Saturday, January 2, 2016

PI Theory

Martin Armstrong has a theory (the Economic Confidence Model) that there are economic cycles that last 8.6 years or 3141 days.  Before, I have speculated that there are 7 year cycles.  The cycle this time seems to be a little longer, so maybe the longer cycle fits better

The stock market reached an all time-high on either Jan 14, 2000 (DJIA) or Mar 10, 2000 (Nasdaq).  On Sep 29, 2008, the stock market crashed. This was 3182 days after the Dow high and 3126 days after the Nasdaq high.

The early 1990s recession ended in March 1991 (call it Mar 31, 1991).  Between Mar 31, 1991 and Jan 14, 2000 is 3211 days, or about 2.5 months longer than the 8.6 year cycle.

The early 1980s recession ended in November 1982.  Between Nov 30, 1982 and Mar 31, 1991 is 3043 days, about 3 months shorter than the 8.6 year cycle.

Before that, there was a recession that ended in March 1975. Between Mar 31, 1975 and Nov 30, 1982 is 2801 days, about 11 months short.

Anyways, projecting forward, 3141 days from Sept 29, 2008 is May 5, 2017.  According to this model, expect something to happen on that date, plus or minus a couple of months.

Why does it matter?  When the next great recession hits, expect government spending to soar again and the annual deficit to return to the trilllion dollar range.

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