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Cycle
by David McMinn
Ed. N.: The 3 papers gathered together here are 3 original articles
concerning the hypothetical value of the 56 Year Cycle in Astro
Economics. David McMinn completed a Bachelor of Science degree from
the University of Melbourne in 1971 and subsequently gained employment
as a Minerals Economist in ANZ Banking Group Ltd. Since leaving this
position in 1982, he has been conducting private research on the business
cycle, the end result being the publication of numerous papers and the
book Financial Crises & The 56 Year Cycle. I thank David for his
participation to C.U.R.A. A background of his theory can be found on his
own web site The 56 Year Cycle
Contents
Financial Crises & The Number 56
The Sun, The Moon & The Number 56
Business Cycles & The Number 56
crises in a particular sequence. Even so, the 56 year cycle can assist in
forecasting major turns for the worse in financial trends.
Cycle theorists assume a fairly regular repetition of crises every so many
years. The concept of numerous sub-cycles lasting for several decades and
operating simultaneously is alien to cycle paradigms. Even the 56 year
sequences, which may persist for centuries, should fade out over very long
time frames. Important crisis events may also skip a beat in a particular
sequence, only to reappear 112 years later and the whole cycle must
change progressively never repeating itself exactly. The 56 year panic
cycle only came to the attention of the author after studying the obscure
work of J M Funk, who privately published his findings in 1932.
1985
SEQUENCE 21
1781
1949
US recession.
SEQUENCE 41
1801
1969
1969-70 US recession.
1763
War.
1819
1875
1765
1821
No crisis.
1933
SEQUENCE 09
1881
1937
US crisis (Autumn).
1993
SEQUENCE 12
1828
1884
1940
1996
No crisis.
SEQUENCE 32
1848
1960
No crisis.
SEQUENCE 48
1808
1920
1976
No crisis.
SEQUENCE 50
1810
1922
No crisis.
1978
No crisis.
SEQUENCE 52
1812
No crisis.
1868
1924
Within the 56 year sequences, crises often take place in approximately the
same month of the year. The crisis month is given wherever possible in the
text.
Seq 05 -
Seq 09 - 1713 (England - Jan - April 1714), 1769 (France February 1770), 1825 (England - December), 1881 (France January 1882). 1993 (USA - February 1994)
Seq 21 -
Seq 48 -
Insufficient data.
Seq 50 -
No Trend.
Seq 52 -
No trend.
1976
1985
1989
1993
fell in 56 year cycle patterns. The next principal 56 year cycle does not
threaten until 2005 (Seq 21).
Difficulties arise in using the 56 year cycle as a forecasting tool. This
complex cycle must change progressively over time and never repeat itself
exactly. It is not possible to extrapolate numerologically into the future
with great precision. Improved financial prognoses may only be achieved
through better understanding of the Sun - Moon mechanisms precipitating
this cycle. Thus, accurate predictions - the Holy Grail of financial
forecasting - could theoretically be achieved years in advance.
TABLE 1
Series 1
Sq 05
1765
1821
1877
1933
1989
+ 36
+ 36
+ 36
+ 36
Sq 41
Sq 03
1801
1857
1913
1969
1763
1819
1875
1931
1987
+ 18
+ 18
+ 18
+ 18
Sq 21
+ 18
+ 18
+ 18
+ 18
Series 2
1781
1837
1893
1949
+ 36
+ 36
+ 36
+ 36
Sq 01
1761
1817
1873
1929
1985
Sq 52
Sq 32
1792
1812 + 36 1848
1868 + 36 1904
1924 + 36 1960
1980
Sq 50
+ 18
+ 18
+ 18
+ 18
1810
1866
1922
1978
+ 18
+ 18
+ 18
+ 18
Sq 12
1772
1828
1884
1940
1996
+ 36
+ 36
+ 36
+ 36
Sq 48
1808
1864
1920
1976
Sq
41
Sq
50
1792
1848
1904
1960
1801
1857
1913
1969
1810
1866
1922
1978
Sq
03
1763
1819
1875
1931
1987
Sq
12
1772
1828
1884
1940
1996
Sq
21
1781
1837
1893
1949
Artifact Sub-Cycles
In the 56 year panic cycle, the key sub-cycles are based on multiples of 9
years, which can be directly related to the causal principles involved,
namely Sun - Moon cycles. However, numerous other patterns can be
generated from the 9, 18, 36, 54 year sub-cycles and occur on the
diagonals of the patterns in Tables 1 & 2. Because they are derived from
sub-cycles in multiples of 9 years, they have been described as 'artifact'
sub-cycles. The following only discusses the 20 year sub-cycles, which are
the most obvious sub-cycles in economic history and were first
commented upon by Funk (1932).
20 year sub-cycles are to be found between his Sequences 01, 21, 41 on
the diagonals of the 36 year sub-cycles.
