on January 11, 2011
I read this book in the 1980's, when it first came out. What made the biggest impression on me was not his forecasted date, but rather the social cycle theory upon which his forecast was based. Even 20 years later I can still recall the cycles and how they evolve from one to the other. The step from "acquisitor" to "laborer" societies is pretty ugly, with a lot of social upheavals and instability, and the majority of wealth in the hands of very few.
I think the main error the author made was trying to predict a single year for a change that is part of a cycle that takes hundreds of years to evolve through. My own prediction is that he will eventually be proved right, only his timing was wrong.
Is this merely a post-ponement? Perhaps the year 2010 should be inserted into the title?
Put 3 economists in a room and you'll get six answers, if your lucky. A good idea is to read books put forth by economists 10 years and longer in the past. You'll see how often most of them are not only misguided and incorrect, but also out on planet Mars. However, some offer good insights into cyclical trends and patterns juxtaposed with current political, technological, and societal evolution. Now, you can keep this in mind when you are reading the current books, newsletters, and magazines from economists, investment gurus, analysts, etc.
Dr. Batra covers many facts of the 1980s such as the Tax Reform Act of 1986, banking conditions, and the exportation of American labor and manufacturing jobs to LDCs among other conditions.
Covering dozens of areas in investing, here is one example of advice. He specifically advised people to liquidate tax-deferred savings such as KEOGHS and IRAs. page 178 states: "Premature withdrawal of funds in Keoghs and IRA plans may then be the safest bet in spite of various penalties, especially if they are entrusted to non-banking institutions. The next question is: what should you do with the money? Can you trust the banks at all?" ---end quote. Batra then promotes the danger of putting money in banks. Real estate is also getting ready to crumble. He did state several times, that he hoped his forecasting would turn out to be incorrect, and he (as all economists seem to do), provide the solutions via tax restructuring, monetary policy, and budget allocation.
Interesting, is that these forecasts were obviously made before the exponential growth and explosion of the Internet, which greatly transformed the economy, and markets. So....what would the economy have been like had it not been for the dot.com explosion? And, now in 2003, after that bubble has burst, will there be wage growth and middle-class job creation in the years to come....?
His "Law of Cycles" has eruditic roots. Batra, an avid reader and self-studied student of world history, international trade, politics, and humanities, noted several areas of the world and the-then present conditions that brought him to his conclusions. He did have the courage to write his beliefs (which he profited from tremendously), and write them in a very easy-to-read way for the masses, or laymen population. (Marketing?) In sum, reading economic books of the past, whether theory, or in historical factual disciplines, helps us make better decisions today, in our attempt to gauge the future.
on April 2, 1998
Batra's 1988 classic had lots of good, logical reasons why we were on the verge of another Great Depression. Unfortunately for his premise, the 1990s have proven to be a time of unprecedented prosperity, as inflation has remained low and cost of living, in real terms, has declined. His book was well-written and I enjoyed reading it, but it is another classic example of the pitfalls of trying to predict the future.
on December 31, 2008
Ravi Batra Ph,D. is a professor of economics at SMU and the author of books on International Trade. This 1987 book predicted a great worldwide depression in 1990 by analyzing business and economic cycles since 1700 (a recession every decade and a major depression every third or sixth decade). The symptoms are the mushrooming federal budget deficits, trade deficits, and the increasing concentration of wealth among the rich. Did this prediction fail to occur? Yes, but the government and economy are dynamic and can be modified to avoid foreseen problems. What they can't do is to reverse the plundering and exploitation of the population that leads to a depression when the people are impoverished. This is an informative and educational book. It should teach that projecting future results based on past experiences is not always correct.
The `Foreword' says analysts can be divided into those who seek explanations in cyclical regularities, and those who seek explanations in unique events (p.13). Each has strengths and weaknesses. History combines both elements. Batra believes depressions can be controlled by social policies designed to stop undue concentrations of wealth (p.15). Inflation is caused by an increased money supply, or by a rapid change in value for a commodity. Lester C. Thurow says the Federal Reserve stopped attempting to control the money supply in 1982 because of new money market instruments. [Hasn't that changed?] The `Preface' says that there was no severe economic crisis since WW II (p.17). Batra believes that another economic cataclysm is imminent and explains why (economic data, sociopolitical ideas, historical trends). There must be major changes in government policy to avoid another great depression (p.18). Batra believes events repeat and things move in cycles (p.20). This book will identify and interpret these cycles, and explain how they affect economic fortunes. Batra will explain the four cycles of money, inflation, regulation, and depression that have gone on for 200 years (p.21).
Chapter 2 expounds on "Sarkar's Law", a theory about human history. [Idealistic and oversimplified generalizations?] It ignores the Global Cooling of the 14th century and the 6th century dimming. Both caused a shortfall in agricultural output and affected society. Chapter 3 traces the cycles of money growth from 1770 to 1970. The variations in money supply and money growth accompany economic fluctuations. The rate of inflation follows money growth (Chapter 4). Economic regulation by the government accompanies money growth and inflation (Chapter 5). Regulatory bodies expanded in the 1970s as it did in the 1940s (p.90). Money or wealth determines how the state governs its people (p.93). Wars stimulate money growth and regulation (p.95). Failed predictions are the occupational diseases of economists (p.96). "An extreme concentration of wealth" causes depressions (p.97). This topic is banned among economists "and those in power" (p.98). Chapter 6 notes the pattern of depressions. The Federal Reserve caused bank failures in the 1930s (p.106). [Who benefitted?] This did not happen in Canada and Great Britain (p.107). A concentration of wealth causes a depression (p.109) and bank failures (p.111). Another effect is the increase in risky investment "bubbles" (p.112). The net effect is a downward spiral to the economy (p.113). Reducing the taxes on the wealthy concentrated wealth and led to the Great Depression (p.115).
