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Cycles Of War And Peace Larry Edelson Choosen by Karl Loren

Page 1 of 25 Version 6/14/2010



Copyright © 2010 by Larry Edelson

Published By: Weiss Research, Inc.Publication Date: April 2010

RWR0044

Our mission is to empower investors and consumers with unbiased information andguidance to protect their savings, build their wealth, and prosper in good times or bad.

All rights are reserved. Permission to reprint materials is expressly prohibited without theprior written consent of Real Wealth Report. The accuracy of the data used is deemed

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Cycles

Of War

Throughout history, war has often been

triggered by financial crises. Will today’sgreat financial crisis — the worst sincethe 1930s Depression — lead to another

World War? And if so, when?

Larry EdelsonEditor, Real Wealth Report





RWRTable of Contents

Introduction ..................................................................................... Page 4

Section 1 ........................................................................................... Page 7

Cycles — Concepts And Theory — A Layman’s Guide

Section 2 ......................................................................................... Page 10The Kondratieff Long Wave

Section 3 ......................................................................................... Page 18

Regularity In Human Conflict: The Cycles Of War

Section 4 ......................................................................................... Page 24

Conclusion

Charts And Tables

Figure 1 ........................................................................................... Page 11

The Kondratieff Wave (Idealized)

Figure 2 ........................................................................................... Page 12

Major Kondratieff Wave Turning Points

Figure 3 ........................................................................................... Page 14

54-Year Socio-Political Cycle With 4.5- and 9-Year Subwaves

Figure 4 ........................................................................................... Page 16Cycle Length Data

Figure 5 ........................................................................................... Page 20

Plate Of The Wheeler Index

Figure 7 ........................................................................................... Page 22Table Of Cycle Turning Points

Figure 8 ........................................................................................... Page 23

54-Year Socio-Political Cycle With 18-Year War Cycle And4.5 and 9-Year Economic Subcycles





Introduction

This is a very special topic for me, and indeed, to all of us, and for many

varied reasons. However, there is simply no way I can do it justice in aspecial report like this. The subject of war and financial crises is far toocomplicated, and requires a major treatise to even attempt to cover the

subject in any detail, to say the least.

So at best, all I can hope to do in this report is give you a heads up on anarea of study that I have been involved with for years, and, moreimportantly, what that research is telling us now.

My first special report on the cycles of war was published, copyrighted

and filed with the Library of Congress in Washington D.C. in May 1988.

It was a special report I put together based on my research in this area inthe mid-1980s — and for the benefit of customers of my advisory firm,

Essex Capital Management and investors in two privately managedcommodity funds for which I was the senior trader.

That report was ground-breaking. Moreover, this current edition, while

coming more than two decades after I first published my findings, willturn out to be just as seminal, I believe, as the original report that came

before it.

Reason ...

The cycles of war — the natural rhythms that predispose

societies to descend into chaos, into hatred, into civil and eveninternational war — are building momentum again, and threaten

to bear down on the world in short order.

No doubt, the subject of war evokes a very basic and fundamental emotion.

That’s not surprising. “War,” or conflict, is in a very real sense, the resultof basic human emotions, as is love, hate, fear and greed.

And, sad but true, the history of war is very much a part of the history of

mankind.

It is a cycle of life and death, of prosperity and depression, panic andserenity — and of the rise and fall of great powers and civilizations.





Before I begin, a few caveats are in order ...First, while this report is entitled, “The Cycles of War,” it is not a history of

war nor is it a fictional tale of what the future holds.

This report has been compiled so that you can understand the naturalrhythms of society’s propensity toward conflict ... how it waxes and wanes... to understand the timeline those rhythms span ... and to betteranticipate their future ... so that you may prepare your family ahead of

time, emotionally, financially, and otherwise.

Second, it is not my intent to elicit emotional responses from the readersof this report or to frighten you. I do not pretend to know the future of

war nor is this report to be construed as a doomsday tactic.

Third, I do not give financial recommendations, or forecasts for various

markets, in this report. That is covered by my work in other publications,namely my Real Wealth Report and associated other columns and special

reports I pen. And naturally, those publications do build upon and takeinto consideration the information and my views found in this report.

This report is largely educational and designed to give you a heads up on

what cycles of war exist ... how they are positioned now ... and when theyare likely to rear their ugly head again.

