The price analysis on this page is based on average velocity “speed”, it’s price/time junctures and harmonics ..it is something you have probably never seen before. – Hal Swanson

An old but fitting quote: “Rhythm is in time what symmetry is in space”.

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CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this advertisement and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using the Speed and Harmonic Research methodology or system will generate profits or ensure freedom from losses. The testimonials and examples used herein are exceptional results, which do not apply to the average member, and are not intended to represent or guarantee that anyone will achieve the same or similar results. Each individual’s success depends on his or her background, dedication, desire, and motivation.

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During the Republican Convention in August 1992, Hal Swanson gave a ninety minute presentation entitled “Long-term Cycles and Patterns in Human Behavior” to a group of about 300 investors. It was originally developed after the fall of the Berlin wall in 1989, and later updated after the first Persian Gulf War. It is now being updated once again. Also, see related links 1, 2, 3, 4

Here are segments of a thirty minute audio tape that was a summation of that 1992 presentation. This is a different perspective on human nature, which we believe will add understanding to our collective future. Click on link Part 1 or Part 2 to listen.

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Climate Change & Roman History

In 300 B.C. the climate goes warm and moist and food is plentiful again. In Northern Italy the Alpine mountain passes stayed open all year around, and the ancient Romans go on a major conquest of the Meditrerrain area and Europe. The Chinese are doing the same thing in their part of the contient for the same climatic reasons. Trade began between the Roman Empire and Chinese Empire.

In about 450 A.D. the global temperature went down again. In the Northern Hemisphere the temperature dropped -7 degrees. This caused freezing droughts and massive movements towards better growing conditions in the southern and eastern areas of Europe – The Huns and Normadic tribes overran the Roman Empire and ushered in the Dark Ages.

Climate Warming and The Rise of The West

The last climatic warming came in about 1750 A.D. when the temperatures in Northern Europe rose +4 degrees. England had the best growing conditions for perhaps 3 decades in the past 1000 years. Wealth was created by the surplus and prosperity spread throughout the region- improved agricultural inventions increased the crop size more than 4 times and this created more work and more wealth and more people. Traditionally, when wages go up and prices go down people get married at an earlier age and have more childern ..so the population shot-up creating greater demand for housing, and home furnishings and household goods, which in turn created factories and a greater standardization of forms and molds. This period developed the start of the steam engine and the conversion of raw energy into industrial efficiency.

After The Crash by Geoffry F. Abert, PH.D. The Roman Empire and U.S. Social Parallels

The similarities between the histories of Rome and the Unitied States may already be obvious to you. Consider, for example, that Rome’s time ran out when she:

1. Rome moved most of her people off the farms and into the cities, where they more rapidly communicated counterproductive demands and disastrous panics;

2. Rome stressed standardization and comformity amongest it’s people. Higher education emphasizes training to “fit the system”. A striving for identical life styles. Also, alot of common names.

3. There was religious tension between ruthless materialism and idealism existed.

4. In both Rome and America team sports were stressed (like the NFL);

5. Rome declared that every member of society was equal and deserved to have whatever any other member had;

6. Rome saw the emphasis on the “people to be pleased” move down from the aristocracy to the middle class and then to the lower class;

7. had everybody adopting the values of the lower classes instead of modeling after and aspiring for the upper classes;

8. Later years, Rome was faced with reluctant trading partners in other countries of her world;

9. Rome lost a steady stream of food and essential supplies because of weather reverses;

10. Both Rome and US found themselves importing more than she was exporting;

11. Successive Roman emperors fought economic decline by tax and spending policies. This added to monetary manipulation had yielded chronic stagflation..and finally price and wage controls;

12. There was continuously escalating inflation resulted in the public assumption that such economic spiraling was normal and natural;

13. Rome gave up the pursuit of artistic and technical superiority;

14. Rome became burdened with social welfare efforts to support the masses who were becoming harder to please and ever more antagonistic;

15. There was declining general safety and protection for the citizens because of ever-increasing groups that took the law into their own hands;

16. After foreign wars there was wide spread begging, when the social system broke down;

17. Divorce was very common in the last days of Rome;

18. Rome had a rise in superstitious beliefs, astrology, religion, and any other escape philosophies that promised a better world to come;

19. There was entered a time of political purges and revenge;

20. They allowed a single essential group to take control ( in Rome, it was the army. For us it could be the military-industrial complex, the labor unions, or simply the poor );

21. Then began a final era of corruption and intrigue that left a society in which no one could be trusted or depended upon.

22. In the Second Century B.C., there was no greater revolution in Rome than that of woman’s rights. They became emancipated in every way, including economically.
The growing role of women in the U.S. has led to many changes in public opinion, including the following: the desire for freedom to be replaced by security, the tendency to focus on the child, and the youth worship syndome, the suspicion of individualism, the desire to avoid risk, and the emotional personalization of issues. (pg. 103 Cycles of War)

23. Romans could no longer keep their aqueducts repaired. Much of western civilization doesn’t seem to have will to correct it’s …water and sewer systems, bridges, and road repair either.

24. ” Family limitation played some part in the history of Greece and Rome. It is amusing to find Julius Caesar offering (59 B.C.) rewards to Romans who had many children, and forbidding childless women to ride in litters or wear jewelry. Augustus renewed this campaign some forty years later, with like futility. Birth control continued to spread in the upper classes. “(Durant pg.23)

Of the thiry-two civilizations the earth has seen, Toynbee says that over half have collapsed and half of the rest are in a terminal condition. The distinguished historian himself concluded after his impressive study ” …Death the Leveler will lay is icy hand on our civilization also. ”

The American historian Crane Brinton has analyzed four major historical revolutions. These are the French Revolution, the American Revolution, the Russian Revolution, and the Glorious Revolution of England in 1688. Crane found that conditions preceding each of these revolutions had a commonality. Among these were:

1. Later in Rome there was the presence of bitter class antagonisms;
2. There was a breakdown and ineffective operation of government machinery;
3. In late Rome there was approaching bankruptcy of the government;
4. There was a loss among the ruling class of confidence about their traditions, with many members of the upper class moving over to support the values of attacking groups.

All of these conditions sound strikingly familiar to the observer of Western civilizations.

“By the time Jesus was born, the Roman Empire extended from germania in the north to the sarhara in the south. Roman banners flew over cities from the Atlantic to the Euphrates.

The great roads the Romans first built to move troops swiftly to battle also enabling the population to travel about the empire.

After peace was established throughout the Roman Empire a few years before the birth of Christ, open routes and sea lanes promoted commerce. Improvement in navigational aids increased the safety of sea transportation.”

“A stable and uniform currency, the construction of good roads, a laissez-faire policy on the part of the government, and the revival of great trading cities such as Corinth and Carthage were added stimulants for a healthy expansion in commercial actvity.” Bourne, A history of the Romans, pg- 359

According to the Club of Rome report ( 1972 ), economic population growth has to stop almost immediately, or shortly after the arrival of the next century the population, food production, and pollution curves, along with the supply of natural resources, will converge for a catastrophic collapse. The life style of those who survive will center on getting food and maintaining life at the simplest possible levels.

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There is a bit of “tongue in cheek” in the title. Our lives are so busy with hectic schedules and with an intense focus on our daily activities, that we sometimes feel like the whole solar system and universe orbits around us. But, when we step back and look at the physics of the solar system we begin to realize that we are only along for the ride. Here on earth everything (including us) is buffeted by overwhelming waves of tremendous solar energy, light, electromagnetic, and cosmic energy. In this presentation, I will be showing you some very interesting correlations between the various phases of the 11 year solar energy cycle (usually called “the sunspot cycle”) and the corresponding changes that impact our collective behavior as a result.