36 ysc Series 1
Sq 05 Sq 41 Sq 21 Sq 01
1709
1765
1821
1877
1933
1989
1745
1801
1857
1913
1969
1781
1837
1893
1949
1817
1873
1929
1985
1873
1893
1913
1933
1953
1973
1993
US panic (May).
1913-14 US & European crises.
US banking crisis (March).
US 'disturbance' (March).
US$ crisis. OPEC oil crisis.
US bond market collapse (February 1994).
Another key artifact 20 year sub-cycle from the 36 year sub-cycles Series
2 has been underlined as follows:
36 ysc Series 2
Sq 52 Sq 32 Sq 12 Sq 48
1812
1868
1924
1980
1792
1848
1904
1960
Seq 48
Seq 12
Seq 32
Seq 52
1828
1884
1940
1864
1920
1976
Sq
48
50
01
03, 05
Crisis
Panic & post war depression.
Crisis (April).
Lifting of gold embargo at old parity (January 1930).
Showa Depression. Embargo on gold re-imposed Dec
21
52
05
Depression.
1979-80 Second oil shock.
Share market collapse (January 1990). After Heisei
Several other notable crises do not fall in patterns of the 36 year subcycles.
1900-01 28-29 Panic.
1923
51
Crisis. Tokyo earthquake (September).
1927
55
1974
46
1997-98 13-14
Conclusions
What can be stated with a high degree of confidence is that major US and
Western European financial crises happen preferentially in patterns of the
56 year cycle. The 56 year cycle is precise with the crisis month occurring
within the crisis year (ie: March of the sequence year through to the
following February) and often around the same month of the year within a
given sequence. The 56 year cycle is extremely complex as numerous
integral numbers (based on the solar year) may be given significance.
There are the 56 year sequences, the 9 year sub-cycles (9, 18, 36, 54 years)
and many artifact sub-cycles (eg: 20 years). The sub-cycles: 1) are only
relevant for a certain period in financial activity and then fade out. 2)
function simultaneously helping to account for the complexity prevailing
in financial patterns. Even so the most relevant sub-cycles are those in
multiples of 9 years, which may be linked intimately with Sun - Moon
cycles. The sub-cycles last for relatively short periods, where as the 56
year sequences may endure for several centuries.
The obvious question arises as to the mechanism precipitating this very
enduring cycle of financial distress. After much research the 56 year cycle
was found to correlate very closely with cycles of the Sun and Moon, a
finding covered in the ensuing paper The Sun, The Moon and The Number
56. Greater understanding of the relationships between lunisolar cycles
and the timing of financial crises offers the potential to boost the accuracy
of the forecasts derived from the 56 year cycle. At present such forecasts
are totally dependent upon numerological analysis and extrapolations from
historical precedent. Both these approaches are primitive and leave a lot to
be desired in their predictability. Even so, the 56 year cycle has persisted
since at least 1760, despite radical changes in technology, per capita
income and economic sophistication. Remarkably, the 56 year panic cycle
retained predictability into the late 20th century. How well this accuracy is
maintained into the 21st century remains to be seen.
References
Sobel, Robert. The Big Board: A History of The New York Stock
Market. Free Press. 1965.
APPENDIX 1
MAJOR US & WN EUROPEAN FINANCIAL CRISES POST 1760 KINDLEBERGER (Appendix B, 1996).
1763
Amsterdam. SP - January 1763. C - September 1763. End of
Seven Years' War.
1772
England & Amsterdam. SP - June 1772. C - January 1773.
1793
England. SP - November 1792. C - February 1793. After canal
mania.
1797
England. SP - 1796. C - February-June 1797.
1799
Hamburg. SP - 1799. C - August-November 1799.
1810
England. SP - 1809. C - January 1811.
1815-16 England. SP - 1815. C - 1816.
1819
USA. SP - August 1818. C - November 1818-June 1819.
England. SP - December 1818. C - None.
1825
England. SP - Early 1825. C - December 1825.
1828
France. SP - MNG. C - December 1827.
1836
England. SP - April 1836. C - December 1836.
1837
USA. SP - November 1836. C - September (error - May correct
?).
1838
France. SP - November 1836. C - June 1838.
1847
England. SP - January 1847. C - October. After railway mania.
1848
France. SP - March - April 1848. C - March 1848.
1857
USA. SP - Late 1856. C - August 1857.
England. SP - Late 1856. SP - October 1857.
Continent. SP - March 1857. C - November 1857.
1864
France. SP - 1863. C - January 1864.
1866
England/Italy. SP - July 1865. C - May 1866
1873
Germany/Austria. SP - Fall 1872, C - May 1873.
USA. SP - March 1873. C - September 1873.
1882
France. SP - December 1881, C - January 1882. Union Generale
failure.
1890
England. SP - August 1890. C - November 1890. Baring Crisis.
1893
USA. SP - December 1892. C - May 1893.
