{Economic Cycles (3) [continued]}[23rd September 1990]

[Redbook7:320-321][19900923:1945b]{Economic Cycles (3) [continued]}[23rd September 1990]

.1945

[continued]

First of all,* it is almost invariably the case that cautious counsels are pointing to the overheating of the economy before the crash occurs – sometimes for years before, even [with]in an 8 year cycle. It will become apparent, taking the recent years in the U[nited] K[ingdom] as an example, that there is simply too much money (credit and tax cuts) available relative to the amount of work being done, or [relative to] the productive capacity of the economy.

This presumably represents the left outer-circle arc, A~-J~-G~-R~-C,** or at least the earlier part of it. Financial activity simply loses contact with underlying wealth creation: financial*** activity becomes more and more frantic as bigger and bigger fortunes are made.

These days, there comes a point when everyone knows it can’t go on, although not everyone says so.

*[See last previous entry, final paragraph]

**[See ms diagram reproduced in last previous entry]

***[Word inserted]

[continued]

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