ELLIOTT WAVES AND MONETARY HISTORY

June 3, 2000

 

Introduction

 

In late 1999 an article titled 12000 Years of Elliott Waves, authored by Joseph Miller, Daan Joubert and myself, described a number of Elliott waves larger than a grand super cycle, the largest wave defined by R.N. Elliott.  This article can be viewed in its entirety at http://www.freebuck.com/articles/elliott/00years1.htm

 

One of our discoveries was a close connection between major monetary developments and these larger Elliott Waves, which this article will address.  In the year 2000 we are ending both a grand super cycle (GSC) and a wave of higher degree (an X Wave).  This has major implications for the world’s monetary system and financial markets going into the 21^st Century.

 

Positive monetary developments typically occur near the beginning of large ascending waves.  On rare occasions they appear at the peak of an ascending wave, and accomplish little good when they do so.  Episodes of fiat money, and other forms of monetary mismanagement, typically occur in the latter part of ascending waves, sometimes accompanied by credit expansions and speculative bubbles.  The descending wave following such an ascent corrects these excesses, and the next advance may begin on sounder monetary principles, with money backed by gold or silver.

 

Large Elliott Waves: An Overview

 

For those readers unfamiliar with 12000 Years, I will present the basic wave pattern here.  An ascending Z Wave is roughly 10,000 years long and is comprised of 5 Y waves.  Waves Y1, Y3, and Y5 are ascending waves of 3,000+ years in length, while Y2 and Y4 are shorter descending waves.  Each ascending Y Wave (Y1, Y3, and Y5) is comprised of 5 X Waves.  Waves X1, X3, and X5 are ascending waves of 800-1000 years in length, while X2 and X4 are shorter descending waves.  Each ascending X Wave (X1, X3, and X5) is comprised of 5 Grand Super Cycle (GSC) Waves.  Waves GSC1, GSC3 and GSC5 are ascending waves of 200-300 years in length, while GSC2 and GSC4 are shorter descending waves.  Each ascending GSC Wave (GSC1, GSC3 and GSC5) is comprised of 5 Super Cycle (SC) Waves.  Waves SC1, SC3 and SC5 are ascending waves of roughly 70 years in length, while SC2 and SC4 are descending waves lasting only a few years each.  Table 1 below shows the large Elliott Waves from the end of the Ice Age to the present.

 

For readers wishing to learn more about the Elliott Wave Principle, an explanation and additional sources were provided in the appendix to 12000 Years, located at:

http://www.freebuck.com/articles/elliott/00bibliography.htm