1907
USA. SP - Early 1907. C - October 1907.
France/Italy. SP - March 1906. C - August 1907.
1920-21 USA/ UK. SP - Summer 1920. C - Spring 1921.
1929
USA. SP - September. C - October 29. Black Tuesday.
1931-33 1931 Austria. C - May. Germany. C - June. UK. C - September.
1933
USA. C - March. Bank holiday.
1950's
Currency speculations: France 1958, Canada 1962, Italy 1963,
1960's
Britain 1964, France 1968, US$ 1973.
1974-75 Worldwide. SP - 1973. C - 1974.
1979-82 USA crises: SP - 1979. Farmland (C - 1979), US$ (C - 1979),
Oil (C - 1980).
Third world debt (C - 1982).
1982-87 USA crises: US$ (SP - 1985), Real Estate (SP - 1987), Stocks
(SP - 1987, C - October 1987*),
* Crisis given as a range 1987-92. Only the 1987 panic could be regarded
as a major crisis.
Excludes the Japanese crises of December 1931 (Seq 03) and January
1990 (Seq 05), as well as the Australian banking crisis of May 1893 (Seq
21).
Abbreviations: SP- Speculative peak. C- Crisis/Panic. MNG- Month not
given.
The Earth bulges slightly around the equator with the distance between the
centre and equator being 0.3 per cent greater than the distance from the
centre to the poles. The plane of the equatorial bulge is tilted in relation to
the ecliptic by 23.5 degrees (called the obliquity). Both the Sun and Moon
gravitationally pull on the Earth's equatorial bulge. The Moon tugs at this
bulge to ally with the Moon's orbital plane, while the Sun pulls it to align
with the ecliptic. The combined effect is to try to decrease the angle
between the Earth's equatorial plane and the ecliptic, but the Earth resists
such forces as it rotates with angular momentum. These competing forces
result in the Earth's spin axis describing a double conical motion (one each
for the north and south poles) around the perpendicular (90 A) to the
ecliptic. The overall impact gives rise to two important astronomical
phenomena.
Precession of the Equinoxes. The equinox points rotate retrograde
(clockwise) very slowly against the background of fixed stars completing
a cycle about every 25,800 years. Around 200 BCE, the spring equinox
point (0 E) was sited in the constellation Aries, but now it is in the early
part of the constellation Aquarius. The orientation of the north pole also
changes very slowly in relation to the background of fixed stars. Currently
the north pole points to Polaris (or Pole Star), but in around 12,000 years
the brilliant star Vega will be the new pole star. The precessional
movement is not perfectly regular because the Sun and Moon
gravitationally pull in different planes and their positions constantly
change in relation to each other and the Earth.
The Nutation Cycle is caused by a very slight elliptical nodding of the
Earth's axis, which is superimposed on the precessional motion due to the
pull of the Moon on the Earth. Thus the double cone described previously
is in fact a corrugated or wavy cone. This nodding shows up as the north
node's retrograde (clockwise) movement around the ecliptic circle, taking
18.6133 tropical years to complete one cycle of the ecliptic circle from
spring equinox to spring equinox.
A number of other Sun - Moon cycles are crucial in financial trends and
arise in the ecliptical and angular circles.
Ecliptical Circle is the basis of three key lunisolar cycles. Positions of the
Sun, Moon and lunar nodes are given as ecliptical longitudinal degrees,
which are equivalent to angles to the spring equinox point (0 E).
Tropical Year (or Solar Year) equals 365.2422 days and is the time taken
for the Sun to complete one cycle of the ecliptic circle from spring
equinox to spring equinox.
Tropical Month is the time taken for the Moon to complete one 360 degree
cycle of the ecliptic circle from spring equinox to spring equinox and is
equal to 27.3216 days.
Nutation Cycle shows up as the Moon's north node retrograde (clockwise)
movement around the ecliptic circle, taking 18.6133 tropical years to
complete one cycle.
Angular Circle. This gives the respective angles between the Sun, Moon
and Moon's north node - denoted by A:
Nodical Year (or Eclipse Year) equals 346.6200 days and is the time taken
for the Sun to complete one cycle lunar north node to lunar north node.
Eclipse year is the astronomically correct term for this cycle, but nodical
year has been used in the text because it is more descriptive.
Nodical Month (or Draconic Month) is the time taken for the Moon to
complete one cycle lunar north node to north node and is equal to 27.2122
days.
Synodic Month (or Lunar Month) is the time taken for the Moon to
complete one cycle new Moon to new Moon and equals 29.5306 days. It is
based on the angle between the Sun and Moon as viewed from Earth.
Saros Cycle. Every 223 synodic months (one Saros cycle), the Sun, Moon
and the Moon's nodes align in the same relative angles to each other to
within a fraction of a degree. The Saros (18.0 tropical years) divided by
two gives the Half Saros Cycle. Every 9.0 tropical years, the Moon forms
the same relative angle to the lunar north node, with the Sun 180 degrees
on the opposite side of the ecliptic circle (see Appendix 1).
