Kondratieff Wave Cycle is a long-term cycle present in capitalist economies that represents long-term, high-growth and low-growth economic periods. This theory was founded by Nikolai Kondratieff, c Communist Russian era economist who noticed an approximate 50-year cycle in European agricultural commodity prices and copper prices. Kondratieff believed that these long cycles were a feature of the economic activity of capitalistic nations, and that they involved periods of evolution and self-correction.
Also known as “Kondratiev waves”, “supercycles”, K-waves”, “surges” or “long-waves”.
The K-wave cycle Theory was watched closely 50 years following the market crash of 1929, after which time it was deemed pertinent to economic and political cycles, but not useful when applied as a stock market theory.
The Kondratieff wave cycle goes through four distinct phases of ..,
Beneficial inflation (spring),
Stagflation (summer),
Beneficial deflation (autumn), and
Deflation (winter).
Since the last Kontratyev Cycle ended around 1949, we have seen beneficial inflation 1949-1966, stagflation 1966-1982, beneficial deflation 1982-2000 and according to Kondratieff, we are now in the winter deflation cycle which should lead to depression.
Four Phases of One Cycle:
A Kondratieff cycle consists of four distinct phases, or distinguishable, dramatic mood changes, the tone of which determines the actions of individuals involved in the economy. The awareness of these characteristics allows for the anticipation of the change in the economy and the psychological mood that will prevail.
