Economic Analysis is different from fortune telling, even though both of them sometimes are very accurate and sometimes not. Economic Analysis is base upon reasoning, logic and theory, while fortune telling base upon mysticism and always something science cannot explain. Different people can have different standpoint but they can also show out their reasoning.
The Big Cycle Theory basically has a framework of six stages, which are 1) New Order, 2) Peace and Prosperity, 3) The Bubble, 4) The Top, 5) Decline and Disorder, 6) Reset/Disorder.
Why we have to study it? Because we must know what position we are in, when we can fix our stages, so that we can take relevant action and no need to guess this and that. For individual investors, when we enter into the market, of course we believe in the long run it will rise if we are still in prosperity. However, for short term fluctuation, it is nothing but Dusk in The Wind, everything is dust in the wind.
We have no war up to world war class for 80 years, so after World War II, the US established a new world order. For investor, the most concerned order is Bretton Woods System, that is Dollar Hegemony.
The Bretton Woods System was an international monetary system established in 1944 in Bretton Woods of New Hampshire. The aim was to provide standard currency exchange rates where a total of 44 countries would use their currency to peg against US dollar and in turn the dollar can exchange for gold. The International Monetary Fund (IMF) is thus established to oversee this. Now, every G7 or G20 meeting, no matter for summit or minster, the IMF is one of the designated members. Bretton Woods System was dissolved because of rise in Trade Deficit, that even all gold is used up and cannot exchange back for the dollar.
Bretton Woods is the reason why most international trade is quoted in USD, and in the financial market, most products are quoted in USD also. Even in the currency market, all other currencies are treated as a commodity and USD is the money. The price of gold is affected most by the rate of USD, and petroleum is also quoted by USD. In July 2008, when petroleum was at record high of $147, some people requested to use EUR as price for it, but still failed. Now USD Index is sometimes known as the 4th Index, that is besides, DJIA, NASDAQ and S&P, the USD Index cannot be neglected, no matter your trade is in stock or any other market. Practically, Philadelphia Semiconductor Index and Russell small cap index are also known as the 4th Index.
Now a lot of people wish to use other currencies to replace USD, such as the launching out of single currency Euro is aiming at this. After the collapse of Bretton Woods System, all other countries used a basket of currencies for reserve. Basically, USD occupies 60%, Euro 20% and rest 20% are for nearby countries. Such as Australia and New Zealand are both at the far end of the earth, so their central banks are holding a lot of counterparts’ currency indeed. China also wants the Belt and Road countries to use CNY (RMB), but practically, it occupies only about 2% transaction in free market.
Recently, crypto and stablecoin are having their importance day by day, but still cannot replace USD. Before World War II, British Pound was the major international currency. But after World War II, USD replaced British Pound for most victories are the merit of US and the major part of their countries was unhurt, therefore industry was still in full turbo. Now no matter in the east or west, people are trying to use another kind of currency hoping to lower the Dollar Hegemony. No matter successful or not, the Reset/Disorder is on the way.
So how can we know are we really in the stage of Reset/Disorder, it does not come out on a single day like the Liberation Day of Trump, it is undergoing a period of metamorphosis. The nearest checkpoint in on Wednesday, the result of announcement of NVDA. In early November, NVDA brought about good news but price started to fall and then kept going horizontally till now. It is followed by TSLA and Pay & Performance Scheme of Elon Musk. Now we have to watch whether it is a trend or just a short-term incident, whether it is a Reset/Disorder or any other symptom which is not listed in the theory.