The Great Wave

To that end, this history begins more than seven centuries ago, on a market day in a medieval cathedral-town. The date was September 8, 1224. The place was Chartres.

Today, we are living in the late stages of the price revolution of the twentieth century. Disaster does not necessarily lie ahead for us. This book does not predict the apocalypse. It does not attempt to tell the future. To the contrary, it finds that uncertainty about the future is an inexorable fact of our condition.

One must learn to look the evidence in the face, without fixed ideological, theoretical or epistemological preconceptions. We are sometimes told that this is impossible. So it is—for some people.9

The great waves are different in that respect. They appear on the surface of the evidence. To observe them no filtering or detrending of the data is required.

Cycles must be teased from the data, commonly by statistical inferences in which the evidence is “filtered” and “detrended” by various techniques.

All major price revolutions in modern history began in periods of prosperity. Each ended in shattering world-crises and were followed by periods of recovery and comparative equilibrium.

Cyclical rhythms are fixed and regular. Their periods are highly predictable. Great waves are more variable and less predictable. They differ in duration, magnitude, velocity, and momentum. One great price-wave lasted less than ninety years; another continued

Before we begin to study these relationships, a caveat is necessary. It should be understood clearly that the movements we are studying are waves—not cycles. To repeat: not cycles, but waves.

The third assignment is consider the consequences of price-movements, or more precisely the consequences of movements that prices represent. These