The Compo cycle, that is, a 50-60 year economic cycle proposed by the ** economist Kondratiev. The core idea of the Compo cycle is that the world's resource commodities and financial markets will fluctuate according to a 50-60 year cycle, and there are four small waves in a big wave: boom, recession, depression, and upswing.
As you may have heard, we are now in the depression of the Compo cycle, and in the last few years. This means that the economy will become more volatile, more and more volatile, with many previously high assets falling sharply and others moving wildly.
Whether you're at home or abroad, your money will become less and less valuable as the purchasing power of money keeps declining and the pressure of debt keeps rising. 2024 may be a turning point in the Compo cycle and a flashpoint in the U.S. debt crisis.
First, let's take a look at the history of the Compo cycle. The first round of the Compo cycle, from 1770 to 1849, was characterized by the British-led Industrial Revolution, with the main resource commodities being cotton, iron, and coal. At the end of the first Compo cycle, there was the European Revolution of 1848, which led to fundamental changes in the political systems of European countries.
The second round of the Compo cycle, from 1850 to 1896, was characterized by the American-led railroad and electrical revolution, with the main resource commodities being steel, railroads, and electricity. At the end of the second Compo cycle, there was the Great Depression of the 1890s, which led to the collapse of financial markets in the United States and Europe, triggering World War I.
The third round of the Compo cycle, from 1897 to 1945, was characterized by a German-led automotive and chemical revolution, with the main resource commodities being oil, automobiles, and chemicals. At the end of the third Compo cycle, there was the Great Depression of 1929, which led to the collapse of the global economy and triggered World War II.
The fourth round of the Compo cycle, from 1946 to 1991, was characterized by the information and communications revolution led by the United States, with the main resource commodities being electronics, computers, and aviation. At the end of the fourth round of the Compo cycle, the collapse of the Soviet Union in 1989 led to the end of the Cold War between East and West and triggered a global political realignment.
The fifth round of the Compo cycle, from 1992 to the present, is characterized by China-led globalization and the Internet revolution, and the main resource commodities are networks, mobile communications, and new energy. From 92 to 24 years, 32 years have passed, and from the perspective of the Compo cycle, it has entered a period of depression.
From this history, we can see two laws. First, the dominant country in each round of the Compo cycle will surpass the dominant country of the previous round economically and become the hegemon of the world. Second, at the end of each cycle of the Compo cycle, there will be a global crisis, leading to economic collapse and social turmoil.
So, what kind of crisis will arise at the end of the fifth round of the Compo cycle? The answer may be the US debt crisis.
The U.S. debt crisis refers to the total debt of the United States**, enterprises and individuals exceeding the level of its gross domestic product (GDP), resulting in a decline in the credit rating of the United States, a depreciation of the value of the dollar, a recession in the United States, and even a global financial crisis.
The root cause of the U.S. debt crisis is the U.S. long-term fiscal deficit and deficit. In order to maintain its military and political hegemony in the world, the United States has continuously increased its military spending, and at the same time, in order to stimulate its domestic economic growth, it has continuously implemented various tax cuts and stimulus programs, resulting in its fiscal revenue far lower than its fiscal expenditure, forming a huge fiscal deficit. In order to enjoy a high standard of living with high consumption, US enterprises and individuals continue to import various goods and services from abroad, and at the same time, in order to reduce costs and improve competitiveness, they continue to transfer their production and investment abroad, resulting in their exports far lower than their imports, forming a huge deficit.
In order to make up for its fiscal deficit and deficit, the United States continues to borrow money from abroad, causing its debt level to continue to rise. According to the U.S. Department of the Treasury, as of January 2024, the total federal ** debt in the United States has reached 31$49 trillion, equivalent to 150% of its GDP. Of these, the U.S. debt held by foreign countries has reached 707 trillion dollars, or 22 percent of total debt5%。China is the largest creditor of the United States, holding 1$06 trillion, or 15% of foreign-held U.S. debt.
The U.S. debt level has far exceeded its capacity, leading to a credit crisis in the U.S. A credit crisis is a global economic and financial disaster that we must be vigilant against and guard against.