Why is Timing Consistent Throughout the Ages?
QUESTION:
Dear Mr Armstrong,
Thank you for kindly answering my question on data.
No doubt you are aware of Ray Kurzweil and the Singularity Theory. The deflationary impact of technological change, nanotechnology, quantum computers, etc etc seems to be accelerating exponentially. This must be causing a crushing impact on historical cycles.
Can your model realistically take account of this if it is fed by historical data? I hate to use the phrase it might be different this time considering your belief in the predictability of human nature and the performance of cycles in the past.
We have access to knowledge of and perhaps control over human behaviour way beyond anything available in the past, both politicians and the common man.
Even war cycles would seem to be open to distortion as robotic conflict perhaps allows less population upheaval. In other words could there be a qualitative change in the war cycle?
My ultimate problem with cycle theory is there always seems to be another hidden cycle which suddenly becomes dominant or existing cycles unpredictably distort.
Thank you.
Yours sincerely,
AB
ANSWER: I had assumed such things might be the case, but after the model churning everything from ancients times to the present, nothing has changed from a timing perspective. For example, on June 3–4, 1989 became known as the Tiananmen Square Massacre. It marked actually the start of the collapse of Communism in China. By the 9th of November 1989, the East German government announced that all GDR citizens could visit West Germany and West Berlin precisely 158 days later. Everyone attributed the demise to the modern technology. However, it was less than one year following the revolution against Monarchy that gave birth to the Roman Republic in 509BC that we find Democracy being born in Athens as a revolt against its tyrants. The modern technology did not alter the cycles between the fall of Communism in 1989 to the rise of Republic/Democracy in 509BC. From the birth of the American Revolution in 1776 against Monarchy, 13 years later we get the French Revolution.
Timing seems to remain the same. The shift to technology that is reducing jobs is nothing new. That is precisely what the Great Depression was all about. Previously, 41% were employed in farming. The combustion engine reduced the need for labor so by 1980, just 3% were employed in farming. The invention of the automobile wiped out the horse-buggy and carriage industry.
The same took place with the railroads. As they expanded, mail order was created and that reduced the need for local stores. Just like book stores today cannot compete with the internet at Amazon.
The technology causing the change may differ from one wave to the next. Nonetheless, the timing is curiously always consistent throughout the centuries. This is what Joseph Schumpeter noticed and called the Wave of Innovation to explain the business cycles. He provided the fundamental explanation of why there were such waves as some new innovation emerges causing the economy to surge. However, Schumpeter failed to explain why these waves of innovation occur at strange regular intervals from a timing perspective.
We have built the largest collection dealing with monetary history even assembled. This effort was carried out to provide all the data from thousands of years to see what makes the economy move. What emerged from this major effort was that the timing always remains the same. Perhaps there is just a time that it takes for such events to unfold and that remains consistent always for it is not the innovation per se that you are observing, but the human interaction and it simply takes predefined periods of time to cause people to react.
The exponential rise in the debt of the Venetian Empire was 52 years. Look at Byzantium. It fell to Venice and was then ruled by the Latins in 1204, Just 52 years later, Michael Palaiologos comes to power inside the government and in 2 years (1258) he instigated a coup against the influential bureaucrat George Mouzaion becoming joint guardian for the eight-year old Latin Emperor. Then on January 1, 1259 he was proclaimed co-emperor with the help of Genoa who was always against Venice. On July 25, 1261, Michael VIII’s captured Constantinople from its last Latin Emperor and entered the city on August 15th when he was then crowned as a Greek Emperor together with his infant son ending the Latin rule.
Why is it 52 years? The timing never changes. The Second Punic war (218-201BC) was followed by the final Third Punic War (149-146BC) precisely 52 years apart. There are countless examples from history regarding this timing (51.6 year wave of the Economic Confidence Model). Technology seems to make no difference. Sounds logical that it should somehow speed up the process. However, that assumption is wrong for news could travel between Rome and Athens in just days, It also assumes if somehow people get the info they will immediately react. There is no proof of that assumption. The studies conducted by Stanley Milgram (1933-1984) prove that logic is faulty. Place one person on the street staring into the sky and people walk by assuming he is nuts. Place 5 people there staring at nothing in the sky and a group of people will form to see what they are looking at.
People create traffic jams because they all have to see how bad the accident was. They may say it was horrible, but they still need to see. There is individual behavior and then there is group behavior. I am only interested in the facts. Trying to figure out the WHY, will be a piece I wrote back in 1979 that we will republish – the Why Report.
Gold Stashed in Airplane Toilets
The Globe and Mail
Published Wednesday, Nov. 20 2013, 7:16 AM EST
It’s funny to think of someone leaving 24 gold bars in the toilet of a plane.
But that $1.2-million (U.S.) in bullion highlights one of India’s big economic irritants.
According to reports today, the bars were found in the lavatories of a Jet Airways flight to Calcutta, in eastern India. Two lunch boxes stuffed with 12 bars each were found by the cleaners, Reuters reports.
In fact, the boxes sparked a bomb scare on board.
“There was a bomb scare immediately when the bags were spotted in two separate toilets at round 1 a.m., but later we found they contained 12 pieces of gold bars in each,” a Customs official, Rameshwar Meena, told Reuters.
The bars – they’re thin, each weighing 1 kilogram – are believed to have originated in Dubai.
“We are educating [our staff] about aircraft maps of how toilets are in an Airbus or a Boeing,” a government official told the news agency.
“We are also asking the aircraft crew to tip us off about people who spend slightly more time in toilets.”
There are heightened concerns about gold smuggling amid new government restrictions. The finance ministry has hiked import duties several times, and has brought in other rules, as well.
