Second Great Depression?

[*T*]

Re: Second Great Depression?

Thanks for the commentary, T. I agree with you. That's why I was pretty careful in my post to talk specifically about the problem of timing. All it takes to get cycles is some kind of "mass" and a "restoring force", and the last part of my post was a nod to there being economic cycles -- just not harmonic economic cycles. The whole point of my post was that although the idea of economic cycles can help with the analysis of the big picture, the cycles can't be used for timing because they aren't harmonic.

(& sunskyfan)

I think we all agree then -- there may be a point where the data says things have gone "too far" but you can't really pin it down until the saturation point occurs, at which point you know things have turned.
Which advocates a good risk management approach.
Makes me feel better about calling the top of the UK housing market every year for the last 10 years then.

[*T*]

Re: Second Great Depression?

*T*, pretty advanced stuff there. I wonder if all these models take into account all of the world CBs printing in unisson?

Keen's model had govt. spending I think, but did not include printing money. The other methods are just data analysis and not really models..

[ricket]

Re: Second Great Depression?

This unfortunately is what the "elders" historically speaking have used as an underlying yet prime reason for war... no? Must put youthful rage somewhere productive when there are no jobs or futures...

Olive

The sad part is that people actually believe war is beneficial.

I say it only halts production and destroys capital and that can never be good for anyone.

[Master Shake]

Re: Second Great Depression?

See Are You a Doomer?

I tried to take the test, but the last two questions were missing.

[olivegreen]

Re: Second Great Depression?

For example, we forecast 25% and higher unemployment among 18 to 25 year old men. The outcome in the US case is unpredictable, but worst case is bad. Just ask the Greeks where unemployment among the 18 - 25 age group has been above 25% for years.
[/CENTER]

This unfortunately is what the "elders" historically speaking have used as an underlying yet prime reason for war... no? Must put youthful rage somewhere productive when there are no jobs or futures...

Olive

[grizam303]

Re: Second Great Depression?

I linked my ex-infantry friend the wiki article on it, and he said "I don't even need to read the article, it's awesome." Any armor that can withstand multiple shots is amazing IMO, the fact that it stops steel-core is fantastic.

[rj1]

Re: Second Great Depression?

Yeah, it's classified now because it "doesn't work" according to the army.

Funny how you classify something that "doesn't work" AND allow the DV's who visit in theater to wear this stuff for "testing purposes".

It's like 4x as expensive as our SAPI plate shit (the 1 hit wonder and then you're done under), and from everything I've seen, worth it's weight in gold if you are being shot at.

Read up on it. Looks good. Has any foreign government picked it up for their military?

[ASH]

Re: Second Great Depression?

Hi Ash,
Thanks for the tip.
As soon as I get this months check I will be subscribing. Then I can get up to speed ;)

I think a lot of the useful reading is probably in the free sections of the site, although I wouldn't discourage you from subscribing. Try reading the articles which are linked in the lower-right corner of the main iTulip web page (in sections such as "Economics" and "Financial Markets", etc.). I think those are free, and they span a lot of the analysis behind EJ's interpretation of the present economic events.

[powersown]

Re: Second Great Depression?

Hi powersown. In my opinion, reading America's Bubble Economy will not be of much benefit to you. Most of it was not written by Erik Janszen, and it is written at a much lower level than what EJ publishes on iTulip. In other words, it seems "dumbed-down" to me, and very light on analysis -- not characterstic at all of EJ's usual work.

Hi Ash,
Thanks for the tip.
As soon as I get this months check I will be subscribing. Then I can get up to speed ;)

[sunskyfan]

Re: Second Great Depression?

"I have a Masters in EE (as well as being a part-time rabbi, long story). I only say that to indicate some expertise in the subject matter."

This is why I love this site ... great points and cool people thinking!

[RebbePete]

Re: Second Great Depression?

