Kondratieff Winter.com Mission Statement

Launched in early October of 2007, Kondratieffwinter.com was created for public consumption and is dedicated to the discussion of the impact of one long wave cycle theory on today’s US economy and capital markets. This theory, first introduced in 1926 by Russian professor Nikolai Kondratieff, suggests that capitalism is a dynamic force that renews itself every 50-60 years in expanding and contracting cycles of economic catastrophe and renewal that increase in scale over time culminating in a Kondratieff Winter. Herein we will provide anecdotal evidence and conjecture to suggest that soon a Kondratieff Winter may be on the horizon.

Kondratieffwinter.com is not intended to promote a prophecy of economic doomsday but rather to ponder and determine the role played by the universal laws of nature inherent in market cycles in determining future performance of economies and capital markets. It also seeks to expose certain negative forces not exposed by the mainstream financial media that are crucial to the backdrop of the looming winter. With the consequences of a new age Depression so daunting, he felt the need was sufficient and worthy of investing considerable time, effort, and capital to develop and maintain the site as a non-commercial public service enterprise. The objective is to raise awareness of this long wave concept to allow the public to consider its relevance for themselves. In researching the body of material on KW on the web he was unable to find a central repository dedicated to its merit and relevance 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.

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

The format first introduces the Kondratieff Wave and then places emphasis on the key variables that could enable or exacerbate such a condition. These include fiat currency,
dollar hegemony, unreliable or skewed economic data as well as certain intangible forces.
These variables are represented by the subject icons on the homepage and each one contains an overview of its relevance to the emergence of the Kondratieff Winter written by the author and further supported with articles best suited for showcasing their relevance. 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 the years and is presented in a manner that may be considered a bit unconventional in its approach. The Kondratieff Wave is more focused on aggregate behavior of economic components whereas others such as the Elliot Wave theory are more centered on specific capital market price behavior. We have provided links to other sites related to the long wave theory and its causes 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 reveals some historic parallels that are acute and powerful, we believe many will find it as compelling as it is fascinating. The intent was to create content and an approach that was as “out of the box” as one can find anywhere on the web.

There is precedent for a keen study of supercycles. 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 prepare for them and better manage them. Likewise, we can embrace the renewal cycle following the Kondratieff Winter also as inevitable and work to make it more prosperous than ever.


Author

Peter Baxter has worked in the securities industry for over twenty 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 Kondratieff 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 he found that odd sounding theory nagging at him at times in the back of his mind but largely ignored it until recent years when he renewed interest in this obscure, far flung theory to reconcile his view on the lack of divergence in competing asset classes. Expecting an inversion from paper assets to commodities after the dot.com bust, he instead saw both asset classes move upward together from 2003 until the present. Several forces combined to allow this conundrum- low inflation from the productivity gains of globalization and technological advances, demographic shifts causing worldwide GDP to surge, fiscal and monetary stimulus, and unprecedented credit expansion. These forces created enormous paper wealth from stock and home price appreciation yet seemed to defy basic economic principles in that these competing asset classes were both appreciating as debt loads soared to historic levels in both the public and private sectors. 

Upon revisiting the Kondratieff Wave theory, he found some basis for a temporary period of such unnatural price performance. One of the features of the theory holds that successive economic cycles carry over some degree of excess from previous cycle generations that accrue over time, compounding each cycle to create ever longer cycles and ever larger boom and bust outcomes. During this period accruing excesses can hide in plain sight or be rationalized by the market as inconsequential but once revealed may be quite daunting. He suspects that this may be the case today thus merits closer scrutiny.