This report is broken down into four major sections ...

Section 1 is a layman’s guide to cyclical theory. In this section, I give

you the concepts necessary to understand cyclical theory and to recognize

that cycles play a very major role in our lives and in civilization.

Section 2 summarizes some broad macro-economic cycles currently inforce; cycles that have spanned hundreds of years. In this section, I

reveal my proprietary work on a very specific major economic cycle.

Section 3 covers the cycles in war, reviewing research conducted by

others as well as myself. In this section, you will find just how rhythmicalwar actually is and what the war cycles currently project.

You will also see for yourself how my original 1988 report on the cycles ofwar not only projected Gulf War I almost to the month, but it alsopredicted subsequent major turning points in the history of war, and

importantly, a major and correct forecast for how the Dow Industrialswould respond.





Section 4 concludes the report, showing you the likely time frame when

the world will be most vulnerable to major civil and international unrest,on a global scale.

One last note: I would like to thank the Foundation for the Study of Cycles— a leading non-profit organization devoted to the study of cycles inhuman behavior and that traces its roots back to 1931 when President

Hoover asked Edward R. Dewey, the Dept. of Commerce’s ChiefEconomist Analyst, to determine the cause of the Great Depression — for

their vast research library.





Section 1 Cycles — Concepts And Theory —

A Layman’s Guide

Before we get started, here are three basic technical terms you’ll need toknow about cycles ...

1. Periodicity: Often referred to as frequency, periodicity refers to the

timing of cycles, quantified as their duration from a high point in a seriesof economic data to a subsequent high, or the trough of economic activity

to the next trough. (You can think of this like the cresting of ocean waves,which occurs at regular, periodic time frames.)

2. Amplitude: Essentially a mathematical measure of the magnitude of

change in the data of an oscillating variable, above or below its trend line.

Put simply, it’s the strength, or power, of a cycle.

3. Phasing: Indicates whether a cycle is arriving on time based on itsperiodicity and a beginning reference point in a time series.

In principal, cycles and cyclical theory are actually simple to define and

explain. Cyclical behavior exists and surrounds us in many differentphenomena.

The alternation of day and night, the succession of the seasons, the

beating of our hearts, and the rise and fall of the tides. Cyclical behaviorexists in nature and in all forms of life, from the lowest to the highest.

Yet, for some reason, mankind prefers to deny that we may be subject to

cyclical behavior. And with all our greatness, mankind overlooks one very

important fact, and that fact is that experience is not hereditary .

Experience is not embedded in our genes and as a result we have notbeen able to eliminate wars, depressions, recessions, and the financial

panics which continually afflict mankind. There has never been a

civilization that has not been adversely affected by economic depressions,wars, and hyperinflation.

Through extensive research I have studied cyclical phenomena as theyrelate to human behavior and to societies in general. I have alsoexamined cyclical phenomena in the spheres of geological activity suchas patterns in weather and earthquakes.





There exist direct correlations between geological and human activity that

help in formulating theories regarding the rise and fall of great civilizations.

Throughout history it has been apparent that rhythms in the behavior ofmankind and nature are the texture of life itself.

Some people are aware of certain cyclical aspects of modem society. It isoften said, for example, that women’s hemlines rise in a bull market andfall in a bear market. This is a valid expression of cyclical behavior, but for

some reason it is treated lightly.

Simply defined, A CYCLE EXISTS WHEN THERE IS A DEGREE OFREGULARITY TO THE PHENOMENON STUDIED OVER A PERIOD OF TIME.

The longer the time period studied, the greater the validity of the cycle.

Once you have established regularity or periodicity in a phenomenon, you

have established predictability. Therein lies the validity of cyclical research.

There exist within society many planes of social behavior which may bestudied from the vantage point of cyclical theory. In this report I’m going

to focus on major economic cycles and cycles that have been present inexpressions of conflict between people.

At any one point in time there are literally hundreds of cycles at workwithin the actions of mankind.

The task of cyclical theory is to isolate individual cycles and determinetheir length. Long-term cycles obviously have greater impact upon society

than those of shorter duration. It is the task of the theorist to track foundand proven cycles. Very often, major milestones and turning points within

a civilization may be forecast well in advance of the actual event.

For argument’s sake, let’s say that two distinct and proven time cycles

have been found in the recorded history of steel prices. One cycle is of aduration of fifteen years from high to high and the other cycle is of a

lesser amplitude and five years in duration, high to high.