I believe it is well documented with convincing evidence that fluctuations in solar irradiance (energy) correspond to fluctuations in levels of human excitability, which in turn influences the business cycle. Also, that changes in solar energy output impacts all of nature in certain predictable ways. It was with this knowledge that I knew, the increasing rate of solar energy released in the late 1990′s (as part of the 11 year “sunspot” cycle) would raise our collective level of excitement and emotionalism to levels of “irrational exuberance” and extreme. Also, as the 11 year cycle in solar energy was peaking in 2000-2001, we would likely be entering an economic recession. My commentary with these forecasts are archieved on the CFOS research page. This was NOT accomplished by astrology, but rather by studying the works of many outstanding scientists spanning a period of 150 years. I hope you enjoy this presentation and find it useful! – Hal Swanson

Remember the great enthusiasm and excitement in the late 1990′s, it seemed like almost anything was possible! At its fever pitch, we were all excited about life and the limitless opportunities around us. Well, that collective intense optimism has repeated itself with regularity (and much variance) throughout our history. It most closely matches the cyclic acceleration of the Sun’s energy as measured by an increase in sunspot numbers. The idea that the sun’s activity can affect us psychologically will make some people uncomfortable, but the evidence is there and it seems undeniable. By understanding all the processes at work, supported by multiple scientific papers, we can use this knowledge to anticipate social change and to perhaps even improve upon it. I will be giving plenty of source links for those of you like myself, like to dig into the nuts and bolts of a subject. By the way, the limitless opportunities are still there, but the Sun’s energy is now in a decelerating phase which collectively “dampens” or lowers our level of excitement ..and we can sense that. As I go on, I will be telling you more about this!

The relationship between energy flux on the sun and it’s effect on everything alive on earth is pretty well documented. The 11 year sunspot cycle has some close correlations to the stock market, economic growth and recession, periods of high mass excitability, weather, health, and more…

First, I would like to put the sun, earth, and the solar system into perspective. The farthest known orbiting object around the sun is a tiny ball of ice and rock called 1996 TL66 which lies more than 12 billion miles away at the farest point in its orbit. Pluto, the farthest planet from the sun orbits it from about 4.6 billion miles away. So, we’re talking about our solar system which is unimaginably big! When it comes to mass, the sun is some 333,400 times more massive than earth and contains 99.86 percent of the mass of the entire solar system! And, Jupiter is twice the mass of all the rest of the planets in the solar system combined! So, earth and the other planets are just along for the ride. The sun is held together by gravitational attraction, producing immense pressure and temperature at its core (more than a billion times that of the atmosphere on earth). The total energy radiated from the sun is 383 billion trillion kilowatts, which is the equivalent to the energy generated by 100 billion tons of TNT exploding each second.

(ref: Recent article from NASA (09/12/06) – “First Global Connection Between Earth And Space Weather Found“; Here is a great primer on sun-earth fundamentals by NASA and for current space conditions go to SOHO. And, here is a list of quotes by scientists on various aspects of the sun/earth connection Whole Earth Forecaster).

The Planetary System-Sun Dynamics

We think of the the sun as sitting in the center of the solar system called the baycenter, but in fact the Sun is pulled in a circular pattern (relative ecliptic) around the baycenter by the collective masses/orbital velocities of the giant planets, jupiter, saturn, uranus, and neptune. These collective forces are so great that the sun is pulled up to 2.2 solar radii outside the baycenter of the solar system by the angular momentum of the planets! It’s believed by some scientists that this orbital/cyclic behavior between planets and the sun creates variations of more than 7% in the sun’s equatorial velocity which significantly affects the sun’s magnetic fields. According to theory, it is these major fluctuations in the sun’s magnetic fields which affect the sub-surface solar convection (internal dynamics) resulting is changes in the sun’s energy output, which in turn creates variation in the earth’s climate. For our purposes it is the pulsating 11 year cycle in energy output, called the “sunspot cycle” that is most useful in this presentation. The 11 year cycle is actually one-half of a 22.1 year sunspot cycle which is identified by a reversal in sun’s magnetic polarity. There is evidence that changes in the sun’s energy output significantly influences the earth’s dynamics, it’s climate, and all it’s living creatures both physically and psychologically. (ref: Planetary Positions Affect Solar Activity).

The picture on the right illustrates the typical changes in solar flux that occurs over an average 11 year sunspot cycle. This cycle is not constant in length nor in its intensity. The length can vary from 9.5 years to 12.5 years and the sun’s internal magnetic field and energy output will flucuate uniquely with each cycle. During the Solar Minimum its magnetic field will be organized and well structured. During the following 5-6 years as the sun moves toward Solar Maximum the orderly magnetic field of the sun will be totally destroyed, resulting in massive cornal holes and solar flares sending intense energy releases (solar winds) throughout our solar system. As the cycle moves toward Solar Minimum again, the re-organization of the solar magnetic field occurs bringing order and relative calmness to the sun’s surface. This approximate 11 year cycle leaves its footprint on earth’s geomagnetic field placing stress on this planet’s surface (increased earthquakes and volcanic activity), on the climate (three times the number of thunderstorms occur during solar maximum) and in a cyclic pattern that’s evident in various human activities as well.
(ref: Climate and Keplerian Planetary Dynamics, The King-Hele Cycles, Solar Activity: A Dominant Factor In Climate Dynamics, Quite lengthy, but excellent Timo Niroma: One possible explanation for the cyclicity in the Sun).

Correlation: Sunspot Cycles & Economic Activity

The graph of sunspot numbers since 1900 has some characteristics that should be noted. First, 9 out of 10 of the sunspot cycle peaks (sunspot maximum) occurred near or at the end of each decade. Second, 9 out of 10 of the cycle lows (sunspot minimum) occurred in about the middle of each decade. Thirdly, the sunspot numbers in each cycle increased to a maximum number in the late 1950′s peak, then began declining including the 2000 peak. Interestingly, the greatest period of thunderstorms and severe winters in the last century occurred during the decade of the 1950′s. Look at the chart below, you see that each sunspot cycle corresponded with an economic recession! ..Here’s the sunspot peaks and recessions for the last five decades: 1957-1958 (also 1960); sunspot peak and recession: 1969-1970; sunspot peak and recession: 1980 (also 1981-1982); sunspot peak and recession: 1990-1991; sunspot peak and recession: 2000-2001; and next projected sunspot peak and recession: 2009-2012.

It is during the period of increasing (acceleration) solar activity that we collectively become more excited and energized, probably as a result of increased geomagnetic flux and atmospheric ionization. As solar energy output is rising, earth is impacted by increased waves solar magnetic winds, which changes the natural dynamics of our environment. Our economic activity and level of enthusiasm has risen during the second half of each decade following the increasing rate of sunspot activity (solar energy output) ..the correlation is there. At sunspot peaks, the speed of increasing sunspot activity has already begun to slow (declining rate of change) and our level of excitability is declining which slows the rate of change. Usually, economic extremes have already been reached and a relative state of exhaustion has set in. The following few years is a period of re-grouping and consolidation both in economic and emotional terms. ..before it all starts up again with the next cycle!

In the early 1900′s a Russian named A.L. Tchijevsky studied this solar/social pattern and wrote extensively about it. He constructed an Index of Mass Human Excitability covering each year from 500 BC to 1922 AD including the histories of 72 countries. He found that over 80% of the most significant events occurred during the 5 years of the sunspot activity maximum. I have written more about him later in this presentation, but here I wanted to show how he divided the eleven year sunspot cycle into four different social phases. ** There is a back shift of one year in the cycle years given to reflect the approximate peak in rate of change for solar energy output. **:

Period 1: (approximately 3 years, minimum sunspot activity). Peace, lack of unity among the masses, election of conservatives, autocratic, minority rule. **Last cycle: February, 1993 to July, 1996; Next cycle: 2004 to 2007.

Period 2: (approximately 2 years, increasing sunspot activity). Increasing mass excitability, new leaders rise, new ideas and challenges to the elite. **Last cycle: August, 1996 to April, 1998; Next cycle: 2007 to 2009.

Period 3: (approximately 3 years, maximum sunspot activity). Maximum excitability, election of liberals or radicals, mass demonstration, riots, revoluation, wars and resolution of most pressing demands. **Last cycle: May, 1998 to May, 2001; Next cycle: 2009 to 2012.

Period 4: (approximately 3 years, decreasing sunspot activity). Decrease in excitability, masses become apathetic, seek peace. **Last cycle: June, 2001 to ???, 2004; Next cycle: 2012 to 2015.

Whether or not the connection between solar activity and social behavior can be broken down into such neat catagories is debatable, but I see a more general pattern here which can be useful in our understanding of this dynamic relationship and in trying to anticipate the intensity of our collective activities.

The decennial chart on the right projects the next several years of stock market behavior based on the decade (10 year) pattern for the last century. For investing purposes, the price trend is a more important factor than the decennial pattern (caution is advised!). Here, I am using the stock market as a general gauge of economic activity and public sentiment. The graph indicates that recessions, economic weakness, and public pessimism occurs more frequently in the first few years of each decade. Then as the decade progresses public optimism grows and economic activity strengthens. This phase ends with consumers, businesses, and governments over-confident and over-spent. Now, look back at the sunspot cycle graph and you’ll see rapidly declining sunspot numbers (lower solar output) in the early years of most decades and rapidly rising sunspot numbers in the later years of each decade. This a very strong correlation, ..and I doubt it’s the sun getting excited about our stock market going up!