Chapter 7 explains why "the perverse fiscal policy of the Reagan presidency" (p.118) makes another depression inevitable. Eminent economists disagree (p.119). Batra explains why he predicts a depression in 1990-1996 (p.123). He lists the parallels between the 1920s and the 1980s and explains them (pp.124-130). Batra predicted economic difficulties for Japan in 1990 (p.134). Chapter 8 has his recommendations on investment. Your knowledge and experience will tell you which advice is good or bad. Chapter 9 offers suggestions to prevent another depression. The Great Depression was caused by the failure of the Federal Reserve Bank to control the money supply (p.163). Bank failures resulted and people lost their savings. [Who profited?] Economic theories "have failed to produce long-run economic stability" (p.164). [As if that is possible.] Economic policies address the symptoms of economic ills, not the causes. Batra recommends higher tax rates to reduce the budget deficits and income and wealth inequalities (p.165). A Federal property tax on the one percent who own over 33% of the wealth is recommended (p.166). Laws should ban banks from lending money for business takeovers. Mergers fuel stock speculation (p.167). Batra recommends fundamental economic reforms (p.168): higher minimum wages, lower taxes for ordinary workers, and a fair tax system. [The last does NOT refer to the hoax version "Fair Tax Book"!]
Why was his prediction for a depression in 1990 wrong? Batra counted the quantity of years without considering their quality. The New Deal laws of the 1930s created more equality and prosperity for the people, avoiding another depression in 1960. But in 1978 Congress started to neutralize or destroy the New Deal regulations and this continued into the 1990s. Add 30 years to 1978 and there you have that cyclical depression.
on February 2, 2001
We should all be for Mr. Ravi Batri. By selling enough copies of this book and its sequel ("Surviving the Great Depression of 1990"), he singlehandedly prevented worldwide economic collapse!
on December 26, 2014
I read this book years ago under a different title - It was originally published as Regular Cycles of Money, Inflation, Regulation and Depression. The Publishers re-titled the book to make it a best seller and screwed the authors ability to publish anything else when the titles prediction didn't come true - it made the book a best seller. Under its original title, it was well received by economists. After the title change, it was universally panned as "voodoo economics." Now the predictions in the book have essentially come true, but many years after the predicted date. The book is worth a read, although it's now partially more a book of history, it is still relevant.
The author didn't take into account several things in this book - he didn't count on the effects of the press on the mindset of the poor and middle class. At the time of the writing, the press was still required to report the truth as much as they could, there were no right wing or left wing echo chambers. The book was written shortly after Reagan drastically dropped the tax rate on the rich and shifted the tax burden to the middle class without closing the loopholes for the wealthy as promised. The author assumed that the people would rise up in rebellion much faster than they have. They still have not done so and inequality is now at a pre-great depression level once again. "Let them eat cake" eventually ends the same way throughout history.
Other than the predicted date of the title, the book still stands as a fairly clear explanation of repeating patterns of shifting of power in human society. It is well worth a read.
on June 28, 2003
I purchased this book sometime in 1989 and recently reread it after reading Conquer the Crash by Robert Prechter. Although Batra misses his prediction by 13 years, in many ways he just predicted the upcoming event too early. In some ways, his theory of social cyles reminds me of Prechter's Elliot Waves in the sense the both suggest a sort of determinism that revolves around the affairs of men. That's one reason that I wanted to reread Batra.
Much of what Batra offers is quite sober and gives some food for thought. I find the discussion of speculative bubbles particularly appropriate given recent events which he could not have known about 13 years ago. Back in 1989, several things were occurring (i.e. S & L debacle, recession, real estate crash) that could have resulted in a very significant downturn. According to Batra, he didn't anticipate the influx of Japanese investment in US assets in response to the Japanese central bank forcing interest rates to zero. He suggests that this increase in foreign investment averted the financial collaspe he predicted. He is correct on this point as our current account deficit up to recently has been reinvested by foreigners in US financial assets. Now with the dollar faltering against major currencies combined with near zero interest rates here, these flows have now begun to reverse. A severe economic contraction is now within the realm of possibility.
on February 17, 2010
I read this book when it first came out and knew he was right. My only question was the timeframe. So, he was a little off. I bet all you critics are EATING YOUR WORDS right now!
on November 17, 2008
Ah, what difference 18 years makes. It was pure hubris to call the date the way this author did. The ability to stagger along had more power than expected. But the long wave will not be denied, self destructive action of the financial ruling class will not cease, the inventiveness with which the financial gurus will distort the relationship between symbolic wealth and real goods and services is inevitable, in the end the guiding hand heads to the cliff, near to the edge, and finally over it. And then the climb back up commences until the lessons become unlearned. It's the raw market stupid...how much do you like it now?
on August 24, 2003
Whether you agree with Ravi Batra's theories or not, his advice on preparing for and dealing with severe economic downturns is golden. Having read this book in the 1980's, and kept the possibility of a second great depression in mind, we successfully (emotionally and financially) dealt with a stretch of my professional husband's unemployment lasting a year and a half. I would recommend this book, and especially the worst-case worksheets, for anyone at risk for layoffs.