Although the two cycles may have originated at different times, at certainperiods they will converge. This is due to the mathematical repetition of

the cycles, since the shorter cycle of five years will at some point and at amultiple of three repetitions converge upon and influence steel prices justas the 15 year cycle is also calling for a high.





It may take centuries for cycles from different planes within the same

market (or different markets) to converge, but the net result will be thesame. In this case, one would anticipate an extremely bullish market

for steel prices as one entered that horizon wherein the two cycles beginto converge.

In the next section, I will explore some very significant macro-economiccycles. These cycles are of long duration and have a direct bearing upontoday’s volatile financial markets.

As in the steel example above, the world as a whole is entering a phase

where important long-term cycles are converging upon one another .





Section 2

The Kondratieff Long Wave

In this section we will explore some very basic macro-economic cycles.

These cycles are well documented and of long duration. Such cycles are ofmajor significance to the world’s economies.

I will begin by reviewing the ‘Kondratieff’ Long Wave — also called the K-wave. I will then introduce my proprietary research, and conclude this

section by correlating various cycles discovered by other analysts.

Many of you may already be familiar with what is called the Kondratieffcycle. This cycle has been taught in basic economic courses and remains

the most popular cycle among beginning students in cycle theory. Overthe years there has been much controversy surrounding this cycle and so

we will take a detailed look at it.

Nikolai Kondratieff was a Russian economist who was imprisoned in early1930 for the work he had published in 1926. Beginning in the early 1920s,Kondratieff researched wholesale commodity prices in Great Britain,

France, and the United States.

His data spanned nearly 100 years of commodity prices, and his resultswere published in 1926. As Kondratieff saw it, long waves of economic

prosperity and decline were unavoidable and repetitive. Politicians and

governments were powerless in the face of these long waves or cycles. Asa result of his conclusions Kondratieff was imprisoned in Siberia.

Kondratieff postulated that these long waves occurred in repetitionsranging from 47 to 64 years in length, with the average wave being

roughly 55.5 years.

The first wave he saw beginning in 1789 and ending in 1814 — a 25-year

span. This was a period of worldwide prosperity.

From 1814 to 1849 this wave declines for 35 years straight coming into

the bottom a few years prior to the Civil War in the United States. Thus,as Kondratieff saw it, the first of his long waves lasted 60 years.

The second Kondratieff wave began in 1849 and peaked in 1873,immediately after the Civil War. From 1873, the second wave declined into

1896. Kondratieff saw the entire second wave as lasting 47 years.





The third wave began in 1896 and peaked in 1920, lasting 24 years. This

wave was consistent with the worldwide explosion in commodity pricesand land speculation which peaked in the United States in 1920.

Kondratieff was imprisoned for his conclusions which stated very simply

that no form of government could escape these long-term economic waves.

So although Kondratieff had directed his research as an attack againstCapitalism, he was, nevertheless, imprisoned for the belief that even a

Communistic state could be affected by such long waves.

After his imprisonment, little work was carried on in the study of theselong waves. Now, with the benefit of hindsight, we may look at how his

work fared in forecasting the period since 1920, the peak of hisproclaimed “third” wave.

The chart to the right ismy original hand-drawn

chart from the 1988report of Kondratieff’s

long waves. Since hiswork ended with the

peak of the third wavein 1920, we mustpostulate the balanceand see how it has fared.

The solid line represents his work as he saw the first three waves. The

dotted line postulates varying peaks and bottoms based upon the averageof his cycle. I took 27.75 years as the average to the peak and 27.75 as

the average of the decline, for a total wave length of 55.5 years.

As you can see from this chart, the third wave should have bottomed in

late 1947, immediately after World War II. The fourth wave naturallybegins at that point and climbs through a period of economic prosperity

into a peak in 1975.

From 1975, according to an average of Kondratieff’s cycle, we should seeanother 27.75 years of economic decline coming into a bottom during the

year 2002. Interestingly, that time period saw the bottoming of economicactivity in the tech sector, an important bottom in the Nasdaq and theDow, and the immediate after-effects of 9/11.





Kondratieff’s work has been amazingly accurate when one takes a simple

average of the first two waves and projects them into the future. It clearlycalled some of the major turning points U.S. history.