So, what happens “if” economic conditions are poor as we enter the next excitable phase of the solar cycle? Well, it’s possible that people would become more pro-active in demanding changes in their social welfare. Perhaps, labor strikes for higher wages, demonstrations for a “freer” health care system, demands for national job training and public works, higher taxes on the wealthy, this would obviously be a shift towards a more socialistic society! And yes, socialism vs individualism does cycle around, just like everything else in the universe! ..The next period of intense excitability is approximately late 2009 to 2012. As of early 2004, the stock market has risen to levels of extremely high price/earnings ratios (in the mid-30′s basis S & P 500) By mid-2005, I expect either a major acceleration of the uptrend following the decennial pattern above (caused by turbo-charged real GDP growth ..which seems unlikely) or more probably, a significant price reversal downward riding on the back of major debt problems, rising interest rates and currency based inflation (too many dollars). ..The current upward retracement (S & P 500) of the September, 2000 to March, 2003 decline is projected to be completed between 1163.83 (06/10/04) to 1252.65 (09/22/04), I would look for some important price pattern changes in that area.

Sunspot-Manufacturing Graph by Edward R. Dewey (1968). The Foundation for the Study of Cycles.

Here is another example of the correlation between solar activity and our collective behavior. This graph shows the rise and fall of US manufacturing activity which is tracking very closely the rate of change in the 11 year cycle in sunspot activity (compare graph B with graph C). The Foundation For The Study Of Cycles has many more examples that fit this same pattern, some of which are listed later in this presentation. Mr. Edward R. Dewey is considered the father of cycle research and was asked by President F. D. Roosevelt in the 1930′s to determine the causes of the Great Depression. While he produced volumes of evidence as to the cyclic nature in man’s endeavors, much of his work at the Foundation has not been updated since his death. I have offered many links on this page to give interested readers much food for thought. At the bottom of this page, I have included a list of other alleged economic and socialogical 11 year cycles (10.8 years to 11.4 years). So, why have we not been taught about our cyclic connection to nature? …perhaps when prosperity is all around us who needs more answers?

Correlation: Sunspot Cycles & War

I have read that over the last 3400 years of world history there have only been 200 years of absolute peace, ..quite a statement about man’s lethal ego! Many studies have found cycles in the intensity of wars (number of international battles) ranging from 9.6 years to 180 years in length. Two of the most dominate cycles found by Edward Dewey (1970) was the 9.6 year and 11.24 year cycles. Both of these correspond closely to the 11 year sunspot cycle. Dewey wrote, “It is inconceivable that the war cycle, which has recurred as regularly as it has, and has continued over nearly 2,500 years, could possibly be the result of anything except some external cause.” The peak in war activity seems to center around a year or two of solar maximums with a lessening of warring conditions within a year or two of solar minimums.

The following is a list of solar 11 year cycle peaks with their corresponding major war events: Solar Sunspot Peaks: peak ..1777-1779 (1776-1783 American Revolution), peak ..1786-1788 (1788-1791 French Revolution), peak ..1803-1805 (1803-1806 Napoleon conquers Europe), peak ..1815-1817 (1815-1817 Two wars to defeat Napoleon), peak ..1829-1831 (1828-1832 Revolts in Turkey, Mexico, Belguim, Poland, France, Britain), peak ..1847-1849 (1846-1848 Mexican War), peak ..1859-1861 (1861 Amercian Civil War begins), peak ..1869-1871 (1869-1870 Franco/Prussian War), peak ..1882-1884 (1883-1886 big US labor strikes, revolt in Sudan), peak ..1892-1894 (1893-1895 Zulu revolt, Cuban revolution), peak ..1905-1907 (1904-1905 Russo-Japanese War), peak ..1916-1918 (1914-1918 First World War, Russian Revolution), peak ..1927-1929 (1927-1929 US stock market crash, revolt in China, India, Vienna), peak ..1936-1938 (1936-1939 Spanish Civil War, Germany and Japan start Second World War), peak ..1947-1949 (1946-1949 Red Army wins China, Greek Civil War, India-Pakistan riots), opeak ..1956-1958 (1957-1960 French-Algerian War, Cuban Revolution, revolt in Iraq, MauMau, Israel invades Sinai), (SSP) 1967-1969 (1967-1969 height of Viet Nam War, worldwide student uprisings, Czechoslovakian uprising/USSR invasion, US inner city riots), peak ..1978-1980 (1979-1982 USSR invades Afghanistan, Iraq-Iran War begins, Falkland War, US invades Grenada), peak ..1988-1990 (1989-1991 Dissolution Of Soviet Union begins, Berlin Wall falls, Tianamen Square uprising, Yugoslavia begins slaughter in Bosnia, Somalia Civil War), peak ..1999-2001 (1999-2001 overthrow in Indonesia, Sernian-KLA conflicts increases, Trade Center/Pentagon terrorist attack, US prepares Afghanistan invasion).

Edward R. Dewey’s War Cycle Graph

In Dewey’s classic book titled “Cycles – Selected Writings” (published in 1970), he included an indepth cyclic analysis of international battles. His graph below is a 10.8 year (sunspot cycle?) time chart (highs only) of the smoothed deviations of international battles from 550 A.D. through 1957. While several deviations can be seen on the graph, the general ebb and flow of warring conditions throughout history can be clearly identified. The broken line rises for 86.4 years and falls for 86.4 years.

I have written above that, the sun is pulled in a circular pattern (relative ecliptic) around the baycenter by the collective masses/orbital velocities of the giant planets, Jupiter, Saturn, Uranus, and Neptune. These collective forces are so great that the Sun is pulled up to 2.2 solar radii outside the baycenter of the solar system by the angular momentum of the planets. This extreme pulling on the sun occurs in approximately 170 to 180 year cycles. The broken lines on Dewey’s war graph represents an idealized cycle of 172.8 years in length!

It looks like a sun-excitability connection to me.

The last ideal low occurred in 1944 and the next peak in international battles is projected to be 2029. ..sorry about that.
(ref: 1816 – The Year Without A Summer 170 to 180 year solar cycle).

Some factors that could make the Sun influence our behavior

As the sunspot numbers are rising solar energy output is increasing also. Solar flares and their accompanying solar winds are intense solar explosions sometimes as large as 50,000 miles across which erupt out into space. During these solar eruptions ultra-violet radiation, electro-magnetic waves, and electronically charged particles are spread throughout the solar system and reach earth in a couple of days. This bombardment of the earth causes magnetic storms, aura borealis, fluctuations in atmospheric pressure, and an increase in positive and negative ionization. Studies have shown that electrical thunderstorms increase 300% after these solar flares and the number of earthquakes and cyclones increase as well. These solar storms have disrupted satellites, power grids, and telephone systems. A few studies link ultra-violet radiation and changes in magnetic fields to increased metabolism levels or erratic behavior. And it is well known that an increase in negative ions make us more energetic. So, it is quite possible that the acummlative effects of these factors can change our collective behavior, perception of reality, and levels of personal activity.

(ref: Sunspots and Human Behavior, Solar Activity & Magnetic Field Fluctuations Affect Earth Weather, Weather Affects Humans, Influences of Solar Activity Upon Biosphere, Sunspots more active than for 8000 years, Sunspots have a measurable effect on crops, Influences of Solar Activity Upon Earth Prices)

The primary source of energy to earth is irradiant energy through many wave lengths of the light spectrum. Sunlight powers photosynthesis, and provides energy for the atmospheric and oceanic circulations that profoundly affect all living things. While the source of the sun’s energy comes from its core, the source of the solar cycle variations come from tremendous fluctuations in the sun’s own magnetic field, and this magnetic energy is released in the forms of flares and intense coronal mass ejections. It is these accumulative large blasts of solar energy during solar maximum that exhibit the greatest effects on our behavior and earth’s climate. Evidence of solar cycles can be traced back many thousands of years in atomic isotopes found in polar ice deposits. What protects earth from a letheal dose of solar energy is earth’s strong internal electro-magnetic field which projects out into space and interacts with solar winds (energy) which creates a cavity called the magnetosphere which ends at the ionosphere. The ionosphere begins at an altitude of about 50 km above earth and reaches out to more than 1000 km above earth.