It can be quasi-periodic as I believe Kondratiev waves are supposed to be. This does not mean there is no predictive value. I think Kondratiev waves explain the credit cycle quite well and I wouldn't call it magic. Although there are many magicians who incant it as there are many magician who incant science.

ASH, as you're an engineer, I won't hold back. If you do an FFT of log daily price series, and plot the power spectrum on log-log plot, a purely lognormal returns time series would have a slope of -2. I have done this. Large cap indices like the S&P or FTSE conform pretty well except for the very low-frequency components, corresponding to long economic cycles. Smaller cap co.s, emerging mkt indices and commodities all have different signatures indicating long-range order.

This is not particularly new - Mandelbrot (who as a sideshow invented fractals) found the same thing for cotton prices for his PhD thesis.

Steve Keen's models all have quasi-periodic behavioural regimes (which apparently we are leaving into a debt-deflationary crash absent money printing).

Turbulent fluid flow displays cyclic behaviour but is not harmonic.

So it doesn't have to be harmonic to be quasi-periodic or cyclic. I would propose that the economy comes under such a heading. Ie. history rhymes but does not repeat.

I have a Masters in EE (as well as being a part-time rabbi, long story). I only say that to indicate some expertise in the subject matter.

The problem with Fourier analysis is that it only looks at the behavior of the system under the current set of inputs. To really understand the system, you need to discover the transfer function. Because of the quasi-periodic effects some people have reported, there probably are some feedback paths with delays in the world economic system. Unfortunately, there is no way of knowing whether there are other feedback paths that become more dominant when the system is stimulated by an impulse or step function (like is happening now).

Here's an example for the non-techies. Take an empty plastic water bottle with the lid off. You can press gently in the side and release it, and the bottle returns to its shape. You can set up an experiment where the bottle oscillates - bounces back and forth by being periodically poked - based on the elastic characteristics of the bottle. You can even fill it with various substances and generate graphs of how they affect its resonance ("bouncing") characteristics.

Now push it further until the side of the water bottle deforms inward. That wasn't predicted by the model, and now, the characteristics of the bottle that you measured have been permanently altered. You took the system beyond the limits of the oscillating model you had developed.

Or, picture a thermostat in a house. If you measure the temperature in a house on a cold day, you will get an oscillation up and down as the thermostat reacts with lag to heat loss through the walls. You can measure it for a long time and find cyclic variations, short term and long term (e.g., day night as the sun illuminates different parts of the house). Now add a malfunction to the heating system so that, whenever it goes on, the basement catches fire. You've taken the system past the limits of your model.

Nowadays, physicists and engineers can model things like these - the crushing of the bottle or the fire in the basement - but the model was developed by a meta-understanding of the system and not by watching its behavior over time. That meta-understanding is akin to macroeconomics, although the world economic system is so horrendously complicated that we have far less understanding of its operation than we do of the physics of materials.

People tried an approach called "deterministic econometric models" that were all the rage back in the stone age when I was in college. They attempted to model the feedback cycles in an economy, but these had limited accuracy. They just weren't complicated enough to be of use outside of some very simple markets (I believe there was a famous model for hog futures that didn't do too badly on a small time interval).

[due_indigence]

Re: Second Great Depression?

"Both writers anticipated the onset of another big depression at that time. Here we are over 20 years later and it looks like it may have finally started. I am wondering what happened between then and now? Why the delay?"

Sorry, I haven't read the intervening thread. But I find it interesting how you're interrogating reality for its 'delay' in not conforming to a wave on a Powerpoint chart. This reminds me of the Kafka aphorism: "a cage went in search of a bird." This may be sacrilege but perhaps the arm on the printer was misaligned?

[ASH]

Re: Second Great Depression?

I will read your book America's Bubble Economy ASAP. Perhaps then I can understand/discuss the current issues better.

