The Monetary Wave, known as Kondratieff’s Down Wave, is a compelling economic theory describing a cyclical credit cost pattern over extended periods. This concept revolves around falling credit costs, commonly termed the falling price of credit, leading to an artificial increase in phantom wealth. This type of wealth is not genuinely founded on actual productive investments and their returns but instead propped up by credit inflation. The phenomenon of the Monetary Wave can be attributed to a disinflationary period, wherein credit becomes more affordable and accessible. This encourages borrowing and speculative investments, leading to a rapid increase in asset prices and an apparent economic boom. However, much of this debt is directed toward unproductive or speculative endeavours rather than contributing to the growth of the real economy. As the cycle progresses, the unsustainable nature of this credit expansion becomes evident, eventually leading to debt deflation. The excessive buildup of unproductive debt strains the economy, resulting in a financialization of the system. During this phase, the economy becomes increasingly dependent on the financial sector, and speculative activities gain prominence. This inflationary cycle’s eventual consequence is a deflationary phase transition. The excesses of credit and speculative bubbles are purged, causing asset prices to plummet, leading to financial distress and economic contraction. This deflationary wave brings the economy back to equilibrium but is often accompanied by challenging economic conditions and banking crises.



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