Peter Turchin: Entering the Age of Instability after Trump

[Mikebert]

Warren Dew Wrote:As a knowledge worker, I'd say we did well until about the turn of the millenium, at which point the business became highly cyclical, with the booms spaced farther and farther apart and the busts lasting longer.

This is true.  Since 1960 business cycles have been longer than they were before.  A wrote an article on business cycles 14 years ago, where I characterized different scales of cycle length.  Between 1885 and 1960 business cycles were largely Kitchen cycles of about 40-48 months in length, which are believed to have reflected inventory cycles.  Before 1885, business cycles were longer.  The earliest work of which I am aware on business cycles was that of Clement Juglar (1862) who described the “Juglar cycle” of 7-11 years. I believe modern business cycles are Juglar cycles.  Juglar cycles were driven by investment cycles.  Before the early 1990’s, the investment driver was business investment, which is sensitive to interest rates.  Cycles ended when the economy “heated up” creating inflationary pressures, which brought monetary crises/interest rate hikes (e.g. 1970, 1981, 1990) or supply shocks (1973, maybe 1990) that induced recession. Since then the investment driver has shifted to financial investment bubbles, in stocks (2001, now) or real estate (2007).  Cycle length still seems to be what Juglar first observed 150 years ago, 7-11 years.  This month the cycle turns 9, so we are in the middle of this range.