In fact, take a look at the important dates of the major K-wave turning

points — they are astounding ...

1790-1849: Characterized largely by the Industrial Revolution

1850-1896: The age of transportation (steam and railways)

1897-1949: The age of steel, electricity, heavy engineering, and

mass production (autos)

1950-current: Coincides with the beginning of the Cold War, butironically characterized by the Information Age and

telecommunications, peaking in 2000-2001 with a recession and adepression phase beginning in late 2008

Major Kondratieff Wave Turning Points

Through modern computer technology and the additional data available, in

the early 1980s I was able to refine the Kondratieff wave. His long-termwave must be given credit for the early and pioneering work that was

done. However, I said back then, it must be understood from the contextin which it was developed, and the wave adjusted accordingly.

In 1920, when Kondratieff was conducting his research, agriculture

comprised over 70% of the productive capabilities of the world’s variouseconomic systems.





Since 1920 there has been a gradual but consistent change from

agriculture-based economies to service-based economies. This change hasbeen such that service-related industries now represent more than 80% of

the productive capability in the U.S. alone.

Plus, since 1971, the world has been on a floating exchange currencysystem. And given the volatility in the currency markets, perhapsKondratieff’s wave — to be understood fully — required understandingsome of the short-term cycles that might be a part of it.

The 54-Year Socio-Political Cycle And Its Subwaves

In my work, I have researched and compiled literally hundreds of economiccycles of varying degrees, from as short a duration as four years to as

long as 75 years.

In addition, as noted above, in the early to mid-1980s, I accounted for theKondratieff wave and made adjustments according to the shifts seen in

the economy over the last 40 years.

As a result, I believe I have found a long-term cycle that exhibits a highdegree of regularity and accounts for the major turning points within theU.S. economy.

The cycle is precisely 54 years in length. Similar to the Kondratieff cycle,it did take into account more than just commodity prices and looked at

interest rate cycles, banking credit, real estate, GDP, employment andother data.

This 54-year cycle may be broken down in six waves of nine-year cyclesand three waves of 18-year cycles, based on other series and cycles in

underlying data.

Each subcycle has accounted for minor economic turning points as well asmajor international events. In addition, as you will see in the next section,

the cycles in war correlate to a very high degree with the 18-year subcycle

of the 54-year cycle.

The chart below is my original hand-drawing of the 54-year cycle, aspublished in my 1988 report, and where I labeled it the 54-Year Socio-Political Cycle, for it appears to have called the major turning points of world

geopolitical events as well as several major cultural and economic shifts.





I have studied this cycle back

over 300 years, and it hasaccounted for several turning

points when subdivided intoits pattern of six waves of

nine years average duration.

At times the subwaves havevaried in length from eight to

10 years, with the averagebeing nine years.

Looking at the chart above, let’s begin tracking this cycle and its subwaves

from the orthodox end of the last 54-year cycle which bottomed preciselyon target at the end of the Great Depression in 1932.

Taking a half span of the first nine-year cycle as 4.5 years in duration, wesee that a minor peak was reached in 1936.5.

From the 1932 low in the Dow Industrials, the U.S. stock market rallied

virtually straight into a high in 1937 on inflationary sentiment as the NewDeal emerged under the administration of President Roosevelt.

Roosevelt had advocated inflationary tactics as the only way out of theDepression and thus the market enjoyed a very healthy rally virtuallydoubling its value from the 1932 low into the 1937 high.

Incidentally, that period stands as testament to the fact that the Dow can

rally during inflationary periods, a concept which today seems to havebeen lost or forgotten.

Moving into the next 4.5 year period we find that the cycle bottoms in1941, at the early stage of World War II and the advent of another

economic boom.

From the 1937 high in the Dow Industrials at 194, equities declined over

52% coming into a low in 1942 at 92. This is very close to the idealizedmodel low which had pinpointed 1941 as the bottom of the first nine-yearsubcycle.

From the 1941 low, we see that the next 4.5 year span of the nine-yearcycle pointed directly to a peak in 1945.5, shortly before the end of WorldWar II. This minor peak forecast the beginning of the postwar recession.

The Dow Industrials peaked in 1946 at the 220 level.

54-Year Socio-Political Cycle With4.5- and 9-Year Subwaves





The next minor turning point lies on the idealized model as a trough in

1950. In essence, this minor cycle precisely called the bottom of the postwar recession, which by orthodox terminology ended in late 1949.