56 Year Cycle. On the same date every 56 tropical years, the ecliptical
position of the lunar north node moves only 3 E clockwise (eg as on July
1: 1761 - NN at 48 E; 1817 - 45 E; 1873 - 42 E; 1929 - 39 E; 1985 36 E). Furthermore, every 56.0 tropical years, the Sun's relative position
forms the same angle to the north lunar with the Moon 180 degrees on the
opposite side of the ecliptic circle. The two cycles of 9.0 (half Saros) and
56.0 tropical years result in alternating solar/lunar eclipses and full/new
moons every 111.5 and 692.5 synodic months respectively (see Appendix
1).
The 9 and 56 year cycles are based on the angles 0 and 180 degrees
between the Sun, Moon and lunar nodes and repeat to within one degree.
Additionally, all lunisolar cycles in Appendix 1 are in integral and half
integral numbers, apart from the solar day.
The very close alignment of Sun - Moon cycles at the Saros and the 56
year cycle could not arise, if the radii of either the Earth - Sun or Earth Moon orbits varied slightly from their current mean values. Tidal force is
strongly determined by distance between the bodies involved. This implies
that tidal effects between the Sun, Earth and Moon play a key role in
influencing cycles of financial upheavals.
The reasons for the importance of 0/180 degree angles in the Saros and 56
year cycle remain unresolved, although it would indicate that the 1st and
2nd harmonics are crucial in understanding how the cycle actually
functions.
The Sun, Moon & Lunar Nodes
Nutation Cycle. The ecliptical position of the north node on a particular
date correlated perfectly with the 9/36 year sub-cycles. On July 1 for ALL
years in the 36 year sub-cycles Series 1, the north node was always sited
between 328 and 58 E, while for ALL years in Series 2, the north node
appeared between 142 and 231 E (see Diagram 1). For such patterns to
occur by chance would be infinitely small. One would expect an even
ecliptical distribution of the north node, if there was no relationship with
sub-cycles based on multiples of 9 years.
For the 1755-1940 period, the placement of the north node can be strongly
correlated with the timing of Kindleberger's 30 major crises (see Diagram
2).
* 24 crises had the north node in the two quarter segments diagonally
opposite in the ecliptic circle - 0 - 90 E and 180 - 270 E (Significant p <
.001).
* 17 crises were located with the north node in two diagonally opposite 45
degree segments - 0 - 45 E and 180 - 225 E. (Significant p < .001).
* No crises were evident when the north node was sited between 255 and
335 E; a segment of 80 degrees (Significant p < .01).
For Kindleberger's 42 major crisis years (1760-1987), significance could
still be repeated for the north node in these ecliptical segments discussed
previously, but at a lower level (down to p < .05). In this analysis, one
would expect an even distribution of the north node on the ecliptic if only
chance factors were operating.
Ecliptical position of mean north node at the time of major crises listed by Kindleberger
(1996) for the period 1755-1940. For years with no given month, the north node is taken
as occurring on July 1. For crises given as multiple months, the north node is timed mid
way between the first and last crisis month given.
The concentration of the north node in the segments 0 - 45 E & 180 - 225
E for the timing of major financial crisis is probably linked with the
equinox points 0 E/180 E, where the celestial equator intersects the
ecliptic. As the Moon's nodes move retrograde (clockwise) around the
ecliptic, major financial crises are most likely to happen in the few years
prior to the lunar nodes reaching the equinoxes.
Sun's Ecliptical Position is hypothesised to have an impact upon
financial activity. There is evidence to support this proposal. The greatest
one day falls in the Dow Jones Industrial Average (DJIA) and Financial
Times 30 (FT-30) are most likely to be recorded when the Sun was in the
180 - 240 E segment (ie: after the Sun has passed the 180 E equinox).
DJIA 50 falls 1915-70
DJIA 50 falls 1943-98
For the DJIA, the biggest one day rises were also most likely to happen
when the Sun was in the crucial 180 - 240 E segment.
DJIA 50 rises 1915-70
DJIA 50 rises 1943-98
October/November are the featured months when both the biggest one day
rises and falls are most likely to be experienced. No seasonal factors are
known which could account for this very persistent correlation.
