by Clif Droke, GoldSeek:
It’s a trite saying but a profound one all the same: “History always repeats.” We’ve all heard this bromide countless times, yet how many of us have truly pondered its significance?
The truism that history tends to repeat itself over time is the basis of the cyclical view of human affairs as applied to the financial market. Cycle investors believe that by studying past episodes of a similar character they can divine the outcome of currents events. It’s not surprising then that the cyclists among us have turned their attention toward the global financial market slowdown and tepid pace of the U.S. economy recovery.
When cycle analysts examine current financial and economic affairs they can see obvious parallels between the Depression Era of the 1930s leading up to World War II. They see the increasingly interconnectedness of the world’s industrialized countries and the threat posed by China’s economic slowdown. More and more, even central bankers and technocrats are worried about the possibility of an economic slump that is truly global in nature.
Christine Lagarde, managing director of the International Monetary Fund, made clear the IMF is fully aware of the danger posed by the global slowdown. In a recent speech she said:
“The good news is that the recovery continues; we have growth; we are not in a crisis. The not-so-good news is that the recovery remains too slow, too fragile, and risks to its durability are increasing. Certainly, we have made much progress since the great financial crisis. But because growth has been too low for too long, too many people are simply not feeling it. This persistent low growth can be self-reinforcing through negative effects on potential output that can be hard to reverse. The risk of becoming trapped in what I have called a ‘new mediocre’ has increased.”
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