CONTENTS
Chapter 1 INTRODUCTION 1
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Chapter 2 THE 56 YEAR SEQUENCES 6
2.1 11 Principal 56 Year Sequences 7
2.2 Sub-Cycles in Multiples of 9 Years 11
2.3 Lesser 56 Year Sequences 15
2.4 Artifact Sub-Cycles 17
2.5 US Peaks & Troughs 19
2.6 The 56 Year Cycle: Other Countries 21
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Chapter 3 ENGLAND: 1555-1800 25
3.1 56 Year Sequences In The 17th Century 25
3.2 Early Lesser 56 Year Sequences 28
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Chapter 4 BUSINESS CYCLES 30
4.1 The Kondratieff Wave 30
4.2 Mass Psychology 34
4.3 The 56 Year Sequences & War 35
4.4 The Kondratieff Wave & Gold 37
4.5 Kondratieff Wave Extrapolations 40
4.6 Long Cycles: Their Proposed Causes 43
4.7 Links Between Major/Minor Cycles 44
4.8 Taming The Business Cycle 45
4.9 US Equities & The Long Term Trend
47
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Chapter 5 THE GREAT WAVE 53
5.1 Structure of The Great Wave 53
5.2 Causal Mechanisms 55
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Chapter 6 THE PROPOSED 36 YEAR SUB-CYCLES 58
6.1 The 36 YSC Series 3 & 4 58
6.2 Artifact 10 & 20 Year Sub-Cycles 59
6.3 Artifact 13 Year Sub-Cycles 62
6.4 Artifact 8, 9, 10 Year Sub-Cycles 63
6.5 A Three Year Panic Cycle??? 63
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Chapter 7 THE BENNER CYCLE 66
7.1 Structure of The Benner Cycle 66
7.2 Links Between The Benner and 56 Year Cycles 67
7.3 Causal Mechanisms 70
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Chapter 8 US MARKET VOLATILITY 72
8.1 Biggest DJIA One Day Rises & Falls 72
8.2 Top Months of US Market Volatility 73
8.3 US Stock Market Monthly Returns 75
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Chapter 9 PREDICTING FINANCIAL CRISES 78
9.1 The 11 Principal 56 Year Sequences 78
9.2 The 56 Year Sequences: 1980-2011 79
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Chapter 10 EARTHQUAKES & VOLCANOES 84
10.1 Earthquakes - USA & Canada 84
10.2 Earthquakes - Other Countries 88
10.3 A 56 Year Volcanic Cycle? 89
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Chapter 11 ADDITIONAL CONSIDERATIONS 92
10.1 Calendar & Seasonal Effects 92
10.2 The Proposed 29 Day Effect 95
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Chapter 12 IN SUMMARY 103
Appendix 1 MAJOR US & WN EUROPEAN FINANCIAL CRISES
Appendix 2 OTHER LISTINGS OF FINANCIAL CRISES
Appendix 3 FINANCIAL CRISES ACCORDING TO SOURCE
Appendix 4 THE 36 YSC & LISTINGS OF FINANCIAL CRISIS
Appendix 5 LISTINGS OF EARLY FINANCIAL CRISES:1555-1800
Appendix 6 DJIA ONE DAY FALLS => 3.20%: 1915 to 2000
Appendix 7 MAJOR QUAKES IN AUSTRALIA, NZ & WN E EUROPE
SUMMARY
Chapter 1 - Introduction
Chapter 2 – The 56 Year Sequences
Financial crises/panics tend to occur every 56 years in sequences and these sequences in turn are interconnected in sub-cycles in multiples of 9 years.
Within the sequences, financial crises often happen around the same month.
Financial crises and panics, as listed by famous economists, fall with statistical significance in patterns of the 56 year cycle.
Artifact sub-cycles arise on the diagonals of the sub-cycles in multiples of 9 years. This gives the various artifact sub-cycles based on a wide range on numbers.
The 56 year cycle indicates the timing of financial crises, but not the peaks and troughs in economic or financial trends.
The 56 year cycle was only clearly apparent in US and Western European history. These regions provided a well documented economic history and maintained persistent free markets over recent centuries. Other countries lacked sufficient historic data to permit a meaningful assessment of possible 56 year panic cycle trends.
Chapter 3 – England: 1555 – 1800
Several 56 year panic sequences extended back into the 16th century.
1550-1800 English crises do not fall with statistical significance in patterns of the 56 year cycle. Thus the 56 year cycle in pre 1760 trends cannot be confirmed, although further research is warranted in this area.
Chapter 4 – Business Cycles
The 56 year panic cycle can be directly linked to the 50-60 year Kondratieff Wave.
Mass psychology progressively changes over the Kondratieff Wave during the rising wave, plateau and down wave.
Wars tend to occur near the peaks and troughs of the Kondratieff Wave. However, a 56 year cycle could not be correlated with the beginning or ending of wars.
Various causal mechanisms have been proposed to explain why the Kondratieff Wave arises in economic trends, but no theory has been really successful.
Countries tended to go off the gold standard near the peaks of the Kondratieff Waves, due to wars and revolutions. Near the lows of the K Waves I, II & III, gold tended increase in value in real terms thereby boosting the incentive to raise mine output. Over recent decades gold has tended to become just another commodity as its price is no longer set by Government fiat.
