Economic confidence model

The Economic Confidence ModelThe is a Global Business Cycle frequency discovered by Martin A. Armstrong . It was first published in 1979. The business cycle is widely recognized, yet perhaps not well understood. Cyclical Wave theory was first discovered by Christiaan Huygens (1629-1695) who established that light traveled in a cyclical wave formation. He also discovered the pendulum clock and other investigations into timekeeping as well as centrifugal force. It was
William Stanley Jevons(1835-1882), a self-taught British economist and logician who first applied cyclical wave theory to economics with his work The Theory of Political Economy (1871) that was the beginning of applying mathematical techniques to economic analysis. Nikolai Kondratiev(1892-1938), father of what has become known as the Kondratiev wave and long wave theory. However, it was Alexander Chizhevsky (also Aleksandr Leonidovich Tchijevsky) (1897-1964) who developed the theory that the cyclical energy wave with solar flares on an 11 year cycle had influenced the behaviour of man after correlating this data to his observations while fighting on the front lines during World War I. When Stalin became aware of his theory, he was thrown in prison for refusing to retract it where he spent the next 8 years starting in 1942. Nikolai Kondratiev may have been influenced by Chizhevsky for his research was based upon the economy rather than the direct behaviour of man. We must keep in mind that at this point in time, it was the early stages of combustion engine phase of the Industrial Revolution. The historical data was certainly dominated by an agrarian economy that certainly would have been more directly linked to weather and the energy output of the sun. Consequently, the general economy was about 70% agrarian during the mid 19th century, 40% by 1900 in the United States (about 85% in Russia), and finally about 3% by 1980 in the United States. Therefore, the rise and fall of commodity prices had a much larger proportional impact within the business cycle compared to post-World War II.
The model developed by Armstrong was based upon financial panic, regardless of the sector involved. The list of financial panics used by Armstrong was not restricted to any particular sector since some panics were banking failures, commodity based booms & busts, currency, stock market, or real estate just as an example. The panic list was:
:1683
1711 1720 1731 1745 1763 1772 1783 1792
1814 1818 1825 1857 1866 1869 1871 1872 1873 1884 1890 1893 1895 1896 1899
1901 1903 1907
This covered a time period of 224 years and the number of panics within that period being 26 after 1683 produced a frequency of 8.6 years. After years of study applying it throughout history as did Chizhevsky as well as to modern times, Armstrong came to see this frequency dominated the global economy even in Roman times. Yet there was much more. Armstrong concluded that this wave of 8.6 years moved through larger waves building in intensity amounting to six waves of 8.6 years constructing a major long wave of 51.6 years that was similar to that of Kondratiev waves of 52-63 years. Armstrong saw history as fractal in structure with the same patterns building into a larger time scale. He saw that six waves of 51.6 years formed a greater trend of 309.6 years that had even marked the fall of Rome and the duration of the Dark Age that followed.
The economist Joseph Schumpeter (1883-1950) saw these waves identified by Kondratiev as human innovation driven, such as the railroad, the automobile etc., others have looked into history and saw oscillations as a dilectic system such as Georg Wilhelm Friedrich Hegel (1770-1831) and Oswald Spengler (1880-1936) who correctly saw the peak in European civilization would be reached in 1914. Thereafter, the balance of economic power began to shift to the United States. Armstrong determined that these waves of 51.6 years oscillated back and forth between periods where the general confidence of the people resides either with government or the private sector. The major group of these 51.6 year waves that form then 309.6 year wave will peak again in 2032.95.
While Armstrong's discovery of this cycle was called The Secret Cycle by the New Yorker Magazine , it was the stunning accuracy of this model and how it has pinpointed changes in the economy right to the day. In Time Magazine, Justin Fox wrote that Armstrong's model "made several eerily on-the-mark calls using a formula based on the mathematical constant pi." (Pg 30; Nov. 30, 2009). Even recently Barrons noted the model calling for a change in sentiment in June 2011 Indeed, the frequency of 8.6 years works out to 3141 days (Pi x 1000) constituting the perfect circle in time. The wave structure of 8.6 years is divided into two 4.3 year waves that are again divided in half being 2.15 years, and then down to 1.075 years. The peak of the last Public 51.6yr Wave was 1981.35. The bottom of that wave was 1985.65 where the dollar peaked making its historical high and the Plaza Accord took place giving birth to the Group of 5 nations, now expanded to G20. The next target was 1987.8 (365*.8 = 292 days) was Oct. 19, 1987, the precise day of the 1987 Crash. The peak of that wave was 1989.95 marking the Bubble Top in Japan in December 1989. The low was was 1994.25 and that marked the precise day of the low in the US S&P 500 share index. That wave peaked 1998.55 (July 20, 1998), which was again the precise day of the high in the US share market. The collapse of Russia was also forecast and began at that time. Armstrong's forecast was then covered by the London Financial Times on June 27, 1998 where Barry Riley wrote: "Martin Armstrong, at Princeton Economics, warns that an imminent Russian economic collapse is a bigger threat to the rest of Europe than the Asian slump. “The real crisis is in Russia.” he insists." The collapse of Russia in September 1998 resulted in the first major bailout of .
The 8.6 year waves constituting the current Private Wave produced the following targets:
1989.95 1998.55 2007.15 2015.75 2024.35 2032.95
1985.65 1994.25 2002.85 2011.45 2020.05 2028.65 2037.25
The next target 2007.15 marked precisely the date of the high in the S&P Real Estate Index. The collapse that took place was again to the day. This model has shocked many, but it has revealed that there is far more order to the economy than most are prepared to consider. It has demonstrated the existence of Long-Wave Theory and has presented another perspective illustrating that there is hidden order in what many had previously thought was just random noise.

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