The September Effect. The average return on shares around the world
during September is negative, even after dividends are reinvested (The
Economist, 1995). (During September the Sun moves through the 158 to
186 E segment or in other words around the 180 E equinox point.) This
finding was made in a study by Professor Siegel of the University of
Pennsylvania. In the 105 years to 1994, Investors would have done best by
selling their shares at the end of August and reinvesting the proceeds at the
beginning of October. The DJIA fell in 63 of the 104 Septembers for the
period 1890 to 1994 (1914 September data was unavailable due to the
beginning of WW 1). Had investors fled each September since 1890, a
dollar invested in that year would have grown to US$ 410 by October 1,
1994, compared with about US$ 100 had their money remained invested
all year round. Even though biggest one day declines tend to be recorded
in October, it would have proved more sensible to stay in the market
throughout October rather than September over the past century. The
September effect appears to be global. For the 1970-94 period, 20 of the
world's biggest stock markets yielded negative average returns for
September, even after dividends had been reinvested. It is also applicable
to the southern hemisphere. The September effect probably is not a result
of seasonal factors, given it seems to apply globally. Thus it could arise
from the ecliptical placement of the Sun as it crosses the celestial equator
from south to north.
Seasonality & Financial Crises. Before 1914, seasonality in financial
crises was strongly evident, according to Kemmerer (1910). He found that
major/minor US crises in the 1873-1907 period were far more likely to
occur in March, April, May, as well as September and December (p<
.001). A similar situation was found to apply to European crises (17201907) listed by Kindleberger (1978), which were also more likely to
happen in Spring and Autumn (p < .001) rather than take place over the
whole year (Glasner, 1997). This seasonality of crises was originally
and not backed up by the evidence (Dean & Mather, 1977). Williams
(1982) believed Jupiter - Saturn - Uranus cycles 'offered a clue' in
explaining the crises in Sequences 01, 21 and 41 proposed by Funk
(1932). On assessment, these were dismissed as having no relevance to the
56 year cycle. A planetary influence upon the 56 year cycle could not be
established despite numerous hypotheses being tested for significance planets by ecliptical segment, angles between the planets, planets sited at
certain precise ecliptical degrees and so forth. Some positive correlates
were produced between eclipses and financial crises. However, these
could be reasonably dismissed as artifacts arising from the importance of
the lunar nodes in the 56 year cycle. (Eclipses can only occur when the
Sun and Moon are both near the lunar nodes.) Traditional astrological
factors proved invalid and only the Sun and Moon can be advocated as the
prime influence on the 56 year panic cycle. However, the planets should at
least have a very subtle influence through the process of planetary
precession on the Earth, a topic covered in any basic astronomical book.
In Conclusion
From the findings, the 56 year panic cycle is most likely based on angular
- ecliptical - diurnal relationships between the Sun and Moon. This
conclusion is derived from the following:
* Based on the angles 0 and 180 degrees, angles between the Sun, Moon
and nodes repeat to within one degree every 9.0 and 56.0 tropical years,
the two basic time units associated with the 56 year cycle.
* Perfect correlations exist between the 36 year sub-cycles and: 1) the
ecliptical position of the north node on a specific date of the year. 2) the
ecliptical placement of S/NN conjunctions. 3) Moon angles to these S/NN
conjunctions.
* Major financial crises are most likely to occur when the north node is in
the quadrants 0 - 60 E and 180 - 240 E and least likely in the segment
255 - 335 E
Given the key role played by the nodes and the tropical year, diurnal
cycles are likely to be very relevant, but could not be assessed from the
financial data. Lunisolar patterns would vary for each crisis and must also
change progressively over long time spans never repeating exactly.
Three astronomical planes appear to be highly significant in the timing of
financial crises:
* The Ecliptic is the plane the Sun gravitationally pulls on the Earth. The
heavenly positions of the Sun, Moon and lunar nodes are also referenced
the timing of financial distress. The key factor seems to be where the Sun
or Moon changes its orientation relative to an astronomical plane (moves
from below to above or vice versa). The astronomical planes involved are
the ecliptic, the celestial equator, the Moon's orbital plane and probably
the horizonal plane. If perigee was found to be significant in market
trends, then it too would need to be considered in any Sun - Moon
analyses. Assuming such a view holds up to subsequent scrutiny, the
complexity of the 56 year panic cycle could be reduced to a small number
of first principles, thereby nurturing the design of much needed follow up
research. A simple, overall theory may be within reach, which would be of
tremendous benefit in explaining the cyclic nature of mass psychology and
the timing of financial crises.
References
GLOSSARY OF TERMS
Diurnal cycle. The rising/culmination/setting of a heavenly body solar day, lunar day, etc.
Ecliptic. The plane of the Earth's orbit around the Sun which is
inclined at 23.5 degrees to the Earth's equator.
Full Moon. Occurs when the Earth is found between the Sun and
Moon (ie: when the angle between the Sun and Moon is 180
degrees).
New Moon. Occurs when the Moon passes between the Sun and
Moon (ie: when the angles between the Sun and Moon is 0
degrees.
Node (Moon). The plane of the Moon's orbit around the Earth is
inclined at 5 degrees to the plane of the Earth's orbit around the
Sun (the ecliptic). The nodes are the points where these two planes
intersect. The nodes regress (ie move clockwise) around the
ecliptic.