The next peak arrives at 1954.5 on the idealized model, which corresponded

roughly to the economic boom of the 1950s and the Korean War. The Dowrallied from a low in 1949 at the 140 level to a high in 1956 in the low500s. This represented a gain of more than 250% in a period of six years.

At this point in the model we find that the idealized peak at 1954.5 was offa short 1.5 years from the actual peak in the Dow which occurred in 1956.

The next half span of the nine-year cycle pointed to a low in 1959. Here

we find that the U.S. economy generally followed the cyclical forecast ofthe model. Although the Dow continued to rally in defiance of what the

model dictated, economic growth actually stalled for a short span of two

yeas, confirming the low point that the model had projected for 1959.

The next turning point arrives as a peak in 1963.5. This point closelycorresponds with the volatile market of 1962, a year in which the Dow

had one of its widest percentage trading ranges ever, spanning some113 odd points.

This period also shows a high correlation with other aspects of our societyas Civil Rights became a hotly contested issue of the times and theassassination of President Kennedy.

From the model peak at 1963.5 the next turning point arrives in 1968.

This idealized point projected another trough and here we find furtherevidence that the U.S. economy was closely following this pattern of

cycles. The Dow peaked in 1966 at the 1000 mark and then began a

decent into 1970. Here the cycles began to take on a more volatile aspectas the Dow dropped from its 1966 high at 1000 to a low in 1970 at 627.

Here we find that the idealized 4.5 year turning point of 1968 was off

slightly. Nevertheless the U.S. economy in general appeared to be

following the cycle spans closely enough, for the distortion seen in thecycles during this period was immediately adjusted for by the next turningpoint, 1972.5. In January of 1973 the Dow Industrials rallied back to reach

1051, a high that would not be seen for years to come.

From 1972.5 we find that the next turning point should be 1977. That yearactually marked the beginning of a high inflationary period which would

peak in 1981 with the prime interest rate of domestic U.S. banks at 21%.





Thus, once again we find that the nine-year cycle actually called the

market from 1972 through 1981. The minor 4.5 year peak at 1981.5marked a high to be followed by a trough at the next turning point, the

year of 1986. Here we find that a wave of deflation began precisely atthat time, bottoming in 1986.

This journey through the various turning points on our model has taken usthrough 54 years of economic history with a precision that is uncanny.

From the 1932 low marking the end of the Great Depression we seethat the economy followed a precise rhythm comprised of nine-year

cycles subdivided into half spans of 4.5 years. 1986 marked not only thebottom of the sixth wave of nine years, but also the bottom of a long-

term 54-year cycle.

Incidentally, in my 1988 report, I wrote the following, reprinted here ...

“The Crash of 1987 is not the end of the bull market butmerely a correction on a shorter term cycle ... the directionalmodels for the Dow show a new all time high due in 1989. Webelieve the Dow will exceed the 3500 level by late 1989/early1990 in conjunction with the influences of the first 4.5 yearcycle of the new 54 year wave.”

That forecast, using my refined cyclical models, proved to beuncannily accurate.

Clearly, cyclical theory teaches us that the records of the past may be thefootprints of the future.

But before I move on, first, takenote of the table to the right and

how the 54-year Socio-PoliticalCycle is supported by other

important economic cycles,which I used to refine my work.

The cycles you see in that table

have been verified by otherresearchers, and documented

by the Foundation for the Studyof Cycles.

Especially note how the two main subcycles of the 54-year cycle dominateimportant economic data series.

CYCLE LENGTH DATA

9 Years BUSINESS FAILURES

CAPITAL EXPORTS

INDUSTRIAL PRODUCTION

STOCK PRICES

TRADE FLUCUATIONS

WHOLESALE PRICES

4.5 Years RECESSIONS

STOCK PRICES

SHORT-TERM INTEREST RATES





In summary, I have given you a guide to a very important macro-

economic cycle. My initial work began with the Kondratieff Long Wavewhich resulted in the culmination of my studies in 1985 with what I have

labeled as the 54-Year Socio-Political Cycle. I have shown you how thatcycle has passed through time, and how it’s subcycles of 4.5 and nine

years have also pinpointed important turning points in the economy.

In the next section I will present to you the basics of my interpretation ofthe cycles of war.





