Nicholas F. Benton

The 40-Year Crash Cycle

Come to find out that while the unwashed masses, which includes most of us, are lulled into a false sense of security and optimism about the steady rise of the economy, of the availability of jobs and growth of real estate values, it is commonly understood among mainstream economists and financial analysts that a long 40-year economic convulsion wave is, with the certainty and deadliness of a tsunami, rolling toward us.

Like the bells go off for astrologers when a convergence of planets occurs, it is a convergence of predictable factors that occur every 40 years which is due to arrive around 2009 or 2010. The last time was 1969-1970, which led the dollar to go off the gold standard, and the time before that, of course, the crash of 1929 and the onset of the Great Depression.

At the end of this decade, so the theory goes, four routine factors impacting economic activity will occur simultaneously. First is the natural tendency of people to become more cautious and tighten their personal finances at the end of a decade. It's apparently a predictable socio-phenomenon. That is combined with the normal 9.5 year business cycle and the fact that about a year after each eight-year election cycle the nation goes into a funk. But those three things together with the most important factor of all — the fact that the leading edge of baby boomers will be hitting retirement age, shifting their economic behavior from spending to saving — transform the whole package into a toxic cocktail.

That one is like the final, essential camel's nose hair ingredient of a first-rate witch's brew, the one that gets it bubbling and steaming like dry ice dropped into a bucket of water in a Halloween Haunted House.

Dr. Stephen Fuller, the respected George Mason University economic analyst, rattled off the components of this imminent scenario with a disarming matter-of-factness at a special Falls Church City Hall briefing Monday, seemingly not phased by the association of the events he was predicting with 1929.

Now, of course, none of this so far takes into account more unpredictable factors, such as the "peak oil" crisis that is gaining more and more currency among analyst circles, and the impact of a really-bad devolution of the situation in Iraq or elsewhere in a world that is becoming more hostile toward the U.S. by the hour.

Finally, there comes the anticipation of all the above, which can become an economic factor in itself as a jittery public starts to batten down its hatches in advance.

The new bankruptcy law should be a clue to the U.S. public that its government does not intend to act kindly when things get rough, especially as it comes just as a record growth in credit card debt peaks. It starts to sound like a click behind the ear of a bear caught with his paw in a honey pot.

Coming with this is the record federal deficit — what a shocker for anyone who dozed off in 1999 when there were record surpluses — and decline in the value of the dollar overseas. Now, Federal Reserve chief Alan Greenspan sounds less grandfatherly and more miserly. How is it he is allowed to change his mind about his predictions and just go ahead about his business like that?

What's stunning in the midst of all this is how we're all being lulled by politicians and the media into an attitude of "business as usual." It's the same old debates that are dividing the parties, with abortion and homosexuality in the forefront, and the same old fixation on high-speed chases and neighborhood perverts that dominate almost every hour of all-news television, much less local half-hour versions.

The fact is that the time is coming when the American public is going to be in genuine crisis, and the sickening reality is that almost all the experts agree on this, if to a greater or lesser degree. When that time comes, loss of assets, jobs, credit and savings (through inflation if nothing else) will only be eclipsed by actual shortages of basic commodities and access to health care.

The current administration, and everything associated with it, which has aligned with the very wealthiest Americans to set up the preconditions to fleece the rest of us under these circumstances, will become more than merely opposed, but hated domestically with a ferocity every bit as much as it already is abroad.

The opposition party needs anticipate this, and begin speaking a language about all this that will become clearer and clearer as events unfold. It could become easier to elect Donald Duck than any Republican in even the reddest of the red states should even a fraction of what so many are predicting actually comes to pass.

Nicholas F. Benton may be emailed here.