(ref: The Earth’s Ionosphere, Solar Flares And Possible Effects On Humans, The Ionosphere – A Real-Time Dynamic Model, Effect Of Geomagnetic Activity On Cardiovascular Parameters, Possible Space Weather influence On The Human Brain, Solar Activity: A Dominant Factor In Climate Dynamics, current space weather activity SpaceWeather.com)

There have been over 5000 studies completed by the US military, universities and major corporations about air ioniziation and it’s effects on humans and the biosphere. The results of these studies are significant and have yet to be explained to the general public. I have given numerous links to the processes of ionization of the atmosphere and I recommend you read them. Generally speaking, an excessive positive ionization is harmful, this comes from pollution and a big city environment, very dry weather, several electronic appliances, and many other sources. A short list of the detrimental effects of excessive positive ionization is anxiety, apathy, fatigue, headaches, aggressiveness, irritation, emotional unbalance, and an increase in other health problems. What basically creates the opposite effects is an environment rich in negative ions.

(ref: the above positive/negative ionization chart came from Superforce.com , and here is an excellent study on ionization Ionization and Air Quality – A technological Study)

So, how does our future look based on all of these influences?

The future is precise terms is unpredictable! Here I will combine what I have learned about social and economic cycles, market (mass) behavior, and the 11 year solar cycle, to draw a possible social scenario for the next 10 years or so. First, I must state that the future will not look like my scenario, but some of the projected trends should be correct and exert themselves on our collective behavior. In 2004, we are living in a very stressful environment, the Iraq war (on going), tremendous global economic imbalances, such as US trade and budget deficits, and ballooning US debt, Europe has social labor laws and a tax system that retards growth, Asia has underdeveloped social systems and economies that are overly dependent on US exports. Lastly, there are growing global doubts about the world leadership role of the United States. From my perspective, we will see weak economic growth with ongoing debt “issues”, with high price volitility and substantial “real” inflation for the foreseeable future. ..There is too much compounding global debt to pay off without more financial crisses and de-stablizing market volitility!!

Here is my armchair analysis of what lays ahead for the next 10 years. This is being done with humility. I have already given projected years for each social phase of A.L. Tchijevsky’s sunspot cycle above. This analysis is based on my understanding of the solar cycle, Tchijevsky’s pattern, and my interpetation of current events : From 2004 to 2007, we are told the ecomony is working, ..the people are apathetic, lack unity, seek peace, and the autocratic conservatives rule. From 2007 to 2009, the economy is declining in “real” terms, and the people want to “vote in” economic relief. The public is frustrated and makes demands for social reform against an elitist government (who will win??). New private leadership will challenge the old system with an increase in activism, and a more socialistic agenda. From 2009 to 2012, maximum excitability, who knows what to expect here? Perhaps more warring conditions, a probable economic recession, and the possiblilty of sweeping changes (more non-establishment types get elected) a move towards representing the majority at the expense of corporations (more socialism). From 2012 to 2015, a decline in excitability, most people probably accepting reduced government social influence and support, apathetic towards their future and perhaps living in the memory of past successes. Hopefully, I’m wrong!

The decennial pattern tells us the Dow Industrials should rise into 2007 before having a significant correction and then rise again to a peak towards the end of 2009. It will probably do the opposite. Watch closely the stock market price action between the fall of 2004 and the spring of 2005.

(ref: NASA, Solar Physics Sunspot Cycle Predictions )

The Sun’s Energy and Patterns in Human Behavior

The obvious solar cycles we live with (and usually take for granted) are: the 24 hour day-night pattern (with the nightly sleep period being one of my favorites). There are other times of day that we all recognize as special to each of us, the creativity of the morning or the calmness of an evening, ..and there’s nothing like watching a beautiful sunset, or on those too rare of occasions a sunrise. And, there’s the annual movement of the seasons, how many of those have slipped by without our full appreciation? This report is about those wonderful experiences, but also about using the tremendous forces of the solar system with all its power and it’s impact on us ..physically, psychological, and emotionally, to make money ..what do you think about that idea??

In 1847, Dr. Hyde Clarke wrote a paper entitled, “Physical Economy – A Preliminary Inquiry into the physical Laws governing the Periods of Famines and Panics.” which was published in the Railway Register. In the commencement he remarks, “We have just gone through a time of busy industry, and are come upon sorrow and ill-fortune; but the same things have befallen us often within the knowledge of those now living. Of 1837, of 1827, of 1817, of 1806, of 1796, there are men among us who can remember the same things as we now see in 1847. A period of bustle, or of gaming, cut short in a trice and turned into a period of suffering and loss, is a phenomenon so often recorded, that what is most to be noticed is that it should excite any wonder.”

List of Alleged Economic & Sociological 11 Year Cycles (10.8 years to 11.4 years)

Written by Edward R. Dewey (1968). The Foundation For the Study of Cycles.

COMMODITY PRICES
Cotton Prices, (1731-1964)
Grain Prices, (1259-1400)
Pig Iron Prices, (1784-1951)
Sheep Value, (1867-1963)
Wheat Prices, (1545-1869)
Wholesale Commodity Prices, (1720-1964)

STOCK PRICES
Combined Stock Prices, (1871-1958)
Industrial Stock Prices, (1871-1950)
Stock Prices, (1871-1964)

OTHER FINANCIAL
Deposits in All Banks, (1834-1964)
Post Office Revenues, (1800-1964)
Reichsbank Clearings, (1884-1925)
Residential Mortgage Loans, (1923-1942)
United States Steel Corp. Earnings, (1900-1948)

GENERAL BUSINESS
Business Activity, (1855-1940)
General Business Activity, (1750-1960)
Non-Agricultural Business Activity, (1875-1931)

AGRICULTURAL PRODUCTIVITY
Corn Acreage Harvested, (1866-1964)
Cotton Production, (1790-1964)
Crop Yields, USA, (1792-1951)

INDUSTRIAL PRODUCTION
Automobile Production,USA, (1925-1936)
Lead Production, (1821-1964)
Crude Petroleum Production, (1861-1964)
Physical Production of Manufacturing, USA, (1863-1953)
Physical Production of Minerals, (1878-1927)
Pig Iron Production, (1844-1958)

MISCELLANEOUS ECONOMICS
Business Panics, USA, (1877-78,1933-34)
Commercial Crises, France, England, (1793-1847)
Worldwide Econimic Prosperity and Crises, (no dates given)
Shipwrecks, Indian Ocean, (no dates given)
Value of Fisheries, Canada, (1870-1917)

SOCIALOGICAL
International Battles, (529 B.C.-1900 A.D.)
Mass Human Excitability, Worldwide, (500 B.C.-1922 A.D.)
Drought and Famine in South India, (no dates given)
Marriage Rates in 15 Countries, (1867-1912)

One of the earlier in-depth historical studies of the 11 year sunspot cycle and it effects on human behavior was conducted by A.L. Tchijevsky, a Russian professor of Astronomy and Biological Physics. In 1926, he presented a paper to the American Meteorological Society in Philadelphia, using an index he constructed, called “Index of Mass Human Excitability”, he found an 11.1 year cycle in the number of major battles, riots, migrations, and human excitability in 72 countries going back to 500 B.C.. He concluded that 80% of the major events of human drama occurred during the 5 years around maximum in sunspot activity.

The following are written quotes by Professor Tchijevsky:

“As soon as the sunspot activity approaches its maximum, the number of important mass historical events, taken as a whole, increases, approaching its maximum during the sunspot maximum and decreasing to its minimum during the periods of the sunspot minimum…”

“In the middle points of the cycle, the mass activity of all humanity, assuming the presence in human societies of economical, political, or military exciting factors, reaches the maximum tension, manifesting itself in psychomotoric pandemics, revolutions, insurrections, expeditions, migrations, etc, — thus creating new formations in the existing separate states and new historical epochs in the life of humanity. It is accompanied by an integration of the masses, a full expression of their activity and a form of government consisting of a majority.”

“In the extreme points of the cycle’s course, the tension of the all human military-political activity falls to the minimum giving way to creative activity and is accompanied by a general decrease of military or political enthusiasm, by peace and peaceful creative work in the sphere of state organizations, international relations, science and art, with a pronounced tendency towards absolutism in the governing powers and a disintegration of the masses.”

“The maximum of human activites in correlation with the maximum of sunspot activity, expresses itself in the following:
A.) The dissemination of differentt doctrines (political, religious, etc.), the spreading of heresies, religious riots, pilgrimages, etc.
B.) The appearance of social, military and religious leaders, reformers, etc.
C.) The formation of political, military and religious and commercial corporations, associations, unions, leagues, sects, companies, etc….”