Section 3

Regularity In Human Conflict:The Cycles Of War

War is a history of mankind. However, war has been too often ignored byeconomists in their pursuit of economic forecasting. As we will see in thissection, war, unfortunately, is an integral part of the economic processwithin civilization. War is as regular and cyclical a phenomenon as life itself.

As you read through this section, I urge you to bear in mind the conclusions

I drew for you in the prior section on the 54-year Socio-Political Cycle.

Moreover, bear in mind that 1986 stands as the bottom of the most recent54-year cycle — and that the crest of that cycle, 27 years from 1986 —

points to late 2013.

Also note, that the next major turning point on the nine-year subcycle

points to the year 2013.

While the subset of 4.5 year cycles points to the years 2014 and 2015.

For your information, in my 1988 report, using my research on the 54-YearSocio-Political Cycle and on war cycles you are about to learn of, I madethe following forecasts ...

“These cycles when combined show us that there will be extremepolitical and cultural volatility beginning in May of 1989. This

volatility will increase in momentum into June of 1990 ...

As the War Cycle kicks off in the middle of 1989, a sharp correctionwill unfold probably beginning after June of 1990 and based upon

international fears stemming from global political tensions.”

Importantly ...

In October 1989, the Dow Industrials marched to a new record high at

2809.08, defying all the analysts who, since the Crash of 1987, werecalling for a depression and 90% loss in the Dow Industrials.

On August 2, 1990, Iraq invaded Kuwait, marking the official beginning

of Gulf War I, merely two months after the June 1990 turning point that Ihad forecast, and leading to a 20.1% decline in the Dow, which I also

forecasted well in advance.





The Dow Industrials advanced in a bull market into 1998, where the

number of advancing stocks versus those declining peaked in April 1998,and is now officially recognized as the major top for the broad stocks

markets. (The narrow-based Dow 30 Industrials proceeded higher into1999, but the majority of publicly traded stocks peaked in April 1998).

War Defined

Now, let’s begin our review of the war cycles with a very brief introduction

to the study of human conflict.

War has been present and always will be present in the history of

mankind. War in its simplest form may be defined as any form of conflictbetween or amongst people.

Anthropologists have long known of the effects of war upon society andhave elaborated upon many studies of war amongst and between isolatedgroups of people.

War has many effects. Researchers have established that war is a method

of population control and that it is also directly related to environmentalconditions and weather cycles. War frequently involves redistributingwealth. This redistribution of wealth very often also includes aredistribution of essential goods — natural resources.

I’m not going to cover the causes or the effects of war here. Nor whether

the next global conflict will be nuclear or conventional.

What I am only concerned with is timing. It is the cycles of war within the

history of mankind that is important for the purposes of this report.

War — Its Cycles

The cycles researched in war cover a period of 2600 years of recordedhistory. The cycles were discovered within the data obtained from theWheeler Index of International and Civil War Battles with stands as the

most authoritative chronicle of war ever published by an analyst withinthis particular field.

Mr. Wheeler’s work, published in 1961, is exhaustive and has been used

by many analysts in the field of war. The Wheeler Index is the longestknown year-by-year record of the history war.





The index is based on the number and intensity of all known recorded

battles, both Civil and International. Reprinted below is one Plate ofthirteen from Mr. Wheeler’s original index.

The most influential rhythm within war is a cycle originally discovered by

Edward R. Dewey, a noted cycle theorist and founder of the Foundationfor the Study of Cycles.

The cycle is 17.71 years in length and was discovered by Mr. Dewey in1964 after having worked extensively with the Wheeler Index. The cyclehas been tested by Mr. Dewey back to 600 B.C., and its validity for

pinpointing turning points within the realm of civil and internationalbattles is astonishing.

My work on war has not expanded upon Mr. Dewey’s but has verified thevalidity of the cycle, and in my opinion, like the adjustments made to theKondratieff Cycle to account for changes in the economy over long

periods of time, I have made additional refinements to existing findingson war cycles.

According to Dewey’s original work, the dates for the crests of this war cyclefor the 20th century were as follows: 1918.5, 1936.5, 1954.0, 1971.7.

Just looking at the dates, there is obvious validity to his 17.71 year cycle.

The 1918.6 date marked the orthodox end of World War I.

The year 1936.3 stands not as a crest, but as the very early stages of

World War II.

