Bryan Kavanagh warns of deflationary depression

. . . Kondratieffian analysis would have the final deflationary phase of the fourth Kondratieff cycle (K-wave) occurring between the years 2003 to 2009.

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Figure 1: Ratio of Australian Real Estate Sales to GDP

. . . [I]n Sydney on 10 July 2001, Mr Macfarlane made the curious statement that “asset price inflation of either shares or property had not become a problem” for Australia. He appeared to seek exoneration for the Reserve Bank for any downturn by suggesting that “The major threat to our future growth prospects now comes from the international economy, not from domestic factors.” It is most difficult to reconcile these statements with Figure 1, showing Australia to be currently teetering at one of the portentous property market peak observed by Henry George. Kondratieffian analysis would have it as the prelude to the deflationary fin de siècle.

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[Extract from “The Coming Kondratieff Crash: Rent-seeking, income distribution & the business cycle”, Geophilos (London) No.01(2), Autumn 2001, pp.84–93 (arbitrarily dated at the start of the season). Posted here on Dec.11, 2009.