ECONOMIC OUTLOOK

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As many of you will remember, this column first discussed Nikolai Kondratieff's "wave theory" back in 1977 (see MOTHER NO. 44 ... Information on ordering back issues can be found on page 148). Those who weren't with us then, however, may not be aware that Kondratieff was a Russian economist — portrayed as the character named "Kondratyev" in Alexander Solzhenitsyn's Gulag Archipelago — who speculated that major world economic events tend to move in cycles, or waves, of about 54 years in length.

And, as you can see from the accompanying chart, which compares actual U.S. wholesale prices with the "idealized" Kondratleff Wave, the American economy certainly seems to be approximating the pattern that the forward-looking Soviet thinker proposed.

Now we all know that a series of lines on a graph can only imply — but not guarantee — the direction in which the same lines will travel once future events have marked their own points in the scale . . . but if Kondratleff's theory is correct (and it sure fits the last two centuries like a glove), it's a pretty safe bet that our economy is before?, to get a whole lot more rocky before it gets better. (And, when one considers that the past three recoveries have each accompanied a major war and a period of increased industrialization and environmental carnage, "better" is a very questionable term.)

Kondratieff's predictions would be bad enough if they stood alone against some rosier future predicted by today's economists . . . but — as the following excerpts, taken from both the "establishment" economic journals, news publications, and thinkers and a wide range of "alternative" investment newsletters show — hardly any source is willing to make other than gloomy predictions nowadays!

JULIAN M. SNYDER, International Moneyline, Dept. TMEN, 25 Broad Street, New York, New York 10004, 12 issues a year, $139: "The latest 'credit crunch' engineered by the Federal Reserve will break the economic recovery and send the U.S. economy back into deep recession in 1981."

BUSINESS WEEK, December 29, 1980 - January 5, 1981 (double issue), "Washington Forecast": "There are ample grounds for skepticism about Reagan's ability to do all he wants to do. The federal deficit is swelling by the hour, and since the President-elect will have control of the budget for barely half of fiscal 1981, his ability to reduce it is limited. And with the near-certainty of a recession in early 1981, the deficit could approach $100 million."

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