Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: energyplay who wrote (62795)	4/26/2005 10:34:30 PM
From: Elroy Jetson	of 74559

To the extent that Nicolai Kondratieff's cycle is predictive, I have always assumed that it relates to debt formation. Leverage reduces the stability and resilience of an individual family or an entire economy. Debt allows you to do tomorrow's spending today, which is fine when the total debt of a society remains constant relative to its income. But people have a long history of increasing leverage until almost any small disruption results in a chain reaction of financial failures, de-leveraging and collapsing demand. This has occurred in during the past 25 years, and previously post WW-I. home.pacbell.net Kondratieff may have had something else in mind, but for me this explains what happens. The social question is why societies go through the same cycle of rediscovering "the efficiency of debt" as Michael Milken described it. It seems to require a certain loss of social memory where the previous economic depression teaches the danger and horror of debt. .

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