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On Tue, Oct 20, 2009 at 8:44 AM, craig tindale <> wrote:

Some of Kondratievs pricing and saving data at the URLs below ( I have coal, iron, copper and wheat somewhere I will dig it up)

http://i56.photobucket.com/albums/g181/ctindale/gold79-80/FrenchSavingT12b.jpg
http://i56.photobucket.com/albums/g181/ctindale/gold79-80/FrenchSavingsT12c.jpg
http://i56.photobucket.com/albums/g181/ctindale/gold79-80/KPricedata1.jpg
http://i56.photobucket.com/albums/g181/ctindale/gold79-80/KPricedata2.jpg
http://i56.photobucket.com/albums/g181/ctindale/gold79-80/KPricedata3.jpg

On Tue, Oct 20, 2009 at 7:05 AM, Bud Conrad <> wrote:

Thanks for the history Joseph.
I think there are important differences from the 1800 to now:

Most important is that our (and therefore all currencies) are not based on gold. That has allowed the credit bubble, especially at the government, to escape historical limits. The credit bubble is collapsing in the private sector, which as Jovens point to, is typical of the roll back in growth (and deflation).

But the whole point of the iTulip slides (if I follow) is that the government response is big enough to counteract the apparent slow down. I would go the next step to say that Chima is even out doing us on a relative share of GDP with their government sponsored $156 B stimulus, and the ECB is stimulating at a rapid if less extreme rate. And the result of all the money creation (call it debt creation) will be to cause price inflation. We only see it in stocks and some in oil in the last half year, but we no longer are seeing deflation going into a death spiral.

So while historical cycles of the Kondratiev magnitude are applicable today, I think we need to overlay the changes in nominal purchasing power to be following the real values of the underlying economic variables. While the broad government fabricated CPI and PPI understate the severity of the swings, Dollars priced in gold or oil or stocks are falling (INflation) partly because: confidence in the dollar is in decline. This is hard to measure, but that is the natrue of fiat systems, that the value of the dollar is what it will buy, more than some imagined intrinsic value. Once we start looking at dollars through that opposite view, the current cycle makes more sense.

The government is printing and the wealthy are feeling much better about their stock prices, and business that are government supported like healthcare, military, big banks and education are doing well. That is the green shoots. Much of this is an illusion because government spending feels good for a short while, but it needs to be paid for either with taxes (they are coming in 2011, if only as a rollback of Bush cuts) or more likely in continuing dollar demise. Government's expansion of share of our economy went from 21% to 25% last year. That spending is inefficient and helps a lot less than the headline. When taxes are collected, the damage is much more than the spending advantage. So the result of big government is less efficient economy. If the Japanese guy's call for DX at 50 sounds extreme, it should be put in the context that he called other problems correctly, and that all the forces of extreme devaluation are aligned with no meaningful power group opposing letting the dollar fall. That certainly includes the Fed that has active programs to bring back inflation, and theoretically they hold the keys to the dollar's direction. One counter force to inflation is from the over invested foreigners who are playing a game of chicken with each other, and IMO will be the proximate cause of tipping the dollar over in a crash, ehen the firs one publicly runs for the proverbial exit.

So the scenario I see is Credit Crisis turning into a Currency Crisis, which means in the U.S. inflation as the dollar decreases purchasing power. For a time it feels good that the measures of everything look better (Stock and Oil today), but the measures overstate the positives as the measuring stick is shrinking, rather than the creation of new real growth in productive wealth building gets going. I also applaud the growth of one of the most crucial generators of our wealth: finding new energy sources. I think the real economy will stay sluggish from the continuing deleveraging.

On Mon, Oct 19, 2009 at 12:41 PM, Joseph Barbuto <> wrote:

I sent this to a colleague earlier this year regarding commodities, this is relevant here.

Here are some outtakes,

Joseph

Kondratiev observed that coal consumption followed prices exactly over periods of inflationary and deflationary cycles. In that consumption and production fell during the longwave down cycle

Once down waves are done, coal production and consumption resumed, as it occurred during the 1890,s this was the long depression of the 1870,s and 1880,s. During the 1930,s oil production and consumption collapsed along with the economy.

Of coarse more coal was found, then the next energy paradigm was just getting started, (oil) Today, clean tech is a little further along..

Note of the timing of Jevons works "on the coal question", the similarities to "peak oil" both occurred at the height of both credit bubbles...

The book was published about 7 years from the top in the markets. One point if you read the book, today global population is slowing, there has been no exponential growth since 1964, very linear and it's going to plateau around 2050, is there going to be a shortage of workers then???

Read the book, the similarities as with all things in history should not be surprising to you.

MY work is completed in pointing out the necessary results of our present rapid multiplication when brought into comparison with a fixed amount of material resources. The social and political consequences to ourselves and to the world of a partial exhaustion of our mines are of an infinitely higher degree of uncertainty than the event itself, and cannot be made the subject of argument. But feeling as we must do that they will be of an untoward character, it is impossible to close without a few further remarks upon the truly solemn question?Are we wise in allowing the commerce of this country to rise beyond the point at which we can long maintain it?

According to Jevons, coal depletion had serious ramifications for population growth. The population of England had increased by more than 10% each decade for the prior 70 years, not surprising given that coal production was growing at 40% per decade, meaning that the per capita wealth was growing.

MY work is completed in pointing out the necessary results of our present rapid multiplication when brought into comparison with a fixed amount of material resources. The social and political consequences to ourselves and to the world of a partial exhaustion of our mines are of an infinitely higher degree of uncertainty than the event itself, and cannot be made the subject of argument. But feeling as we must do that they will be of an untoward character, it is impossible to close without a few further remarks upon the truly solemn question?Are we wise in allowing the commerce of this country to rise beyond the point at which we can long maintain it?

The exhaustion of our mines will be marked pari passu by a rising cost or value of coal; and when the price has risen to a certain amount comparatively to the price in other countries, our main branches of trade will be doomed. It will be well, therefore, to inquire whether there has been any recent serious rise in the price of coal such as would be the sign of incipient exhaustion. Had a considerable recent rise occurred, as I have heard asserted, it might be argued that no such evil results have followed as alarmists prophesy, and then the optimist would conclude that, perhaps, after all, "dear coal" is not the fatal thing some suppose; this country may surmount that evil, it will be said, as it has surmounted worse evils. Jevons 1866

http://www.econlib.org/library/YPDBooks/Jevons/jvnCQ.html

Downward cycles will fool everyone that the recovery is here, with repeated recessions, hence one lon

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