Long Treasuries vs The Long Wave
Since the early 1990s, I published this chart every month on the back cover of my publication until I retired a couple of years ago. I thought it was a great piece of marketing to remind readers that I was a long run bull on interest rates.
Readers might not pay much attention or remember claims that I was bullish, but they would pay attention to and remember this. I even had bond managers walk out over this chart in the middle of my presentation.
Now just felt like a good time to publish it again.
Click on image to enlarge it for better viewing.
Why are 1885 and 1889 between 1980 and 1995?
Typo, fixed on original chart.
I assume that’s Forrester’s Long Wave from his systems model. Interestingly, Hackett Fisher, in his book on European historical economic research, calls it the Long Wave, and points out that there have been a number of such long waves in European history. Peter Turchin calls them Secular Cycles and ties them into population to resource ratios and takes the history back to the Roman Republic.
We were a corporate sponsor of Forrester in the 1970s and his work certainly influenced my thinking. But this was completely independent of his models.
When I first did this I just used from 1950 to 1980 and on to 2010.
I never thought I would have to extend the chart back to 1940 and up to 2020. But 1941 was the apparent all time low for bond yields — data on the composite long yield goes back to the early 1930s.
Kaleberg, I’ve done quite a bit of extensive research looking into the Secular Cycles and the evidence to support, even now a decade later, still holds true. Years ago I somewhat confirmed this for post WWII economy. Post war GIs had kids and 1960s prosperity hit (this was the largest period that I can see in recent US history), Boomers had kids, and we have the early/mid 90s suburban sprawl and now we have the Boomers grand-kids having kids and buying houses. Of course this is highly subjective to what part of the country you are in but seems like for the most part on the aggregate this holds. The big what if is the transference of the Boomer assets into the free market and how that plays out.
Long story short, I have been a big advocate of what Turchin was preaching and it seems to me, when population expands, so do economies and availability of resources, and vice versa.