The universe and the free market are expansionary, in other words, because they are natural processes.  

Fun fact, the universe we exist in is the product of the mother of all inflations. 

Dick Buttkiss's picture

Yes, and while it was created out of nothing, the result is the very definition of reality, as opposed to the flight from it that the state's creation of money out of nothing represents.

FutureShock's picture

Very true however now we have much larger structural problems that time was supposed to help fix but clearly is not.  When the structure and foundation is a bad as it is and getting worse cycles will not matter so much. Case in point Japan. 

Geronimo66's picture

Money is the ultimate designer drug:P

I am not cyclical cynical...


sidiji's picture

ZH late to party as usual..2015-2020 already happened, it was called 2007-2014

Colonel Klink's picture

If at first you don't succeed, keep on sucking until you do suck seed.

Fox Moulder's picture

Elliot Wave & Prechter?  Gimme a f*cking break!


Hasn't he predicted 12 of the last two market crashes?

jenniewadeguy's picture

Amen, brother.  Prechter is beyond laughingstock by now.  And, Dent has yet to be accurate.  Harry keeps pushing out his dates, and has been for years.  Let's call him on it.  "Hey, Harry, what gives with these constantly rolling range predictions of yours?"

Slave's picture

Yep, this is bullish.

OC Sure's picture




"There are many economists that believe that..."

We understand in order to believe, not vice versa. 


"...all of them seem to indicate that the U.S. economy is about to enter a major downturn."

This is no surprise since tyranny is rapidly accelerating.

As tyranny increases economic production decreases.

blindfaith's picture

People get used to 'things' and adapt without realizing it.

Like traffic on the freeway, you get used to it until a truck hits you because you were texting and not paying attention to what is around you.

OC Sure's picture

If by things you mean the lies they are harrangued with daily which grow louder and louder, then yes they do get used to them however their acceptance is more submission than adaptation.

When facts change, rational people change to adjust themselves to the facts and do not expect the facts ever to adjust to them. When innocent people who are rational too but lack the perspicacity to identify what is true and what is false are lied to they obey their "authorities" and submit unwittingly. They are duped, hoodwinked, bamboozled, etc.

This lying that we see everyday has the sole purpose of being verbal sedation as the means to make the mind numb and the body succumb. I call the verbal sedation Terms of Tyranny. The conscientious observer should detect them and reject them. Here are just a few with the lie as the subject and the truth as the predicate.

Terms of Tyranny:

It is not a Democracy but a Tyranny.

It is not Inflation but theft.

It is not Deflation but replenishment.

It is not  a lack of Labor Particiption but unemployment.


 By accepting Tyranny's terms they control or bodies by confusing our minds.

CaptainSpaulding's picture

Thank god i will be going away.

djsmps's picture

After years of watching this site, I know that the catastrophe will always happen next year.

Seasmoke's picture

The sign on the wall says. FREE BEER TOMORROW.

jenniewadeguy's picture

Free Beer was the name of a college band at Ohio University in the mid eighties.  They advertised their participation in college gigs on posted signs simply as "Free Beer".  And, damn, they really packed the events with people!

GoldieOne's picture

Agreed. Armageddon is coming next quarter!

willwork4food's picture

wait..did someone say free beer tomorrow?

knukles's picture

My doctor told me to tell myself every day that tomorrow I'll go to they gym and work out.

centerline's picture

end of the world happens when the beer runs out.

Oldwood's picture

My dad was born in 1919. After watching our government in action for his entire life, he never thought it would last. He saw nothing but corruption and collusion and massive fraud and rightly believed it would collapse. He just didn't know when...and we still don't. But you can believe it will go on forever as that is EXACTLY what they are depending on.

CrazyCooter's picture

When anyone with an ounce of gumption looks down the line 200 years, it's hard to not be long plow mules, outdooor shitters, and perseverance.

Unless population gets real small, real smart, and stays that way.



Freedumb's picture

With a real small and real smart population we're just going to end up living like the people in "Zardoz"


RaceToTheBottom's picture

So basically waiting a lifetime for it to fail is data that it will fail?

But I have to say that they are some extremely lucky magicians to have kept this POS together this long.