Professor Tchijevsky was incarcerated in a Russian prison for 30 years because his ideas and opinions were not aligned with the Russian government at that time!

http://www.carolmoore.net/articles/sunspot-cycle.html NASA – Solar Physics- The Sunspot Cycle http://science.nasa.gov/ssl/pad/solar/sunspots.htm Space Weather http://www.sunspotcycle.com/ Sunspots and Human Behavior – by James Borges http://www.borderlands.com/sun/sunspots.htm Sunspot Cycles, human excitability and recessions http://www.carolmoore.net/articles/sunspot-cycle.html Solar Terrestrial Activity Report (frequent updates) http://dxlc.com/solar/ Graphical comparison of solar cycles http://www.dxlc.com/solar/cyclcomp.html A. L. Tchijevsky’s 1926 article “Physical Factors of the Historical Process” * R. Edward Dewey’s book Cycles: The Mysterious Forces that Trigger Events, 1971, (available at links below) as well as his article “Sunspots and War, 300 B.C. to Date”, R. E. Dewey, May, 1960; * A variety of scientific news articles, including: “Pieces of sun’s magnetic field fly through space,” Lawrence Spohn, Albuquerque Tribune, 3-22-91; “Great Ball of Fire: An angry sun stages a spectacular show,” Time Magazine, July 3, 1989. B. C. References: Moore, Carol, Sunspot Cycles and Activist Strategy, http://www.kreative.net/carolmoore/sunspot-article.html Lakhovsky, Georges, The Secret of Life, BSRF, 1985 Petersen, William, Man, Weather, Sun, John Anderson Publishing Company, Chicago, 1947 Stetson, Harlan True, Sunspots in Action, The Ronald Press Company, New York, 1947 Stetson, Harlan True, Sunspots and Their Effects, McGraw-Hill, New York, 1937 Botezat-Antonescu, L., Predeanu I., “Possible Heliogeophysical Influence on Human Health in Romania” (Abstract), Relations of Biological and Physicochemical Processes with Solar Activity and Other Environmental Factors, 1993 Breus T.K., Halberg F. and Cornelissen G., “Effect of the Solar Activity on the Physiological Rhythms of Human Being” (Abstract), Relations of Biological and Physicochemical Processes with Solar Activity and Other Environmental Factors, 1993 Ertel, Suitber, Solar Activity and Bursts of Human Creativity, http://www.knowledge.co.uk/frontiers/sf067p17.html Freitas, Robert A., Sunspots and Disease, http://www.knowledge.co.uk/frontiers/sf034p12.html Goncharov, G.G., “Asian Nomads Invasions and Solar Cycles” (Abstract), Relations of Biological and Physicochemical Processes with Solar Activity and Other Environmental Factors, 1993

Solar Influences on Climate & Nature

(ref: very interesting website Ocean and Climate Change Institute )

(ref: NOAA, an excellent weather & climate resource Climate TimeLine Information Tool )

(ref: Solar Activity Controls El Niño and La Niña )

(ref: NOAA, the government agenecy monitoring El Niño and La Niña )

(ref: Long-Range Forecast of U.S. Drought Based on Solar Activity)

(ref: The Year Without A Summer 170 to 180 year solar cycle )

(ref: The Pacific Decadal Oscillation and Climate Forecasting for North America PDO )

(ref: history of our climate NOAA Paleoclimatology Program )

(ref: interesting graphics/info on the Universe An Atlas of The Universe )

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In this presentation, I will be showing you evidence that we are currently in the midst of a major turning point in a longer-term approximate 72 year social cycle. And, if it holds true to the past we will see significant changes in the fabric of our society and the way we live our lives during the next several years. The 72 year cycle is a piece of a large puzzle which gives added perspective and color to what the future may have in store for us. There are three other presentations on this website which I believe add more parts to the puzzle of what our future will look like. They are: Cycles in History, which is an audio presentation where, I interpret and update Dr. Raymond Wheeler’s 500 year cycle and also, the 90 to 100 year generational cycle. Next, the EXCITABILITY study where I describe the 10 to 11 year cycle in the rise and fall of social intensity and how it will color the next several years. Lastly, the SELL DOLLARS & BUY GOLD analysis which lays out what some of the legendary investors are saying the U.S. economy and the value of the dollar.

First, I must state that nobody knows how it will turn out! The most obvious characteristic in all of the previous 72 year cycles was an extremely high stress level which affected everyone. During similar periods in previous cycles, as it is today, there were massive speculative bubbles, banking crises, massive currency depreciations, volatile and unstable economic trends, loss of public confidence in institutions, and wars. In such major turning points in our history great leaders have emerged, like George Washington, Abraham Lincoln, and Franklin D. Roosevelt, who changed the direction of this country forever. ..This is a long-term dynamic cyclic process that is colored by our unique circumstances, and it will likely shape our collective character well into the future. I have outlined below the important events that have marked each of these 72 year epic periods and their harmonics, the 36 year period (1/2), and the 18 year period (1/4) going back to 1637. And yes, many of us will view these coming changes with apprehension, while others will see the rare opportunities which will be offered by these coming changes. I believe, the great resiliency of this country’s citizens will see us through the good and the bad of it! From my perspective, I think it is likely we are heading into a period of slow growth with frequent recessions, ..and it may take us from 10 to 20 years to bring about the social and financial changes needed to bring things back into a healthy, livable balance. The amount of time it will take will depend upon the quality of our decisions and the decisions of our leaders.

The same cycle analysis that tells us are entering this period of difficulty will also tells us when it will likely end!

Over the last 50 years, Americans have developed mind-boggling technical, financial, and social innovations, some which have moved society ahead, while others may have put us at risk. There are financial trends that appear to have gone to unsustainable extremes, such as: the historically low public savings (cash in the bank) and high debt levels relative to national income, both of these have inflated asset values into “bubbles” like housing prices, stock prices, and probably retail consumption. For years, seeking personal “happiness” was sought through materialism at the expense of social relationships and spiritual growth. Over next several years, I think we will see a realignment of important financial ratios, such as debt to income, savings to income, asset values to utility, ..and socially, the importance of family time will gain over career time, while escapism will lose to the search for meaningful self-development. If the pattern is to remain true to the past, there will be a substantial decline in credit availability with the possibility of a major banking crisis, which forces us to live within our means. In some cases, real incomes will be reduced and unproductive jobs painfully eliminated. Significant government projects like alternative energy and rebuilding waterworks could become a major source of jobs. Then, once many of the financial excesses are eliminated the country will move back to a mode of self-sustainability.

Today, we live on fast food, drive fast cars, and embrace the fast lifestyle, and needless to say fast markets. In historical terms all this “fastness” does not seem normal ..and it’s not. It is symptomatic of escapism and an over-leveraged society. The cost of this overindulgence is seen straight-forward in the breakdown of the family unit. Unfortunately, as Thomas Jefferson predicted over 200 years ago, in a democracy the people will elect those politicians who will promise them the most, in “giveaways and free lunches”, is this system viable?? The answer is NO! In the United States, we are now chasing income (and leveraging assets) to maintain our lifestyles at the expense of bedrock relationships, Seemingly, not enough time for slow walks around the block, listening to the birds sing, or long casual conversations with those we love. Too much debt changes our behavior! We will find time for those simple pleasures and responsibilities once again!

In New York City on August 14, 2003, there was a black-out which lasted for 12 hours, the 8.1 million population could have reacted in various ways. As the energy needs around the world increase as lifestyles in third world countries move toward availability around the instant communications will connect the citizens of the world into a more interdependent community will have a many intriguing implications for our immediate future and for decades to come. . ..It is probably generational cycle in nature or perhaps a collective social pattern that shows bursts of heightened excitability that surrounds the years of important historical events. This is a 72 year repetitive pattern (as outlined below) that seems to have appeared with clockwork regularity throughout at least the last 350 years of our history. In each 72 year period the circumstances are different, but similar in behavioral characteristics. It seems that about every 72 years we collectively find ourselves in a vulnerable position.