Indians are huge consumers of gold, particularly during the traditional wedding season.
But officials, trying to tame a raging trade deficit, have brought in several restrictions. Finance Minister Palaniappan Chidambaram has boosted the duty several times.
“When you have social compulsions, there are many ways of overcoming restrictions,” Ramesh Babu, the father of a recent bride, told Bloomberg News.
“Irrespective of what the government does, Indians will find a way to get around this because every wedding has to have gold.”
India accounts for an outsized portion of global demand for gold, which skews its trade balance.
In October, for example, its trade deficit swelled to almost $11-billion, according to Reuters, as imports of gold and silver surged ahead of its festival season.
In its most recent annual report, India’s finance ministry noted that gold and silver represented almost 13 per cent of the country’s total imports in 2011-2012, rising by 44.5 per cent.
Demand for gold in India, and how the government acts, can have a significant impact on the market.
Overall global demand for gold slumped by 21 per cent in the third quarter of this year, from a year earlier, partly because of “Indian government intervention in their domestic market,” the World Council said in a report last week.
According to the group, consumer demand for gold in India plunged 32 per cent in the third quarter of this year from a year earlier. So far in 2013, however, demand is up a “robust” 19 per cent, it added.
Private People are Better Care-Takers than Academics or Government.
QUESTION: Dear Mr. Armstrong-
First, thank you for all the research you provide the investment community. I have been duly cautious thanks to your web site — note I first learned of you through … web site & and article in The New Yorker.
If there has been any lesson to date over the past six years for me, it is that markets & history are cyclical (I also follow …). Sadly, the lesson has mainly set in since April 2013.
In any case, I was browsing a Christie’s catalog & noticed a beautiful ring (item 258) acquired by you. I am a small fry investor, but was thinking of buying a piece of Greek or Roman Jewelry for my wife’s Christmas & anniversary present. (My other big lesson from you was–don’t make a stupid investment that will cause your wife to divorce you)…
So question is, as a small fry–is this an OK investment? Better to go through a dealer than an auction house? Does your selling mean we’re at the top of the jewelry market?
Very best,
ML
ANSWER: Antiquities are a good investment for they retain their value for the most part. Auctions tend to be the more common ground and Christie’s is a reputable firm. I am not sure what the item might be since I am not the current owner nor do I have that catalog. However, in the world of antiquities, the industry tends to require “provenance”meaning they list the history of ownership. This verifies authenticity and its source. I have been a rather famous collector and in all honesty we constructed perhaps the largest collection ever assembled spanning the world cultures. I am not the seller of that item for I do not own it so do not assume I am selling because it is the top of the market. I probably owned the object at some point in the past. I would always improve on things and sell duplicates. Other objects such as jewelry were bought for study and then resold.
I also funded important archeological digs that would have furthered knowledge. You will no doubt find my name associated with many ancient objects like this Greek gold wreath, Roman helmets, bronze passports, swords, Babylonian tablets, and various sculpture. I funded projects and was asked to fund projects that governments neglected or ran out of money. One such project was the Villa of the Papyri, which was a a private house in the ancient Roman city of Herculaneum. The owner of the house was perhaps Calpurnius Piso, who established a library of a mainly philosophical character that included lost works. There still remain 2,800 square meters to yet be excavated. Since the 1990s, the Italian government claims it is just preserving the site and it has not been excavated under the policy that the Italian government is practicing conservation rather than excavation, and is more interested in protecting what has already been uncovered. The real policy – they do not want to spend the money.
Academics argue private collectors should not be allowed to collect and everything belongs to them. But they are like people on welfare. They have no money and go begging for fund from the state. The reality is they cause black markets to emerge for they seek to confiscate what is ever found, pay nothing to the finder, and keep everything hidden in drawers they will not reveal when it proves their theories wrong (i.e. Forbidden Archeology).
During the First Gulf War, the bombing uncovered an ancient city previously unknown that predated the Babylonian era. The archives of the city were on the black market. I tried to buy them for $25 million. I went to dinner with a collector of documents who assembled perhaps the best collection in the world – the Norwegian collector Martin Schøyen. We agreed that he would allow me to use the legal and economic text from the find and I would back out of the bidding.
The Legal Code of Ur-Nammu (ca. 2100BC) is the oldest known, written law code that predates Hammurabi’s law code by about 300 years. The translation of this legal code was provided by Martin Schøyen, a Norwegian collector of manuscripts containing over 13,000 documents. His private efforts have contributed greatly to our knowledge base when government funding for translation is lacking. When the Legal Code of Hammurabi (1792-1750BC) was first discovered in 1901, his laws were heralded as the earliest known examples. The recent discovery and the efforts of Martin have established that Hammurabi was merely a copy of preexisting the Legal Code of Ur-Nammu (ca. 1900-1700 BC).
So you will see my name associated with various objects from jewelry, sculpture, artifacts, and documents. This is not an indication of market trends. I am not the current owner of those objects. The primary purpose of gathering all of this material was to be able to produce a consistent record of the monetary history of the world. So as far as the nonsense propagated by gold promoters about fiat and the like, they know nothing of what they say and have not done the research that we can document demonstrating what they say is propaganda. To produce this chart alone was tens of millions of dollars. It was this chart that enabled me to coin even the term a “Waterfall Event”.
Private funding is absolutely necessary to further knowledge. Where I would have donated the collection to a museum, the hostile attitude of academics has convinced me that my estate will sell it to the public for I trust private people before government or academics. So what is out there with my name is not an indication of market conditions. It is a belief that private people are better care-takers than academics and government.