Understanding Current US and World Conditions

By Hugh Ashlie

Throughout history, humanity has devoted enormous amounts of energy and money in the pursuit of answers to real and perceived difficulties and challenges that humanity has faced. It seems ironic that we understand the cyclic nature of the seasons and are able to predict the exact position of planets in our galaxy at any given time, yet appear to be surprised by the cyclic nature of world affairs. The only universal constant is cyclic change, and predicting the next change is not difficult once the underlying cyclic principals are understood. Reacting to change seems to be the general modus operandi, plus the fact that most change is usually fiercely resisted.

All cycles are mathematical in nature because however great or small they are divisible by nine or a product of nine. Most astrologers fix the duration of the precession cycle, the time it takes for the equinox to precess 360 degrees relative to the fixed stars at 25,920 years and within this great cycle are many cycles of shorter duration. Ancient wisdom states that among the numerous cycles which include the cycle of Great Empires spanning several centuries, the economic cycle which is said to be 81 years in duration, market cycles are said to be 18 years in duration. The question that might come to mind is. - Where is the planning for this cyclic change?

Today's conditions are continually compared to the Great Depression by reporters, politicians, pundits and many in the general populace. So let us back it up slightly. The roaring 1920's were noted for a time of fun and partying. There are many reasons why it was called the Roaring Twenties. Most of the American people were living a great life and were able to afford luxury items, although this did not apply to every one many believed that it was an excellent and exciting time of great hopes. The workweek dropped from 60 to 48 hours. At this time Americans began to consider play as important as work.

The car and train industries were the largest. The assembly line made mass production possible, and industry boomed. America was now the envy of many nations. The largest assembly line was Henry Ford's in Detroit. Almost everybody in the United States had a car. Instead of paying for the cars with cash, people could now use credit to purchase items. Since most families did not have the money, they would buy the car with on credit.

Many people benefited from the boom. Average Americans either bought on margin or made money in other ways. Factory owners and companies made massive profits. The number of millionaires rose from 7,000 in 1914 to 35,000 in 1920. People made money by buying and selling items and making a profit on them, much like the real estate flippers of the 1990's.

It would appear that the economic cycle was right on time, but to make sure that we are on the right track let us examine what happened in the economic cycle before 1920. (1920 - 81 = 1939)

o From 1836 to 1860, individual "wildcat" banks issued currency not always supported by gold or silver.

o Land speculation grew as public lands were bought by speculators like John Jacob Astor, and William Gilpin with wildcat currency.

o President Jackson issued the Specie Circular in 1836, demanding that public lands be bought with gold or silver. This decree by Jackson curbed land speculation with questionable bank notes, but also helped destabilize the Western economy. Wildcat banking and land speculation, a fall in the price of cotton and tightening of British credit halted an overheated economy, and helped cause the Panic and a depression that lasted until the mid 1840's.

Peter Temin's The Jacksonian Economy (1969) has become the standard and definitive work on the causes of this Panic. He absolved President Jackson and the banks from having caused the panic and sites several contributing factors, and whether or not one agrees with his premise these factors are only the conditions that existed at the time. The outcome was certainly colored by the reaction of those in power at the time to the conditions.

The fallacy of our modern day thinking is reflected in the wikipedia definition of a business or economic cycle; "The term business cycle (or economic cycle) refers to economy-wide fluctuations in production or economic activity over several months or years. These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth (expansion or boom), and periods of relative stagnation or decline (contraction or recession). These fluctuations are often measured using the growth rate of real gross domestic product. Despite being termed cycles, most of these fluctuations in economic activity do not follow a mechanical or predictable periodic pattern."

Planning for cyclic change is practically non-existent in world economic affairs. Individually or collectively, society has two avenues that may be used to address evolving economic conditions as they unfold.

1. Wait until it happens and then react to the new conditions. (usually accompanied by panic)

2. Understand the cyclic nature of passing time as it applies to economic conditions and construct a plan that will address changing conditions when occur.

Until we can collectively employ the second option, we are bound to keep repeating history.

In conclusion, we might ask the question. So what's in store for 2010? Well do the math - October 29, 1929 Black Tuesday occurred, a massive stock market crash that signaled the beginning of the Great Depression. At the time, the crash was considered to be a cause of the Great Depression but it is now generally considered to have been a symptom. (October 29, 1929 + 81 = 2010)

The widespread concern over the US dollars decline is for the moment not a real difficulty. However the "Bretton Woods Agreements" that were deliberated during the first three weeks of July 1944, and the consequent situation whereby the United States dollar became the "reserve currency" for those that signed the agreement may in the not to distant future (1944 + 81 = 2025) become a condition that will have to dealt with. Now might be the opportune time to begin the process of formulating a comprehensive plan for dealing with that condition. Change although at times painfully slow is inevitable.

Hugh Ashlie is a semi-retired custom home builder with a penchant for things of quality. URL [http://hughashlie.com/]

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