Bullish on Duct Tape.

centerline's picture

Like Chumba points out above, the timelines for significant change are very long.  I would wager the one we are watching peak right now is much, much longer than even 70 years.  Centuries perhaps for a convergence of numerous cycles (perfect storm sort of thing).  Shit, even ice ages are cyclical (something like 10,000 years or so if I recall correctly).

Sounds like your Dad was a smart man.

Oldwood's picture

He was a rational man who never made more than $7/hr and had a seventh grade education....but he could see reality. He watched as FDR shat money at worthless projects paying people to do little or nothing productive. He saw the growth in government and the corruption that surrounded it. It has always been obvious to anyone who wanted to see it. He didn't need the internet or Drudge. He could see it on the streets and the local paper. From his prospective it did not take a genius or economist to understand that wealth and prosperity only come from productivity. Banks and stock markets and government do not produce, they eat. They skim off the top and as the game became more corrupt, more and more have crowded into this skimming operation. Its eating more and more and will not go on forever.

He had a corny joke about a farmer who pursued a profitable plan of feeding his cattle sawdust as a cheaper alternative to corn. He continued to up the percentage of sawdust mixed into the feed, amazed that he was noticing hardly any negative effects. Until one day he goes out to check on his cattle only to discover them all dead and instantly goes into a rant as he just can't understand why, just when he gets them on 100% sawdust, they up and die. This is our world. they continue to layer more and more theft and tyranny upon our backs and we continue on. They believe that there are those ignorant and flawed individuals who suffer the illness of greed so deeply that they will continue to struggle to profit even when taxed 100% while enduring every law and regulation imaginable. They will not be satisfied with simply taking their wealth and liberties, but will also demean and insult them. At some point we cattle will simply lie down and there will be no one more shocked and surprised than those who have sought to oppress the productive class of the world.

They will never see it coming...but it is coming.

centerline's picture

Funny thing is that as I get older, the more I see the "basics" asserting themselves.  What appears wrong is usually wrong.  What is not sustainable does not get sustained.  And so forth.  On that note, just from a rational perspective, we are no doubt on a trajectory for a catestrophic event.  And the parasites who are trying to hold onto power and wealth will start operating on shorter and shorter timeframes as they get more and more desperate to keep the proverbial ship from sinking.  Seems to me history is pretty clear about all this.  And I too don't think one needs a Harvard education or silver spoon in one's mouth to read those tea leaves.


Yohimbo's picture

ok so in order for it all to end all the sheep have to die. 


yep that figures. 

Thorny Xi's picture

My old man was born in 1901 in Germany.  Got his PhD in economics at Heidelberg after lving through WW1, came to the US in 1923 during the Weimar inflation. Lived through the depression here, and WW2, through the 70's oil crunches.  Always said things ended up right where we are now, the power and ease of inflation was too attractive to central bankers.  Next?  War.  The only way credit is cleared on these scales.

djsmps's picture

My dad was born two years earlier. He was a career, decorated Naval,officer. I think he started questioning it in the 1960's.

August's picture

Well, my Grand-Dad was born in 1889, moved to the USA in 1912; and said that each and every year life in the USA got a little bit worse....  Silly old man.

Radical Marijuana's picture

It depends who you are and where you live, djsmps. For many people catastrophe has already happened.

daveO's picture

It's coming between now and 2020?! Where were they 5 years ago? The best part of the article is this:

  • The U.S. and Europe are headed in the same direction as Japan, a country still in a "coma economy precisely because it never let its debt bubble deleverage," Dent argues. "The only way we will not follow in Japan's footsteps is if the Federal Reserve stops printing new money.

The crash won't happen on Wall Street thanks to the FED. 

Relentless101's picture

Haha. S&P hits 10,000 today as the unemployment rate also reaches an all time high. We have Mike Hunt here who is managing director of Anal Rape Capital Management and he is going to tell us why this is bullish for stocks.

CrazyCooter's picture

Presupposition: nominal == real.




centerline's picture

It probably won't actually.  Everything around it will fail first.  The giant sucking sound as capital flees Wall Street is probably one of the last things to occur as the US as we know it goes nipples up (taking all the pensions, savings, SNAP system, you name it, with it).