Kondratieff Winter.com Mission Statement

Kondratieffwinter.com was created for public consumption and is dedicated to the discussion of the impact of one certain long wave cycle theory on today’s US economy and capital markets. The intent was not to promote a prophecy of economic doomsday but rather to discuss the impact that the creative universal forces of nature have upon our markets.  This theory, referred to here as the Kondratieff Wave or K-Wave, was first introduced in 1926 by Russian professor Nikolai Kondratieff and suggested that capitalism is a dynamic force that renews itself every 50-60 years in a series of recurring waves of expanding and contracting cycles of economic catastrophe and renewal that culminate in a Kondratieff Winter. We have provided a great deal of content on this theory in the Kondratieff Wave section.

The initial purpose of this site, which debuted in early October, 2007, was rooted in establishing that such a winter was looming and to alert the public that the US and global capital markets were subject to a serious correction in the short term that would destroy a great deal of wealth. Shortly after this occurred, our purpose shifted to showcasing the very progressive nature of the K-Wave in a hopeful and helpful manner so we can use it to better manage our future prosperity.

A deeper study of the universal creative forces behind these super-cycles will reveal certain higher truths about the nature of economics and our financial markets. Quite often these higher truths are counter-intuitive by nature and thus not so evident  because they are not reported or even discussed by the financial press. One such truth we will establish is just how beneficial the creative destruction process is to our prosperity. Some of the greatest improvements in our standard of living have occurred during the renewal phases of the cycle as the worst excesses are purged to accommodate a progressive transformation. A long-term chart of the US stock market since the late 1700’s bears out this positive trend line of greater wealth and prosperity. The K-Wave is really about this process of “creative destruction”, a process that has endured for thousands of years and must be embraced, not feared. Change, even radical change, is often good for our well-being.

Because historical evidence assures us that this winter is certain to be followed by a renewal phase of prosperity (the Kondratieff Spring), it is important that everyone center their energies today on making the changes needed to usher in the prosperity of this renewal cycle. This includes changes in our attitudes so we don’t become fixated on the present winter hardships, no matter how daunting they may seem to us. Although many are attracted to our site for the purpose of confirming their worst fears on the global financial meltdown, we wish instead to emphasize the progressive nature of the cycle itself rather than the doom and gloom. However, we still remain dedicated to providing fresh material and ongoing commentary each month on how this economic winter is playing out. Please visit the Monthly Comments page for this editorial content.

With the consequences of a new age Depression so daunting, the author felt the need was sufficient and worthy of investing considerable time, effort, and capital to launch this venture as a non-commercial public service enterprise. The objective was to raise awareness of impact of these super-cycles and allow the public to determine its relevance for themselves.  Sadly, this philosophy has been missing from our public policy and we as a nation are meeting the consequences of failing to enact the counter-cyclical  policies needed to overcome the limitations inherent in the long-range planning of any social economy. We feel that the content on this site will establish that need to be urgent and also make sense intuitively to most everyone. The author felt that if such an approach were taken by the leaders of our business and government sectors then our precious resources, both human and capital, could be better deployed to chase their highest utility.

In researching the body of material on the Kondratieff Wave on the web we were unable to find a central repository dedicated to these objectives so the author secured the domain and set out to create a site that would aggregate the most complete, insightful and provocative content to be found on the subject. The format first introduces the Kondratieff Wave and then places emphasis on the key variables impacting the scale and duration of these cycles. These include fiat currency, the credit bubble, dollar hegemony, and unreliable or skewed economic data. The Esoteric section was provided to give our readers a deeper and more meaningful understanding of the creative forces at work that integrate nature and the human element into economies and markets. The Prosperity Solutions section was provided to offer content on fresh and unique approaches to improving our condition that are not being advanced in the mainstream financial press.  The Kondratieff Winter Survival Guide has tangible suggestions to protect your wealth and keep your sanity during these challenging times. The Kondratieff Spring section offers hope by giving our readers a glimpse of how the renewal phase may unfold.

The articles within the subject icons on the homepage each contain an overview of its relevance to the Kondratieff Winter written by the author.  These supporting articles are in large part from seasoned and respected writers and fresh in that they have been generally underreported in the mainstream business media. This content was carefully selected for its ability to frame the underlying dynamics crucial to understanding how this scenario has evolved over time. We took a unique approach to this format, one that emphasized the esoteric and universal forces, because the core objective of this site is so unconventional by its very nature. Thus, much of the content found here may be regarded as “out of the box” and quite unlike what can be found from conventional sources.

Peter Baxter explains the Kondratieff Wave and
its relation to the current financial crisis

The Kondratieff Wave itself is more focused on the aggregate behavior of the broad economy whereas other long wave disciplines such as the Elliot Wave theory are more centered on capital market price behavior. We recognize the great works of Robert Prechter, Ralph Wilson Elliott, Ian Gordon and others who have championed long-wave principles for decades and have provided links to their sites and others to encourage ongoing reader diligence. Like any theory, this one cannot be proven and fails to account for every dynamic.  However because the content herein does reveal some historic parallels that are acute and powerful, we believe many will find it as compelling as it is fascinating.

There is precedent for a keen study of super-cycles. The Mayans were the most conscious of super cycles and were adept in using their astronomical knowledge of these cycles to mitigate the effects from the worst periods of earth and climate change. If the boom-bust pattern of economies and markets are indeed universal in nature to capitalist economies then we may also benefit. By using an approach that embraces the inevitability of these super cycles, we can better mitigate the winter fallout and also get more out of the renewal periods.

Author

Peter Baxter is the sole author of this site and has worked in the securities industry for over twenty five years serving as a broker, investment banker and consultant in many areas of the capital markets. While in college at Georgia State University in the early 1980’s he was introduced to the K-Winter proposition and found it as much endearing as it was confounding. Perhaps his unusual interest was grounded in the extreme cycle pivot then underway at the time, one that ushered in the demise of hard commodity assets to paper assets that gave way to the longest and strongest bull market in history for stocks. He surmised that economic cycles really did matter and pondered the timing and magnitude of the next reversal.

Since then from time to time he found that odd sounding theory tugging at him in the back of his mind, but largely ignored it until recent years. His renewed interest in this obscure, far flung theory came from the need to reconcile his rationale for the lack of divergence in competing asset classes evident after the dot.com bust.  Expecting an inversion from paper assets to commodities, he was puzzled to see both asset classes move higher together from 2003 until 2007.  Several forces combined to create this conundrum- low inflation from the productivity gains of globalization and technological advances, demographic shifts causing worldwide GDP to surge, unprecedented credit expansion brought about by the Fed, and the evolution of securitization on Wall Street, among others. These forces created enormous paper wealth from stock and home price appreciation yet seemed to defy previous cycle patterns in that these competing asset classes were both appreciating while debt loads soared to historic levels in both the public and private sectors.

Upon revisiting the Kondratieff Wave theory, he found some answers that seemed to account for this divergence.  The K-Wave theory holds that successive economic cycles can carry over some degree of excess from previous cycles that accrue over time and compound from each successive cycle to create ever larger boom and bust outcomes. During this autumn cycle phase in the K-Wave theory, accruing excesses can hide in plain sight or be rationalized by the market as inconsequential but once revealed may be quite daunting. Since the autumn phase gave way to winter in the fall of 2007 few have bothered to recognize the significance that these economic super-cycles have to the development of the current global financial crisis. The author is as sure as ever today that this theory, based on the naturally recurring forces of the universe, may indeed provide the best possible lens through which we can view, understand and cope with the evolution of today’s complex and volatile financial markets and global economies.