The Inflation Supercycle

Inflation runs in a 54-year cycle known as the Kondratieff cycle, or the “Long Wave,” which represents the changes in prices of products over time. Nikolai Kondratieff, a Russian economist of the 1920s, wrote several papers dealing with the question of long economic cycles. In his book, aptly titled Long Economic Cycles, he showed how several indices, such as commodity prices, interest rates, wages, and foreign trade, vary over time. From this data, a consistent and repeatable form emerged – a cyclical pattern of consistent length. This curve came to be known as the Kondratieff wave. This curve can be compared to the actual values of these indices over long periods of time and is shown to be predictive.

The Inflation Supercycle contains the elements of all of the other cycles within it; although, it takes two complete Inflation cycles (2 x 54 years = 108 years) to correlate to three complete Stock Market supercycles (3 x 36 years = 108 years). This I why when these cycles are in-phase (aligned peak or bottom), then the consequences can be severe (as in the 1929 Stock Market collapse). The Inflation cycle is a perfect multiple of three Real Estate cycles, and the Inflation Supercycle cycle is a multiple of the Business cycle. Note also that the primary driver of the Business cycle is Innovation, which is also the main force behind the Inflation Supercycle.