Summary
Opening session of the Feb 28, 2020 PSE Forecast Class in Melbourne. Phil frames the big picture before getting into the day’s technical material. Covers David Hackett Fischer’s Great Wave (1000-year commodity price history), Kondratiev long waves, the 18.6-year real estate cycle origin story (US public land sales 1800+), and personal real estate investment history. Sets the context that commodity prices through the 21st century may stay subdued (the Great Wave theory) while a Kondratiev upswing is expected into ~2026.
Key Claims
- David Hackett Fischer’s “The Great Wave” documented ~1000 years of UK commodity prices with alternating centuries of price revolution and flat prices; the 20th century was the biggest price revolution yet. — confidence: high
- Fischer suggested prices could go nowhere for the entire 21st century — a useful filter preventing inflation-bet errors after the GFC. — confidence: high
- Kondratiev discovered ~50-60 year long waves in commodity prices from Russian agricultural data; forecast low prices for the 1930s (was sent to Siberia). — confidence: high
- US public land sales peaked every 18 years: 1818, 1836, 1854, 1872, 1888, 1908, 1926 — originating Phil’s real estate cycle research. — confidence: high
- Global commodity index on log scale expected to continue up from the 1990s low to approximately 2026 (25-30 year upswing from trough). — confidence: high
- The real estate cycle drives bank credit creation; no land tax means economic rent capitalizes into land prices → you always get a cycle. — confidence: high
- Mid-cycle pause is now (Feb 2020); stock market due a panic in 2020 from the Financial Timetable — but this won’t necessarily affect real estate dramatically. — confidence: high
Predictions / Forecasts
- Commodity prices to continue rising toward a peak around 2026. — status: pending (as of Feb 2020)
- Mid-cycle stock market panic in 2020; real estate cycle continues. — status: partially confirmed (COVID crash March 2020, market recovered)
Notable Quotes
“The reason why you’ve got to know that [The Great Wave] is because David Hackett Fischer suggested that from the issuance of his book for the next somewhere like 100 years, he felt if history was to repeat prices would go nowhere.”
“When the Fed prints money, you have to get runaway rampant inflation. And I looked at this data… I just knew that those fund managers that were betting on another runaway bout of inflation, they were just going to be wrong.”