Nutation cycle. The time taken for the Moon's north node to
complete one 360 degree cycle retrograde (ie: clockwise) through
the ecliptic circle and equals 18.6133 years.
Nodical month (or draconic month). The time taken for the Moon
to complete one cycle north node to north node and is equal to
27.2122 days.
Nodical year (or eclipse year). The time taken for the Sun to
complete one cycle north node to north node and is equal to
246.6200 tropical years.
Solstice. Times of the year when the Sun is furthest from the
equator at 0 Capricorn (December 22) or 0 Cancer (June 21).
Synodic month. (Lunar month) The time taken for the Moon to
complete one cycle new Moon to new Moon and is equal to
29.5306 days.
Tropical month. The time taken for the Moon to complete one
360 degree cycle of the ecliptic circle from spring equinox to
spring equinox and equals 27.3216 days.
Tropical Year (or Solar Year) is the time taken for the Sun to
complete one cycle from spring Equinox to spring equinox and is
equal to 365.2422 days.
Years
18.000
18.031
18.030
18.028
18.030
Lunisolar cycles
18.0 Tropical Years
19.0 Nodical years
223.0 Synodic Months (One Saros Cycle).
241.0 Tropical Months
242.0 Nodical Months
Years
9.000
9.016
9.015
9.014
9.015
56 Year Cycle
Lunisolar Cycles
9.0 Tropical Years
9.5 Nodical years
111.5 Synodic Months
120.5 Tropical Months
121.0 Nodical Months
Days
Years
20,453.55 56.000
20,450.58 55.992
20,449.94 55.990
20,450.23 55.991
20,449.97 55.990
Lunisolar Cycles
56.0 Tropical Years
59.0 Nodical years
692.5 Synodic Months
748.5 Tropical Months
751.5 Nodical Months
The Kitchin cycle is short term averaging only about 40 months and was
deduced from commodity prices and bank clearing interest rates during the
period 1890-1922 for the USA and the UK. It has also been strongly
linked to the inventory cycle. Since World War II, a Kitchin cycle of four
years and another of 40 months has been evident in Western Europe and
the USA respectively.
The Kondratieff Wave
In the 1920's, Professor Kondratieff (1935), the famous Russian
economist, studied price trends and raw material production levels in
capitalist countries. His long wave model has been widely discussed by
other researchers and therefore only a brief outline is presented in this
paper. According to Kondratieff's theory, capitalism was self regenerating
after long periods of economic decline. He hypothesised that capitalist
economies fluctuated with peaks every 45 to 60 years. Kondratieff
believed that his long wave averaged 54 years, which closely
approximated to the 56 year cycle. His theory incorporated two phases:
The Rising Wave is a long expansionary period of 20 to 30 years
containing many years of prosperity. This growth phase experiences
expanding investment in capital goods and implementation of new
technologies developed during the preceding down wave. Escalating
inflation and rising interest rates are also evident. Advanced economies
require raw materials and new markets for their increased output, fostering
development of new territories and stimulating growth in lagging
economies.
The Downward Wave: A peak in price levels is apparent, which
coincides with rampant inflation, speculation, high commodity prices and
war. These peaks are followed by a 'primary recession' and plateau phase,
during which inflation slows, unemployment rises, the finance sector is
euphoric and temporary political stability is achieved. There is also
declining capital investment, a levelling out of labour productivity and a
falling return on investment. This plateau stage lasted for up to 10 years in
Kondratieff waves I, II & III. A major slump is experienced leading to a
'secondary depression'. Little investment in physical capital is undertaken
and the agricultural sector is chronically depressed. This strong
contractionary phase persists for up to 25 years.
The long waves for the US economy are:
K wave
I
II
Trough
Peak
1788
1814
1843
1864*
End of Plateau
Trough
1819*
1843
1873*
1896
Duration
55 yrs
53 yrs
III
IV
1896
1949*
1920*
1974(b)
1929*
?
1949*(a)
?
53 yrs
form very regular patterns found in the 9/36 year sub-cycles (McMinn
1997). On the rising wave, strong economic growth is recorded with
depressions and recessions of short duration. The principal sequences
occur infrequently in this phase (notably Seqs 32 & 41) and thus relatively
few major crises are evident.
The Kondratieff peaks for US inflation fall in a narrow range of the 56
year cycle between Sequences 46-54 around the 'cluster' of principal
Sequences 48, 50, 52.
Kw I
Kw II
Kw III
Kw IV
1814
1864
1920
1974
Sequence 54
Sequence 48
Sequence 48
Sequence 46
These peaks are followed by the plateau stages with financial euphoria
being widely evident.
1810's Era of Good Feelings.
1870's Reconstruction after the Civil War.
1920's Roaring 20's.
1980's Rampant speculation.
The beginning of the secondary depression is marked by a major panic:
Kw I
1819:
Kw II 1873:
Kw III 1929:
Sequence 03.