1953 marked the end of the Korean War and 1971.70 to many analyststhe end of the Vietnamese War.





According to Mr. Dewey, the next major conflict was to then culminate

around the middle of 1989.

I have previously reviewed Mr. Dewey’s work in detail, and examined each17.71 year cycle idealized crest back to 600 B.C. It is important to note

that although the 17.71 year cycle has an exceptionally high probability(non-random) factor, I have found that this cycle very often flipped backand forth between producing a crest to projecting the low.

As a result, in my early years studying Dewey’s work with the WheelerIndex, I threw out the notion of cycle highs and lows in the historical war

cycles ... concluding that in social phenomenon, just as in financialmarkets, cycle timing dates relate more to TURNING POINTS in time, than

anything else.

This is where today’s cycle theorists fall flat on their faces in that they

believe cycles must always flip from producing a HIGH to generating aLOW. If the rhythm does not produce this alternating sequence, then the

analyst concludes that the cycle has somehow disappeared and is nolonger valid.

I do not subscribe to the theory that cycles somehow disappear. My work

has consistently shown me that cycles remain a valid force even if theybecome at times imperceptible within the data being studied.

I also believe that at times, cycles are influenced by cycles of a larger

degree and that larger waves may often distort lower level cycles andproduce a string of successive highs or lows, rather than the simple

pattern of HIGH to LOW back to HIGH.

For instance, when a cycle arrives on its projected path but produces a

high when it was calling for a low, it does not mean that the cycle is nolonger valid. It simply indicates that something of a more significant

proportion is exerting a strong influence upon the behavior.

Moreover, another force that I believe is present and could be affecting

cycle timing, across many classes and phenomenon: The fact that theworld’s monetary system completely changed in 1971 when the lastvestiges of the gold standard were completely abandoned and President

Nixon closed the gold-backing for the dollar.

My thinking is simply this: Since fixed exchange rates have gone by thewayside, floating exchange rates have become the medium through which

various cultures and political systems communicate. International capital





flows have become very dramatic and volatile, often changing the facade

of each and every nation.

So, I began crunching the data on my computer to screen tens ofthousands of data points from various economic data series and social

phenomena such as the Wheeler Index, looking for anomalies caused byforeign exchange movements.

The result: Starting in 1971, there were indeed many more frequent

occasions in the data where series put in successive highs or lows in thedata, but still consistent with the more important turning points projected

by the subcycles, as well as with Wheeler and Dewey’s data.

But one aspect of the studies stuck out above all others. Volatility wasincreasing ... shorter-term cycles had a tendency to complete their

revolutions in shorter time spans, while longer-term cycles were being

stretched out a bit. I attributed all of these to the advent of floatingexchange rates.

In the end, I found that Dewey’s findings could effectively be rounded up

to an 18-year cycle, which then meshed very well with the 54-Year Socio-Political Cycles and its Subwaves — as well as independently verified data

for other economic data for 4.5- and 9-year cycles.

Here is a listing of the dates/turning points that resulted from my work ...how they panned out and intertwined with major economic and geo-

political events ... and where those turning points lie in the future ...





With further refinement and computer studies, I have been able to map

out a cycle chart of these projections (chart below), showing that for theperiod from 2014 through 2017, the world is, sadly, at very high risk of a

major, international war. A war that could be as significant as the KoreanWar, and quite possibly, World War II.





Section 4

Conclusion

In this report I’ve given you a simple overview of how cycles work, and

their impact on the study of economic, financial, and socio-culturalphenomenon.

This is just skimming the surface of cycle studies, and the report wasdesigned to give a broad overview of how these important cycles have

panned out in the past ... and how they are likely to unfold in the nearfuture.

To summarize ...

An important turning point in all economies will arrive in the middle of

2016, the peak of the 54-year Socio-Political Cycle.

4.5 and nine-year subcycles, proven out in other economic and financialseries, are also lining up as important turning points for in a time windowranging from 2016 to 2017.

The 18-year War Cycle is due to hit with maximum force also in the

middle of 2016.

I hope I am wrong. I hope and pray that the leaders of the world

recognize that times of financial chaos are also times that can lead toterrible consequences.

But whether they do, or do not, I hope that you take this information very

seriously, and take the necessary steps to prepare your family ... yourloved ones ... and your finances — by recognizing and acknowledging the

potential dire times that may lie ahead.


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