Long-Wave, Fixed Investment, Inventory, and Demographic Cycles all Converging

10-04-2010 • GlobalEconomicAnalysis.blogspot.com

A deceleration of real final sales/demand of 35-40% or so below the long-term trend implies a similar scale of decline in bank loans of 35-40% (-4%/yr.) from the secular '08 peak to converge by '20 with the longer-term trend growth of final sales from the onset of the secular reflationary phase in the early '80s. As mentioned earlier, the loss of growth of final sales/demand per capita from the secular peak will be closer to 50%, which is approximately the scale of decline per capita likely to have occurred from the '85 secondary peak for US oil production by '20. The loss of bank loans and final sales/demand, with total government /GDP of 36-37% (and 56-57% of private GDP), implies a combined loss of GDP and resulting government receipts totaling no less than 8% of GDP or $1.1T/yr. avg. in federal deficits for the decade just to keep nominal GDP from contracting.