Reviewing the History of the 72 Year Cycle

The low point I am using in the last 72 year cycle is the stock market low of July 8, 1932. This was a time of great uncertainty, social stress, and disillusionment caused by the wipe-out of wealth caused by the 1929 stock market crash, the economic depression, and high unemployment. This did not change until the public and markets put what trust they had left in the obvious coming presidential election of Franklin D. Roosevelt and his “New Deal”. His management of this social and economic crisis and his leadership during World War II that made him great and endeared by most people in the western world.  We all have heard FDR’s famous quote, “We have nothing to fear but fear itself”, ..but what caused that fear and doubt to begin with?? The public disillusionment with the government’s ability to guide our future in the early 1930′s is playing out once again.

In cycle analysis, the more repetitions that occur, the more confidence we have that a real cycle is at work. When there are only a handful of repetitions, as with the 72 year pattern, then we must look internally within the pattern at fractal behavior for additional supportive evidence. Here, we look for similar behavioral characteristics of the longer-term pattern on a lesser scale at the mid-point (36 years, then 18 years) of each 72 year period. And, this evidence does show up enough to convince me that we are looking at a social pattern of real substance and importance!

The fundamental circumstances during each 72 year cycle low are distinctly different and unique to those times. But, there are also similarities which draw them together and define a period in our immediate future which could be dramatic, intense, and historic in its affects on our society.

In each of the following major 72 year cycle lows listed below, I have found some common characteristics which I believe will be repeated during the next several years or in fact have already occurred recently. Here is some of those characteristics and I would suspect there are more:

There is a period of high social stress which spans several years (5 to 10 years). During these historic cycle low periods, much of the public is in numb shock, anxious about their future, and many feel a sense of self-failure. This is due to high unemployment, widespread economic weakness, financial and currency stresses, and the prospects for war. With all these upheavals the public response is to raise their savings rate and reduce spending which intensifies the weakness.

72 YEAR CYCLE – HIGH STRESS EPIC - HOUSING/BANKING COLLAPSE (2008)
THE IDEAL LOW (2004) WAS DELAYED BY INTENSE MONETARY EXPANSION
72 Year Cycle -  BARACK H. OBAMA ELECT. CRISIS/EPIC PRESIDENT (2009)
72 Year cycle – Stock Market Low (2009)
72 Year cycle – Currency Crisis (2008)
72 Year Cycle – Economic Upheaval (2002-201?)

18 Year cycle – Currency Crisis (1985)
18 Year cycle – Recessionary Low (1982)
18 Year cycle – Stock Market Low (1982)

36 Year Cycle – High Stress Mid-Cycle (1968-1975)
36 Year cycle – Stock Market Low (1970 & 1974)
36 Year cycle – Currency Crisis (1967 & 1973)
36 Year cycle – Economic recession (1970 & 1975)

18 Year cycle – Currency Crisis (1949)
18 Year cycle – Stock Market Low (1949)

72 YEAR CYCLE – HIGH STRESS EPIC – THE GREAT DEPRESSION (1932)
72 Year Cycle – FRANKLIN D. ROOSEVELT CRISIS/EPIC PRESIDENT (1933)
72 Year Cycle – Economic Depression Low (1932)
72 Year cycle – Stock Market Low (1932)
72 Year cycle – Currency Crisis (1931)

18 Year cycle – Currency Crisis (1913)
18 Year cycle – Recessionary Low (1914)
18 Year cycle – Stock Market Low (1914)

36 Year Cycle – High Stress Mid-Cycle (1896)
36 Year cycle – Stock Market Low (1896)
36 Year cycle – Currency Crisis (1895)
36 Year cycle – Economic depression (1893-1897)

18 Year cycle – Currency Crisis (1877)
18 Year cycle – Depression Low (1878)
18 Year cycle – Stock Market Low (1877)

72 YEAR CYCLE – HIGH STRESS EPIC – CIVIL WAR (1860)
72 Year Cycle – ABRAHAM LINCOLN CRISIS/EPIC PRESIDENT (1861)
72 Year Cycle – Economic Upheaval (1857)
72 Year cycle – Stock Market Low (1861)
72 Year cycle – Currency Crisis (1859)

18 Year cycle – Depression Low (Debt Repudiation)(1843)
18 Year cycle – Stock Market Low (1843)
18 Year cycle – Currency Crisis (1841)

36 Year Cycle – High Stress Mid-Cycle?? (1824)
36 Year cycle – Stock Market Low (1819)
36 Year cycle – Currency Crisis (1823)
36 Year cycle – Economic depression (1816-1818)

18 Year cycle – Currency Crisis (1805)
18 Year cycle – Stock Market Low (1805)

72 YEAR CYCLE – HIGH STRESS EPIC – A NEW NATION IS BORN (1788)
72 Year Cycle – GEORGE WASHINGTON CRISIS/EPIC PRESIDENT (1789)
72 Year Cycle – Recessionary Low (1787)
72 Year cycle – Currency Crisis (1787)

1720-1788 – The American Colonies went through a series of economic depressions and did not have an extended period of prosperity until after the US Constitution was signed on July 2, 1788. In October-December 1788 commodity prices stabilized and the economy began improving.

72 YEAR CYCLE HIGH STRESS EPIC – MISSISSIPPI & SOUTH SEAS BUBBLES (1716)
Primarily in England and France
1716 – John Law established a private bank called Law & Co., and promises bank notes his bank issues will be redeemable on demand for coins.
1717 – John Law sets up the Mississippi Company to exploit wealth of the French colonies in America.
1719 – The Mississippi Company was given a monopoly of trade over the East Indies and China. Excessive speculation in the Mississippi Company shares ensued which created a huge financial “bubble”.
1720 – The “bubble” combined with over-issuance of notes by the Banque Royale collapsed when the Banque was forced to halt payments on those notes.

1719-1720 – The South Sea Company in England was established to take advantage of trade in Central and South America. Excessive speculation in South Sea shares created a “bubble” which collapsed and left the banking system in shambles. Banking and company laws were changed and it took decades to fully recuperate.

36Year Cycle – High Stress Period (1680)
1688 – The Glorious Revolution in England William of Orange and his wife Mary are made jointly sovereign by parliament after James II flees to France. Political and economic power is in the process of shifting from the monarch to the moneyed classes and thus the financial and constitutional revolutions are closely and causally intertwined.

72 YEAR CYCLE HIGH STRESS EPIC – TULIPMANIA & THE ENGLISH CIVIL WAR (1644)
Primarily in Holland and England

1637 – Tulipmania in Holland was a tulip bulb-trading frenzy which turned in a display of mass speculation and delusion.
1642 to1651 – English Civil War
The war is fought because parliament disputes the king’s right to levy taxes without its consent. The use of goldsmith’s safes as secure places for people’s jewels, bullion and coins had increased after the seizure of the mint by Charles I in 1640 and increases again with the outbreak of the Civil War. This accelerates the tendency of some goldsmiths to become bankers and development of that aspect of their business continues after the war is over.

From the Bolshevik Revolution – November 1917 to the demise of the Soviet Union December 1989 ..The 72 year Cycle at work!!

And what will come of China, if this 72 year pattern holds true for them?? On October 19, 1949, The Communist People’s republic of China was formally proclaimed by Mao Tse Tung. Adding 72 years to 1949 we come to the year of 2021 when major changes may sweep across china ..once again.

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Material from Hal’s recent seminars: “Currencies & Commodities”

Sell Dollars & Buy Gold

Since the late 1990′s, I’ve been concerned about the exceptional rise in consumer and government debt relative to our ability to service this debt with lagging incomes and a very low savings rate. The various ratios of debt to income have been reliable indicators in determining when our economy has become over-leveraged and susceptible to a reversal or recession. Today, these ratios are at record extremes and have put us as investors at risk as never before! I will show you in this presentation the facts, graphs, references, and expert opinions which all point toward a reduction in excessive consumption and a reduction in the total debt burden to more manageable levels. This process of debt reduction will take some time to play out and will likely drive the U.S. dollar substantially lower.

I am not alone in this pessimistic assessment of our economy, some of the best known and wealthiest investors on the planet are saying similar things in their own way. It’s a time for doing homework and strategic planning. ..I hope this information will be of help to you.

“In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4 percent more than we produce — that’s the trade deficit [now closer to 6%] — we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.” – Warren E. Buffett (2004)

So, what do we invest in now?
Here’s what some of the legendary investors are thinking.