Sequence 01.
Sequence 01.
US Depressions
1819-21 (Seqs 03, 05) & 1825-29 (Seqs 09, 12).
1873-79 (Seqs 01, 03, 05) & 1884-85 (Seq 12)
1929
1987
01
03
Peaks:
1814: War of 1812.
1864: US Civil War.
1920: World War I.
1974: Vietnam War.
Typically, the trough wars have wide approval and support by the US
public, where as the peak wars are unpopular and viewed as ending
prosperity. Following world wars, the leading country on the winning side,
which survives with its economy in tact, reorganises the world system
around itself. This may be achieved as the war economically bleeds both
the adversaries and the allies. For example:
WW I & WW II (USA).
The 56 year cycle may have some relevance to war, as many financial
crises are related to revolution and to the beginning and ending of war.
Year Seq War
1745 41 Jacobite Rebellion. English Black Friday (Dec).
1756 52 Beginning of the Seven Years' War.
1761 01 Ending of the French & Indian War (USA).
1763 03 Ending of the Seven Years' War (English & Dutch panics September).
1781 21 Ending of the US Revolutionary War (US deflation). Peace
treaty not signed until 1783.
1792 32 French Revolutionary Wars (English panic - Feb 1793).
1801 41 Peace of Amiens.
1812 52 War of 1812 (US depression).
1848 32 Year of Revolutions (French panic - March).
1864 48 US Civil War (French & US panics).
1866 50 Austro Prussian War (European panics - May).
1913 41 Second Balkans War (US & European crises).
1940 12 World War II (US near panic - May). French capitulation.
1989 05 Collapse of communism in Eastern Europe.
According to Kindleberger [1978], (1989), there may be a time lag for a
crisis to manifest after a war, as follows:
1857
1866
1920
41
50
48
Kindleberger also commented that a major crisis may occur about 10 years
after the ending of a war. For example:
War
Ended
Seven Years' War
1763
US Revolutionary War 1783
Napoleonic Wars
1815
Crimean War
1856
US Civil War
1865
World War I
1918
Crisis
+9
1772
+9
1792
+10 1825
+10 1866
+08 1873
+11 1929
Seq
12
32
09
50
01
01
established.
Mass Psychology
Kondratieff (1935) regarded the upwaves to be 'considerably richer in big
social changes in society' than periods of the down waves. Snyder (1984)
and other researchers have discussed the changing mass psychology
through the Kondratieff wave.
Rising Wave. At the beginning of the rising wave, social/political
conservatism and a strong work ethic prevail as a carry over from the
previous down wave. Near the top of the wave, there are major social
upheavals and radical changes in the lifestyles. Optimism prevails and
there is discontentment with traditional values and new sexual mores
emerge. New movements demand freedoms and basic rights for racial
minorities and freer sexual expression. Feminism comes to the fore being
marked by:
In the current wave, the 1960's/70's saw liberalism, sexual freedoms, gay
activism, abortion rights, birth control, interest in Eastern religions,
improvements for racial minorities and so forth.
The Plateau phase of the 1920's and 1980's witnessed the rise of social
and political conservatism. Euphoria pervades the economy and there is a
general feeling of 'greed is good' with people speculating and over
extending themselves with credit. The new rich are showy in their public
displays of wealth and luxury. Entrepreneurs are treated as media
celebrities, many of whom end up bankrupt or in prison for fraud when the
economic tide turns.
Downwave. The initial problems are viewed as temporary phenomena
rather than profound changes in economic trends. As the difficulties
persist, disillusionment becomes increasingly apparent, shattering peoples'
risk free view of the world which prevailed in earlier decades. Workers
seek to maintain their living standards while social unrest is aimed at
insulating people from financial hardship. Laws are passed to protect the
well being of the populace and conservative values and lifestyles are
adopted. The sexual excesses of the up wave give way to modesty and
romance with less tolerance towards deviant social behaviours. This does
not mean that old mores return as many of the freedoms established on the
up wave are maintained.
Due to the hard times, there is a willingness to settle for less with value
being placed on work, success, security and saving. Alas the ugly side of
human nature becomes apparent. Religious fundamentalism and political
extremism (both right and left) resurge in a clamber for radical solutions.
Racism increases as scapegoats are sought to vent frustrations (Previous
waves: anti Semitism in Europe during the 1870's/80's & 1930's/40's.
Current wave: Ethnic cleansing of the 1990's) There is less tolerance of
unconventional sexuality (Previous waves: Victorian morality of the
1870's/90's and Hitler sent homosexuals to the gas chambers in the
1930's/40's). The current down wave has seen the rise of the religious right
in US politics, with moves against abortion and less tolerance towards
racial minorities and homosexuals. Lastly, socialism becomes more
popular with the masses as there is a reaction against free market
economics, which is widely blamed for the adverse conditions.