Links can be made between the 50 – 60 year Kondratieff Wave and the shorter 18-20 year Kuznets and 9 year Juglar Cycles.
The business cycle over the past 150 years has become much less volatile, with much longer periods of growth and shorter shallower recessions.
Since the late 18th century, long cycles in US equities tend to move in steps with the market experiencing secular boom and plateau conditions. The actual time fr
Chapter 5 – The Great Wave
Inflation tends to fluctuate in Great Waves lasting up to 290 years, with a protracted period of rising prices (price revolution) followed by plateaus where prices remain stable for many years (equilibrium).
The Great Wave is composed of five stages, culminating in rampant inflation and major economic and social distortion.
The crises of the 14th and 17th centuries appear to be worldwide events, with major economic collapses in China, India and the Middle East.
Unfettered flows of money and speculation are highly destabilising, ultimately destroying whole economies and obliterating social systems near the top of the Great Wave.
The collapses are followed by sharp deflation and then a stabilisation of prices during the equilibriums, where social and economic conditions for the general population markedly improve.
Culture may flower during the equilibriums such as experienced in the 15th century (Italian Renaissance), 17th century (The Enlightenment & the Spanish Golden Age) and 19th century (Romanticism).
No convincing theory can be proposed to account for the Great Wave and its persistence in economic trends.
The Kondratieff Wave has been linked to the Great Wave. However, this could not be achieved for the 56 year panic cycle, due to primitive markets and a dearth of meaningful data on pre industrial financial crises and panics.
Chapter 6 – The Proposed 36 YSC Series 3 & 4
Major US and Western European financial crises tend to fall within the 36 year sub-cycles Series 3 & 4 as shown in Table 6.2.
Artifact 10 and 20 year sub-cycles can be associated with the 36 year sub-cycles Series 1, 2, 3 & 4. Such patterns help explain the widely known decennial cycle and the tendency for US recessions to occur in years ended in ‘0’.
Artifact 8-9-10 year sub-cycles may be generated from the 36 year sub-cycles Series 1, 2, 3 & 4, which may account for the price peaks in the Benner pig iron price cycles. |
Artifact 3 year and 13 year sub-cycles could be evident in the timing of crises in financial history.
The proposed 36 year sub-cycles Series 3 & 4 are in the ‘interesting’ category and more research is necessary to verify their validity.
Chapter 7 – The Benner Cycle
Benner’s pig iron price highs and lows are based on cycles of 9 years and its regular deviations.
Benner’s 54 year cycle is based on panics occurring in interval of 16-18-20 years. This can be directly linked to the 56 year panic cycle.
Both the Benner’s cycle and the 56 year panic cycle have a reasonable track record in predicting financial crises and/or recessions since the 1870’s.
Benner believed the larger planets in the solar system activated his cycles. However, both the 56 year cycle and the Benner cycle probably arise from Moon - Sun cycles influencing mass psychology and thus market sentiment.
Frost’s adaptation of Benner’s cycle shows very consistent patterns of DJIA cycle lows based on 16-18-20 and highs based on 8-9-10 year cycles during the 20th century.
Strangely, DJIA market lows fit an 8-10-11 year cycle much better than an 8-9-10 year cycle as expected from the Benner Cycle.
Chapter 8 - US Market Volatility
The biggest one day rises and falls in the DJIA tended to happen in the same crisis periods and also in autumn.
Top months of US market volatility took place with significance in patterns of the 56 year cycle. This applied to the three categories considered – stocks, bonds and commercial paper and over two time fr
The most significant results were achieved for top months of volatility over the very long term and for the two years commencing March 1 of those years in the 36 year sub-cycles Series 1 and 2.
The three sets of data - stock market returns, dividends and capital gains – did not give repeatable significance with the 36 year sub-cycles Series 1 & 2.
Chapter 9 – Predicting Financial Crises
Financial crises tend to occur around the same month as crises happening 56, 112, 168 years previously. This has been a reasonably accurate tool for forecasting financial crises in the coming year over the past two decades.
Chapter 10 – Earthquakes & Volcanoes
Major US earthquakes (mag => 7.0) occur preferentially in patterns of the 36 year sub-cycles Series 1 & 2. A similar finding was made for Australia, New Zealand and Western Europe. However, this was not repeatable for any other country or region, which seemed most unusual.
Most major US quakes by region tended to happen within the 56 year cycle and all took place in the 6 months ended February 15.
Since 1700, Sequence 52 showed a reasonably persistent trend for major earthquakes to happen every 56 years.
Only Hawaiian and Alaskan volcanic eruptions could be correlated with the 56 year cycle. This was not repeatable for any other region, which was a major anomaly.
Chapter 11 – Additional Considerations
Various calendar and seasonal effects show up in market patterns. The biggest DJIA one day falls are most likely to occur on Monday and in autumn. US & Western European financial crises most frequently take place in spring and especially autumn. US stock prices tend to follow the presidential cycle with down years more likely in post election years, with the market tending to rise in the rise in the pre election years.
If a major DJIA one day market fall happens within 29 days of a record high, the market will not experience a bear market. If this fall takes place after 29 days of a record high, the market will go into a bear market.
Chapter 12 – In Summary
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