The world is beset by at least three virulent rhythms and one benign cycle:
- Excessive debt that needs to be extinguished before a durable recovery is possible.
- Climatic conditions that are similar to those that have triggered major discontinuities in the past.
- Conflicts over water and major civil unrest.
- The release of individual energy sponsored by the Digital Age.
This is primarily a combination of the first two rhythms with their implications and what is likely to lie ahead, for the same forces that were present during the Seventeenth and early Nineteenth Centuries are with us today. Each were periods of considerable change and distress for many but, as the descriptions that follow suggest, each heralded a new era of prosperity and new thinking.
Each of these features is explained in The Global Recovery Manual but for the purpose of this presentation, we should concentrate on those that will provide the most powerful headwinds that need to be overcome. These are the 178.8 year climatic cycle and the debt rhythm of the Kondratieff Wave; the rhythms of conflict are decided by these others. Finally there is the nature of personal change.
The 178.8-year climatic cycle is based on the reaction of our planet to major shifts in the solar system. It is thought that the out-of-balance of the great planets Jupiter and Saturn has at least two effects. The first it to distort the sunspot cycle to reduce the solar output, the second is to drive long-term tidal forces to the northern hemisphere shown in the solid line of the chart; these act on the sensitive areas particularly around the Pacific where, in many places, the oceanic contraction causes what is known as the ‘ring of fire’.
Large volcanic eruptions shift huge quantities of dust and gases into the stratosphere which shield the sun. On April 9 1815, Tambora in the Sunda Straits went off with the force of a hundred fusion bombs; it ejected thirty five cubic miles of dust and over a hundred thousand tons of sulphuric acid into the stratosphere. There it spread north and south reducing global temperatures by 3 degrees F which made people feel they were living 900 miles closer to the poles. The combined impact over the climatic cycles is shown in the Orange line on the diagram.
These cycles have been registered four times in the last Millennium and have been designated as Minima for each time it became cool there occurred major discontinuities as set out below. However we should note that the early part of the Thirteenth was unusually warm; it was known as the Medieval Warming with very little discharge of carbon dioxide that is so concerning politicians today.
- The Wolf Minimum of the 14th Century devastated Western Europe to cause a terrible famine in 1317/8 and later; this reduced peoples’ immune system that they were unable to counter the Black Death years later. It was so cold it forced the evacuation of the Danish settlement on Greenland but it had the upside that it ended serfdom in England. (This is not shown in the diagram)
- The Sporer Minimum actually occurred mid-15th Century but its impact was felt around 1500 when civil wars and famines could have increased the wrath of northern Europe when the Pope excommunicated a little known Augustinian monk who triggered the Reformation. Then the upside was the Elizabethan age in England.
- The Maunder Minimum started mid-17 Century and lasted for 100 years. It was probably the most powerful for it was a contributory cause of the civil wars in England and in Germany, famines in the Ottoman Empire (when two Sultans were garrotted), the overthrow on the Ming Dynasty and nearly the loss of the Cape Cod colony. However the Glorious Revolution of 1688 created the basis for the English Constitution and the Enlightenment.
- The Dalton Minimum of the late 18th Century caused famines in Western Europe and was the direct cause of the violence of the French Revolution and the Napoleonic Wars. It also defeated the French Emperor in his ill-fated invasion of Russia. However the outcome was peace in Europe until the 1870 Franco-Prussian War.
And now? We have the prospect of wars over water, rising nationalism, mass movements of people, revolutions and civil wars. And the upside? The prospect of a new Elizabethan Age into the Digital Era.
The Debt, or the Kondratieff Cycle is described in detail in The Global Recovery Manual but the area that should concern us most is the cycle of debt shown for the United States.
The Kondratieff long wave was called after its originator, an economist at the Academy of Agriculture in Moscow during the 1920s. Fascinated by the variations of interest rates, raw and finished goods material prices in the United States, France and Britain, he defined a cycle length of between 45 to 70 years of boom and bust caused by the rise, then destruction of debt. Of the three cycles shown in the graph showing US debt, only what-are-known-as K 2, 3 and the not-completed 4, are shown (there was a similar period between 1790 and 1849). We should note what happened to the former periods for it has great relevance for the present.