Long Cycles: Their Proposed Causes
Kondratieff (1935) noted that 'explaining the long cycles is extraordinarily
difficult' and he was not so concerned 'with the problem of the causes of
the long cycles, but with that of characterising their course'. However, he
did theorise that the long wave arose from the wearing out and
depreciation of long lived capital equipment, such as railroads, canals and
factories. The replacement of such capital occurs in spurts of massive
investment in big expensive projects during the rising wave. The demand
for capital increases which eventually boosts interest rates. Investment is
dampened due to the higher cost of money and after a long time lag, the
rising wave loses momentum and the downswing emerges. Over
investment during the rising wave also results in depreciation of excess
capital on the down wave. Investment in large scale projects falls,
economic activity contracts and inflation declines. Lower investment
levels decrease demand for capital, which thus becomes cheaper resulting
in lower interest rates. Hence favourable conditions are again created for
economic recovery.
Kondratieff (1935) also discussed trends in technical innovations during
the course of the long wave. Important inventions are made during the
downswing phase of the cycle due to the depressed times and the need to
cut production costs. Even so, these new inventions were only widely
adopted at the beginning of the upswing when economic conditions
improved. He believed that scientific discoveries were non random and a
product of necessity during depression. At these times, there would be the
greatest pressure to develop new products, slash production costs, find
new sources of raw materials and established new markets. Such
The existence of links between the major/minor business cycles has been
covered in economic references. Kitchin (1923) stressed the primacy of
the short term cycles and believed that the Juglar cycle was merely
aggregates of two, sometimes three, minor cycles each lasting about 40
months. The Juglar cycles averaged about 8 years, but ranged in duration
from 7 to 11 years. Furthermore, Kondratieff (1935) considered the long
waves and the shorter cycles to be linked in some manner and that the
'intermediate cycles are strung on waves of the long cycles'. During the
rising waves, these intermediate cycles were characterised by brevity of
depressions and intensity of upswings, while for the downward waves the
opposite applied with intense depressions and shorter periods of growth.
Schumpeter (1939) thought time spans of these economic cycles were
related as follows:
One Kondratieff wave equals 3 Juglar cycles.
One Juglar cycle equals 3 Kitchin cycles.
Schumpeter (1939) considered that 'every Juglar so far observed..... is
readily divisible into three cycles of a period of roughly 40 months'. On
further research, Zarnowitz (1992) found that 'there was no good reason to
insist on any particular fixed scheme of so many Kitchins per Juglar and a
more relaxed approach may be more instructive'.
The Juglar Cycle and Kondratieff wave have interrelationships as crises
manifest when the 56 year sequences 'intersect' the sub-cycles based on
multiples of 9 years (McMinn 1997). Analyses of the Juglar cycle has
regarded the following crises as major turning points in economic trends.
1810*, 1818*, 1825, 1836*, 1847*, 1857*, 1866*, 1873*, 1881, 1890,
1900, 1907, 1913*, 1920*, 1929*.
Crises *asterisked fell in the 16 months ended December 31 of the years in
the 36 year sub-cycles Series 1 & 2 (Observed: 10; Expected: 3.6).
Furthermore, the 1825 and 1881 crises appeared in principal Sequence 09.
From the 56, the connection between the Kondratieff wave and the Juglar
cycle was only a general trend with no obvious periodic relationships
between these two business cycles.
The Kuznets cycle could at least in part be based on the 18 and 20 year
sub-cycles associated with the 56. Although there was some variation
from one measure of economic activity to another, Kuznets dated troughs
in his cycle at 1878 and 1896 and peaks at 1873, 1892 and 1913. The latter
three years approximate to the 20 year sub-cycle between Sequences 01,
21 & 41 respectively. After World War 1, Kuznets viewed 1921 as the
peak and the trough as 1931 (Seq 03).
The Kitchin cycle of around 3.3 to 4 years could not be aligned with the
longer term cycles.
Conclusions
The business cycles of economic literature are highly variable and
notoriously unpredictable. In contrast, the 56 year cycle is more far more
precise as crises tend to occur in certain select sequence years. This 56
year panic cycle has a major influence on economic trends, with a
significant impact upon the 45 to 60 year Kondratieff wave, the 9 year
Juglar cycle and, to a lesser extent, the 20 year Kuznets cycle. This implies
that these three cycles may arise from the one very complex cycle.
Unfortunately, no link could be confirmed with the short term Kitchin
cycle of 40 months to 4 years. To date, the 56 year cycle has only been
firmly correlated with the timing of financial crises, but not necessarily
peaks and troughs of financial activity. Furthermore, the 56 has to date
only been developed to an elementary stage of understanding. Much
objective research is essential to determine the intimate relationships
between the 56 and the four main economic cycles.
References
McMinn, David. Financial Crises & The Number 56. Twin Palms
Publishing. 1997.
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