Summary
Written mid-cycle in 2015, Foldvary confirms the 18-year cycle is on track after the 2008 depression and predicts the next depression circa 2026. He identifies cheap credit (Federal Reserve low rates) as the financial subsidy amplifying the natural land-rent cycle, and argues the cycle perpetuates because policymakers see only financial superstructure, not underlying land values.
Key Claims
- “For two hundred years, there has been a real estate cycle in the USA with an average duration of 18 years” — also documented in Australia and China — confidence: high [Source: Foldvary, Progress.org, 2015]
- Government’s role is double: public works raise nearby land rents (fiscal subsidy), while cheap credit enables land speculation (financial subsidy) — together they inflate the bubble — confidence: high [Source: Foldvary, Progress.org, 2015]
- The cycle will “most probably plunge the economy into its next depression in 2026” (written in 2015, predicting 2026 peak) — confidence: high [Source: Foldvary, Progress.org, 2015]
- Policymakers fail to learn because “they don’t look literally beneath the financial surface down to the land” — confidence: high [Source: Foldvary, Progress.org, 2015]
- Lending regulation worsens the cycle: tightens post-bust (delays recovery) then loosens mid-expansion (amplifies bubble) — confidence: high [Source: Foldvary, Progress.org, 2015]
- As of 2015, 15% of US houses still had negative equity — mid-cycle expansion underway but not yet in bubble territory — confidence: high [Source: Foldvary, Progress.org, 2015]
Notable Quotes
“None of the financial regulations and diversification mandates will stop the real estate boom of 2012-2022. The 18-year cycle is still on track, which will most probably plunge the economy into its next depression in 2026.”
“Why the economic experts, policy makers, and the journalists who shape public opinion do not realize this is perhaps the greatest mystery in human history.”