Hi powersown. In my opinion, reading America's Bubble Economy will not be of much benefit to you. Most of it was not written by Erik Janszen, and it is written at a much lower level than what EJ publishes on iTulip. In other words, it seems "dumbed-down" to me, and very light on analysis -- not characterstic at all of EJ's usual work.

[sunskyfan]

Re: Second Great Depression?

At another level, which I find more interesting, the Fourier transform is the basis for how a lot of subtle stuff works.

Yep. Good stuff. You should check out Optics and Imaging in general. Fourier Optics is super cool. It is how all imaging is really "understood". A lense is just a FT. A slit is the simplest lense.

[powersown]

Re: Second Great Depression?

See Are You a Doomer?

Fred,

I took the Am I a Doomer survey, but the last two questions were blank so my survey was incomplete. I got the following message:

Required questions were not answered.

(Don’t know which answers to select when don’t have the question :confused So, I don’t know how I would have scored. Would like to know though, so if you get the survey fixed let me know and I’ll retake it.

The question Are You a Doomer, and the thread comments were quite thought provoking. Your comment regarding America’s Bubble Economy

Neither America's Bubble Economy nor iTulip are about doom. They are about the nature of the next inevitable financial market and economic setback, how one might reasonably prepare for and deal with it, including not buying into the press coverage that will appear during the event to give everyone the impression that things will never get better. iTulip additionally explores the social implications, as those bear not only upon the experience of the period but also the form that the recovery is likely to take, the opportunity in the crisis.

could be easily applied to Beckman’s Downwave. Contrary to doom, he points out positive aspects of depression periods, as well as how to anticipate, prepare for and benefit from same. Also, opportunities and prosperity to follow.

Also noted in reading Gary’s Crusade article:

By the way, Nikolai Kondratieff was proved right: The 1979-82 depression came exactly 50 years after the 1929-32 depression...

Maybe there is something to those wave theories after all

Back to Am I a Doomer? I am pretty optimistic on a personal level. However, I do not like much of what is going on in our country, which leaves me pretty pessimistic in several big areas. I believe in a system of just weights and measures and resent the private banking cartel run "Fed" fiat money system. I am against theives as well as those who violate individual freedom, so dislike the government with all of its confiscatory and regulatory schemes. I am opposed to monopolies and fascism, so abhor such entities as the FDA, who work with the medical/drug monopoly to keep cures from people and jail or otherwise destroy the efforts of those who are actually healing people. I hate lies and believe very little of what the mainstream media, historians, academics and politicians are disseminating. Consequently, I avoid their rhetoric as much as possible and discount the latest fear fads they are promoting to keep us all malleable. Am I paranoid? Some would say so. I would say that to the extent that I am, it is not without reason.

The optisism I do have does not necessarily stem from believing that good times are ahead, but rather from a belief in the amazing tenacity of the individual people who make up the back bone of this great nation. (Oh, and I am able to decern the difference between the American people and the US government! Not an exactly PC observation ;)) I am also optimistic because I was brought up in an entrepreneurial can-do family. On the otherhand, my dad, having been on his own as a teen during the early 30's, did have an impact on my propensity toward individualist self-preparedness. I admit to being pretty obsessive in that direction.

iTulip is about seeing our financial and economic world for what it is, rather than as what we'd like it to be, and that includes discounting one's unconscious doomer fears/wishes.

Sounds good to me.

Now, as to the discussion of a depression. My understanding is that we are currently in a deflationary recession. And that an economic depression is defined as:

A severe or prolonged recession...

Severity or duration aside, I guess my interest here lies in learning more about deflation vs. inflation scenarios. I will read your book America's Bubble Economy ASAP. Perhaps then I can understand/discuss the current issues better. The bottom line is that I am a truth seeker. It is my hope that with the itulip community’s collective brainstorming, I/we can determine in advance the turning point between deflation and inflation and be prepared to act appropriately.

Hopefully,in the process my psychological foibles won’t get in either my or anyone else’s way.

Appreciate the feedback.