Analysis of the debt/gdp cycle of the USA:
- The Second Cycle K2 was triggered after the Mexican War in 1842 when New Mexico, Arizona and California were ceded to the Union. The resulting gold rush added liquidity that helped the advance of banking, the building of railroads that united east and west, and the development of agriculture. The Civil War in the early 1860s ended in inflation and a rise of debt that Diagram 2 shows collapsed in the early 1880s.
- The trigger for K3 was technology-driven with cars like the Ford Model-T, the exuberance of Theodore Roosevelt’s presidency and producing for the allies war machine. This ended in the rapid inflation of 1920s followed by what was known as the ‘Roaring Twenties’ fuelled by spare money injected into speculation of land and stocks. This all ended in the ‘crash’ of 1929 followed by the nominal GDP of the US declining fifty percent by 1932. This explains the rise in the debt/gdp ratio to 300% in 1930 and then the crash by one third until 1935 when debt nearly equal to the GDP in 1929 was destroyed. By 1950 the ratio had virtually halved.
- The start of K4 was initiated by the need to rebuild Europe and Japan, the great Marshall Plan and then the Korean War. These were the days of full employment and booming production financed by equity and debt when America was able to sell to a beleaguered world. The ratio was similar to the rise in K3 until it accelerated in the 1980s when the US outdid the USSR in weapon development to defeat communism. There was a deep recession in the early 1990s after which the Federal Reserve Bank made money freely available and the ratio exceeded the peak of 1933 in 2003.
The combination of these two major cycles is shown in blue: the upper half when it is warm, the lower when it is cooler – as we approaching now! Historically these have shown singular times.
During the Seventeenth Century there were civil wars and revolts at similar latitudes around the Northern Hemisphere but emerging from it there was the Enlightenment. In the late Eighteen Century and early in the next century the Napoleonic Wars rent Europe but emerging from it was peace on the continent for some fifty years and the great expansion of the Victorian Era.
And Now? The world is faced with a combination of the need to eliminate debt while, at the same time, managing difficult climatic conditions that historically have led to civil unrest. This will demand the attention of individuals of unusual character and foresight. Managing the turmoil is the subject of this presentation.
The cycles of Conflict have been driven in the past by the two previous dynamics:
As suggested earlier, climatic cycles have been responsible for wars over water and, what is more alarming, civil wars and revolutions.
Depressed economic conditions have created rising nationalism and wars of expansion by states driven by dictators as a means of relieving internal unrest.
The Digital Age, the power of the individual and a five-hundred years cycle.
The Sporer Minimum in the early part of the Sixteenth Century was the focus of innovation, wars, exploration and, with the Reformation particularly in England, a release of the human spirit that drove the Elizabethan Age and beyond. The technology known then drove the Industrial Revolution two centuries later; it spawned a spate of experimentation both intellectually and practically during the Eighteenth Century Enlightenment that generated the huge advances of the Victorian Era.
Now the technology is different. Instead of being based around the melting, rolling, forming and machining of metals it is based around the exploitation of the atom to create a whole series of innovations that will drive the next upswing. Already communications allow individuals to access material and ideas that would have astounded their grandparents. Instead of relying on the printed word, people can now scour the internet and create movements that are enabling would-be leaders to form political parties totally outside the mainstream.
At present politicians and bankers are applying conditions on debtor counties that are forcing businesses to close, millions to be without work and rising distress, but this will change. Soon the electorate will choosing individuals to represent them with views and policies that directly affect individual lives – just as the Reformation freed the human spirit from the then control of the Medieval Church. The resources now available to the individual will force those in power to make changes from the bottom-up, not the present obsolete top-down brutalised forces now being applied in many countries; what was possible only a few years ago is no longer becoming acceptable. Once again, these changes are releasing the power of the human spirit only equalled five hundred years ago.
Move to next part: Implications