Monday, March 28, 2011

The Big Picture, part 4

In the last post, we have established that we are in either a major depression or a dark age. Either scenario has very serious implications. In this post, we attempt to determine our position within the larger Millennium degree advance. We know that we ended a Grand Supercycle degree advance in 2000, and a bear market of at least Grand Supercycle degree is in progress.

So far, we have established the periods of two Grand Supercycle degree periods.

1720 - 1784       Major Depression
1784 - 2000       Industrial and Technological Revolutions

We also know that that the bear market that started in 1720 was initiated by the bursting of the South Sea bubble in England and the bursting of the Mississippi  bubble in France. We also know that the bursting of the bubbles marked the end of a long bull market period known as the Renaissance.

Now to take a look at the Renaissance period. The lack of stock market data prior to 1695 makes this endeavor more challenging. However, it turns out that people had kept records on economic activity as far back as 1150. This is important because the economy follows the stock market.

The book, The Great Wave, Price Revolutions and the Rhythm of History, by David Hackett Fischer, turns out to be an excellent source of information on economic data going as far back as 1150.

With the economic data on hand, we can first attempt to identify both of the depressions that occurred during the Renaissance. The later of the two depressions is very easy to identify because an event known as Tulipmania occurred from 1634 and the bubble burst in 1637, resulting in a deflationary crash and depression. The earlier of the two depressions turned out to be more challenging to identify as no obvious blow-off top is discernable. However, Europe was engulfed in a series of wars from 1479 - 1495. (Later, I will discuss the correlation between wars and bear markets. Correlations between social trends and stock prices are part of a science known as socionomics). Looking at the economic data of that time period and utilizing the correlation between wars and bear markets, the earlier of the two depressions occurred from 1470 - 1484.

The Renaissance can easily be characterized as a Grand Supercycle degree bull market advance. Here's the picture so far:

1400 - 1720      Renaissance
1720 - 1784      Major Depression
1784 - 2000      Industrial and Technological Revolutions

The Grand Supercycle bull market associated with the Renaissance subdivides into Supercycle waves as follows:

Supercycle wave (I)    1400 - 1470    Commercial Revolution
Supercycle wave (II)   1470 - 1484    Depression
Supercycle wave (III)  1484 - 1637   Enlightenment Age
Supercycle wave (IV)  1637 - 1648   Depression
Supercycle wave (V)   1648 - 1720   Scientific Revolution

There is in fact enough economic records to identify the major recessions that took place during the later part of the Renaissance. Here's the Enlightenment Age in terms of its Cycle waves:

Cycle wave I            1484 - 1514    Early Enlightenment Age
Cycle wave II           1514 - 1520    Major Recession
Cycle wave III          1520 - 1587   Middle Enlightenment Age
Cycle wave IV          1587 - 1600   Major Recession
Cycle wave V           1600 - 1637   Late Enlightenment Age

Here's the Scientific Revolution period in terms of its Cycle waves:

Cycle wave I            1648 - 1660   Early Scientific Revolution
Cycle wave II           1660 - 1667   Major Recession
Cycle wave III         1667 - 1676    Middle Scientific Revolution
Cycle wave IV         1676 - 1695    Major Recession
Cycle wave V          1695 - 1720    Late Scientific Revolution

I think that the wave count works well here, as it identifies Supercycle wave (III) as an extended third wave, and the tendency of first and fifth waves having a relationship of equality when the third wave is extended is also fulfilled quite nicely. Additionally, Cycle wave III of Supercycle wave (III) is also an extended third wave, with Cycle wave I having a relationship of equality with Cycle wave V being fulfilled.

In part 5, we'll explore the Late Middle Ages period in detail, using the economic data and socionomics to see where it fits within the larger picture.

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