Some of the World’s most successful and prominent investors believe the US Dollar is poised for another significant decline. This dollar decline, if they are correct will have repercussions on the stock market, global trade, raise the threat of inflation, and ripple across all markets. The following interviews with Jimmy Rogers, Sir John Templeton, and Warren Buffet seem to reach the same conclusion:

• Here are two direct link interviews (one audio and one video) with the “legendary” Jimmy Rogers ..important and well worth the time!! Prudent Bear interview and Bloomberg interview. And, here’s his website: www.jimrogers.com. Also, a couple recent articles, “Rogers Says Gold to Reach $1,000 as Commodities Soar” – Bloomberg. “Commodities bull market has long way to go”: Jimmy Rogers – Business Times.
• The legendary investor Sir John Templeton has been optimistic towards US investments for over fifty years ..but not anymore, Templeton feeling bearish.
• Warren Buffet thinks the US trade deficits will sink the Dollar. More from Warren Buffet Short the Dollar, Berkshire Hathaway Inc…
• Also, I find insight and opinions of the following experts to be especially valuable:
  Dr. Marc Faber current articles.
  Dr. Kurt Richebacher current articles.
  Richard Russell current articles.
  Financial Sense Online current articles.

References: The eventual lunch bill may spell end to dollar’s dominance, ..moving out of dollars.

The US Deficit vs Dollar outcome is Ominous.

10/20/04 – A great summation of day’s economic imbalances, well worth reading, Borrowing traction – Kurt Richebacher

12/27/04 – Warren Buffett’s vote of no confidence in U.S. fiscal policies is up to $20 billion. . – Forbes.com

So, why are these great investors so pessimistic?
…THE U.S. HAS TOO MUCH DEBT!!

US TRADE/INVESTMENT IMBALANCE – According to Bloomberg, “Growing trade deficits contribute to a widening gap in the current account, the broadest measure of trade because it includes investments, and may put the dollar at risk because the U.S. needs to attract more and more foreign capital ($1.6 billion per day) to finance it”.

The following quotes are from a new study, The US as a Net Debtor.. (link is referenced below). “Since 2001, the current account deficit has reflected a widening government deficit, not strong private investment. The U.S. now borrows from abroad to allow the government to run a large fiscal deficit without crowding out private investment, even as growing consumption (and necessarily, very low private savings) reduce the United States’ ability to finance the fiscal deficit and private investment domestically”. , “the net internatonal investment position or NIIP (for the United States) – has gone from a negative $360 billion in 1997 to negative $2.65 trillion in 2003. At the end of 2004, we estimate the net international position will be negative $3.25 tillion. Relative to GDP, net debt rose from 5% of GDP in 1997 to 24% of GDP at the end of 2003 and to an expected 28% of GDP by the end of 2004″, and “The U.S. debt to export ratio at an estimated 280% of exports at the end of 2004, is in shooting range of troubled Latin economies like Brazil and Argentina”.

References:
U.S. Trade Deficit Widens to $54 Bln in August, The U.S. as a Net Debtor: The Sustainability of the US External Imbalances, U.S. Trade Gap Represents a Lost Opportunity, Current Account Deficit Poses Serious Risks, and here’s a major links page, Is the U.S. Current Account Deficit Sustainable?

Text

U.S. BUDGET DEFICIT PROJECTIONS – From a BBC article on the U.S. budget deficit, “And within the space of a few years, a projected surplus over ten years of $5.6 trillion has turned into a deficit for the same period of $1.4 trillion”. Also, “The budget deficit is now one quarter of total Federal spending, and 80% of the total receipts from Federal income taxes. It is equal to $1,600 per US citizen this year, and the accumulated deficit over ten years would be nearly $20,000 per person”. And finally, “This could lead to a run on the dollar (which is already suffering serious weakness), and a sharp rise in the interest rates demanded on Federal debt, which in turn could hurt the stock market, weaken banks and reduce private sector spending”.

References:
Does the US budget deficit matter?, Congress’s Analysts See Worsening Deficit, and Federal Deficit Reality – Could U.S. Treasuries Face A Rating Downgrade?

NATIONAL DEBT 1940 TO 2002 – The National debt graph below in stark terms displays a credit machine or a financial credit system out of control! It took 200 years to reach a debt of one trillion dollars in 1985, today less than 20 years later the debt level stands at over seven trillion dollars! As of 09/07/2004 the US Treasury debt stands at $7,368,363,360,008.57.

Reference:
US Treasury – The Debt To the Penny

WHO OWNS THE NATIONAL DEBT? – In recent years the national debt has become increasing owned by two groups. First, the US government through it’s various agencies, primarily Social Security has purchased for “us” over 40.6% of our own national debt. At some point in the future, this debt will likely offset much of the expected retirement benefits in the Social Security Trust Fund. ..Meaning, don’t give up your day job if you’ll be depending on the Trust Fund in ten to twenty years! The second large owner of our US national debt is foreigners. Our collective appetite for borrowing from the future for benefits today, has increasingly put us at risk of dependence on the desires of foreign lenders and their influence in our national policy-making processes. ..Meaning, our financical future is less and less in our own hands and more in the hands of foreigners!

Reference:
How Long Will Central Banks keep Financing Our Treasury Deficit?

A MOUNTAIN RANGE OF DEBT – The public took it’s cue from years of excessive government spending (poor leadership) and ramped up consumer spending (promoted by the Federal Reserve) to unrealistic and unsustainable heights. Now, after several years on a consumption binge the public is left exhausted, with very little in savings and deeply in debt. This situation is very slowly changing, savings rates are beginning to rise and consumer spending is slowing. Since about 70% of the GDP is based on the over-indebted consumer, it’s likely that economic growth will decline. The result of this growth slowdown will likely be a lengthy recession, including increased personal bankrupties, high banking and corporate failures, a sharp drop in the US dollar perhaps 40% to 70% from current levels, a tidal wave of imported inflation which will possibly coincide or follow a liquidity crunch and a drop in real estate prices. ..along with a gridlock in the global credit system. Now with every crisis there are opportunities arn’t there, and that’s what HalSwanson.com is all about.

NET SAVINGS AS PERCENTAGE OF GROSS NATIONAL INCOME – The record low savings rate is the counterpart to the U.S. trade deficit. During the last decade Americans have been on a consumption binge at the expense of their savings and potentially their financial future. The “comfort level” for savings appears to be in the area of 8% to 12% on a longer-term basis, not only in this country but throughout much of Europe. It seems quite likely that the savings rate will rise as the aging babyboomers seek greater financial security during their retirement years. And, with the huge Social Security and pension plan shortfalls many Americans are feeling their future “safety net” is now too close to the ground!

Reference:
Masking our Negative Personal Savings Rate

DEBT vs GDP 1915 TO 2003 – Our collective debt as a percentage of GDP has never been higher in our history. And, our lenders will be quick to tighten up loan requirements on any convincing evidence that the economy is seriously slowing down. This means that non-essential retail transactions will likely decline along with stock prices and interest rates will probably move significantly higher. Based on national income levels there is simply too much debt to pay off quickly!! ..so it will take time and changes in our lifestyles.

HOUSING PRICES vs PERSONAL INCOME – Cracks in the foundation of the housing boom!! Income growth has significantly lagged the dramatic growth in real estate prices. Residential prices in other “real estate bubbles” like in England and Australia appear to have topped out and have recently been declining. In the U.S., inventories of homes for sale has been rising, ..these increases in availability will probably lead to a weakening in home prices in the months ahead while municipalities are still pushing for higher taxes.

Latest update: Sales of New Homes Rebound, But Underlying Trend Is Soft.

References:
Housing Boom Threatens American Dream and Bubble Trouble.

To get additional perspectives on major consumer and government trends in debt and spending the following three essays are especially enlightening:

“Too Much Debt” (November 2002), “Everything (Un)Hinges On The US Consumer” (September 2004), and “Deep in Debt, Deep in Danger” (September 2004).

US DOLLAR INDEX (DAILY CONTINUATION) – The U.S. dollar has been in a clear and distinctive downtrend since the beginning of 2002. And, it appears poised for another sharp leg down perhaps to the 78.00 to 80.00 area. Over the next three to five years it is possible that the dollar could decline to the 40.00 to 50.00 area depending on how the fundamentals mentioned above unfold. The volitility will likely become much more intense than it’s been in many years. I will develop more of this commentary as time allows.

NY GOLD – (WEEKLY CONTINUATION) – Throughout history gold has had a reciprocal relationship to whatever fiat currency (backed by promises only) it was quoted in, so when the US dollar goes down, then gold goes up in dollar terms. Globally, almost every country’s currency is primarily fiat creating more potential demand for gold and world is full of debt. These are positives for gold and other commodities priced in U.S. dollars. ..more commentary to coming.

COMMODITY RESEARCH BUREAU INDEX (CRB) – (WEEKLY CONTINUATION) – As the downtrend in dollar continues, it makes our exportable commodities like grains, metals, chemicals, cheapier to foreign buyers, consequently, global demand for those commodities is drawn to the Uniterd States and prices are bid up. The CRB index is in a strong uptrend and is projected to continue strong for at least the next year. ..to be continued.

An economic slowdown with excessive debt could lead to a banking crisis.

BANK OF INTERNATIONAL SETTLEMENT (BIS) - In June, 2004 the BIS published a study on the history and causes of banking crisis around the world. Bank Failures in Mature Economies, it’s worth looking through. The diagram below also comes from the BIS and defines the interaction between inflation/deflation, economic growth, and debt leading up to previous banking crises in the United States. Here is the full BIS report, Back to the future? Assessing the deflation record.

See the graph below, we now have extreme “CREDIT/GDP” (also shown on the chart above), any significant slowdown in “REAL GDP” (guessing 0% to 2% real GDP) would likely trigger stress in the banking system perhaps tripping into a crisis situation. Currently, financial institutions around the world are watching these dynamics unfold and are quick to sell US dollars and securities on any sign of GDP weakness. If it were not for massive foreign Central Bank buying of US dollars, its value would be substantially lower than where it is today. ..Yes, a rather dicey macro financial situation.

VELOCITY OF MONEY – The US economy from 1993 to 2000 has been based on a record high level of business transactions which has been fueled by loose credit and a disregard for sound business judgement. The economy has been over-heated during the late 1990′s as rarely before with more debt piled on top since the 90′s. The stock market decline in 2000 through 2002 erased about five trillion dollars from the economy and triggering a decline in the number of business transactions which slowed the velocity of money markedly. Record high levels of debt must have a high rate of transactions to sustain itself or what will follow will be slowing economic activity. A slowdown in business transactions is not good for those with too much debt ..so they pay it or give it up! The current slowdown in velocity (see chart below) has been with us for a few years now and we all feel it. This what the Federal Reserve has been fighting to turn around ..if they can’t then the debt comes down around our ears.

RETAIL SALES vs MONEY SUPPLY – M2 money supply and retail sales have a close correlation (see the graph below), and recently both M2 money supply and retail sales have been showing a marked decline. This does not bode well for the economy, ..for there is not only a “bubble” in housing prices relative to income, but there is also a retail “bubble” with overbuilt retail trade based on high transaction activity, while the consumers appear to be retrenching (pay down bills and saving a little). Retailers could take a long and big hit if the economy continues to slow here.

The Cost of Living ..and those bogus government numbers, the CPI & PPI

Everyone’s cost of living is rising rapidly! ..despite what the bogus CPI & PPI numbers say!! According to the San Diego Union-Tribune, “over the past three years, energy costs have shot up more than 50 percent; haircuts, 40 percent; cheese, dishwasher detergent and soft drinks, 30 percent; gasoline, 28 percent; auto maintenance, 21 percent; dry-cleaning, 22 percent; and movie tickets, 11 percent”. What has fallen behind has been real wages! After taking the cost of living into account, the buying power for some of the largest occupations in the county (San Diego) – cashiers, retail sales clerks, security guards and janitors – has fallen between 3 percent and 17 percent over the past three years.

Reference:
Feeling the Bite of Inflation, The CPI – Certain Percentages Imagined, and A Federal Inflation Conspiracy?

CPI & PPI – While we are lead to believe that inflation is low or benign as measured by the CPI and PPI indices, the truth is these government reports are heavily manipulated to keep interest payments on the National debt and the “cost of living” increases for those retirees on social security as low as possible. Over a 35 year period the Consumer Price Index (CPI) has been altered 17 times to this end! I strongly recommend you read the following article by Richard Benson on the PrudentBear.com website. Using the Consumer Price Index to Rob Americans Blind.

PRICE LEVELS 1685 TO PROJECTED 2013 – There have been six other periods in world history dating back to 642BC where price levels have risen dramatically (superinflation) over a 90 to 110 year period. These century long periods of high inflation are then followed by about three centuries of price stability. As seen in the chart below, we are now living in the seventh period of decades long superinflation with no end in sight. ..A far cry from what we’ve been lead to believe.

In 1950, Mr. John Hay Whitney purchased Picasso’s “Boy With the Pipe” (painted in 1905) for about $30,000. That painting which is considered a Picasso masterpiece was auctioned off at Sotheby’s auction house on May 5, 2004. It fetched the highest price ever for a painting, ..$104,168,000. Here is an example of extreme monetary excess, the unproductive application of wealth, and a parabolic rise in prices. Personally, I think building a new factory or hospital would have been a better monument to one’s success.

YEARLY INFLATION RATE 1665 TO 1914 – commentary coming.
Source: Robert C. Sahr – Historical charts and data on inflation, dollar, etc..

Ref: Annual Confederate Inflation Rates .

YEARLY INFLATION RATE 1915 TO 2002 – commentary coming.

Source: Robert C. Sahr – Historical charts and data on inflation, dollar, etc..

GOLD PRICES 1786 TO 2002 – commentary coming.

Source: Robert C. Sahr – Historical charts and data on inflation, dollar, etc..

“The system of banking [is] a blot left in all our Constitutions, which, if not covered, will end in their destruction… I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity… is but swindling futurity on a large scale.” - Thomas Jefferson

A Generational Social/Economic Pattern called: The Kondratieff Cycle

Throughout history people have lived based on their expectations. Those expectations drive their actions, when the future seems perilous we (collectively) are very conservative and risk adverse, and to the other extreme, when we are overly confident we take on unrealistically high risks that are driven by greed and emotions. The world economies and the United States in particular, in the 1990′s and to date, used credit (future payments) to sustain their current lifestyle. ..or in other words, borrowing from our children or grandchildren for our present benefit. This has been tried many times before and never worked. The debt becomes overwhelming and it ends up collapsing around the lifestyle of the borrowers and the lenders !! ..So, here we are today as a country ..overspent again!!

The following links include articles and an interview with Ian Gordon, the best expert I know of regarding the Kondratieff Cycle. I suggest you listen to his interview with Jim Puplava of Financial Sense Online (also a great website for info!). taped interview and also, read the interview transcript for further study. Also, Ian Gordon’s extensive analysis is available on his website at The LongWave Analyst in the form of several lengthy newsletters.

Next, is some background information about Nikolai D. Kondratieff (1892 – 1938) and a brief description of the different phases of the 50 to 60 year cycle.

IAN GORDON’S KONDRATIEFF WAVE GRAPH – This is a pattern of credit and asset price booms and busts!

BIG BANKRUPTCIES -

RECORD PERSONAL BANKRUPTCY FILINGS -

“Bulls of 1929 – like their 1990s counterparts – had their eyes glued on improving profits and stock valuations. Not a thought was given to the fact that the rising tide of money deluging the stock market came from financial leverage and not from savings.” -Dr. Kurt Richebacher

“The only perfect hedge is in a Japanese garden.”

GENERATIONAL CYCLES HAVE SIGNALED A TURN!!

The 30 year cycle in the CRB Index (commodities) and silver have put in major lows right on schedule. Look back 30 years ago! ..The US dollar came under intense selling pressure as foreign investors and Central Banks sold US Treasury securities. The results of this dollar decline was an inflationary explosion, ..and a move from financial assets into tangiblies. The stage is now set for a repeat performance.

LOWER INTEREST RATES AND TAX CUTS CAN NOT CREATE ECONOMIC GROWTH …WITHOUT A DECLINE IN THE EXTREMELY HEAVY DEBT LEVELS.

At the end of every extended economic expansion ..there is too much debt relative to income. The only difference this time, is the debt to income ratios are at all time record highs, ..and with little or no personal savings growth,

..IT WILL TAKE TIME TO STRAIGHTEN THIS OUT!!

See the link Too Much Debt To Pay.

Here is a good historical 50 year reference chart.

…You can comment below if you have questions.
Your comments and opinions on this presentation and my technical charting in general would be helpful. Also I’m looking for (truthful) testimonials that I can use in future promotional materials ..that would be appreciated too. Thank you.

PLEASE READ THE RISK DISCLOSURE STATEMENT LINKED AT THE BOTTOM OF THIS PAGE BEFORE ACTING ON ANY OF THESE RECOMMENDATIONS. TRADING COMMODITY FUTURES IS A VERY RISKY VENTURE. ..especially with the current volitility!!

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