Many people see the past as something that has occurred, and cannot be changed.
While I believe that we should focus our lives 100% on looking forward, and not focusing on the past, taking lessons from history can help us do this.
Here I’ll show a patterns in history that has happened many times over, and how we can use the experiences of the past to break away from the cycle as we focus on the future.
An Observation
I’ve found that (most) people rarely make the same mistake twice.
Once they’ve been involved in a situation, they can normally sense the same situation repeating, and are able to avoid it.
When we learn knowledge 2nd hand, some (but not all) knowledge is passed along.
When we learn things 3rd hand, we often ignore it don’t fully grasp the intracies of what occured
First Hand Knowledge of the 1929 Stock Market Crash
A junior executive in a financial company would have entered the workforce in their early 20s.
40 years later, in their 60s, they would have retired.
That means that by 1969, almost all people with 1st hand industry knowledge of the crash of 1929 – who had been there, on the trading floor, leading up to and involving the event, would have retired from the financial world.
Second Hand Knowledge of the 1929 Crash
While people who had witnessed the 1929 crash were still in the workforce up until 1969, it is likely that they would have been able to pass their “soft knowledge” of what they say to the people they worked with.
They may have mentored younger executives, or interacted with them in a way that the younger generation understood what happened leading up to 1929 such that they would be able to
From the year 1969 onwards, it is unlikely that anyone entering the financial workforce would have the opportunity to work side by side with somebody who had “witnessed” the 1929 crash.
If we extend that 40 year “career lifetime” further, then by 2009, all people who been able to learn “second hand” about the crash of 1929 will be out of the workforce.
Looking Back Further
Before the great depression, the last “major” financial crisis was in 1857 – 72 years before the 1929 crash
Exactly 80 years before that – we can observe what has been called by some the continential dollar crisis – Rampant inflation in the US – 1777
57 years before that – the Mississippi and South Sea Bubbles burst in 1720
And 84 years before that event was the Dutch Tulip Craze of 1636
Almost all of the major financial corrections have happened at intervals of close to 75-85 years (the only exception being the time between the South Sea Bubble and the Continental Crisis, at 57 years) almost exactly the amount of time for all second hand knowledge to retire from the workplace
Can we see further patterns?
In the Anglo-American world since 1800, historically the characteristics of recessions that have occurred can be classified into 3 major “groups”:
- Industrial
- Financial
- International / War
Looking back through the US’s financial history to the late 1700s, we can find that
- Recessions with characteristics of war and international issues have occurred without any predictable regularity
- Recessions with characteristics of financial and industrial conditions appear in an almost altering pattern:
“Industrial” characteristics appear to have been the cause of the recessions of 1819, 1893, 1937, and the early 1990s.
“Financial” characteristics appear to have been the cause of the recessions of 1837, 1857, 1907, 1929, 1958, and 2008.
Recession Characteristics Time Line
A time line of history and recession characteristics would look approximately like this:
1797 – War / International
1807 – War / International
1819 – Industry
1837 – Financial
1857 – Financial
1873 – War / International
1893 – Industry
1907 – Financial
1918 – War / International
1929 – Financial
1937 – Industry
1953 – War / International
1958 – Financial
1973 – War / International
1980s – War / International
1990s – Industrial
2000s – Accounting and Governance (arguably more of a stock market crash than recession)
2008 – Financial
Observations from the Time Line
- There is never an occurrence of two industrial and only one instance of two financial recessions in a row
- Industrial recessions have been separated by periods of 74, 44, 44, and 53 years
- Financial recessions have been separated by periods of 20, 50, 22, 29, and 50 years
In essence, industrial recessions have occurred 44-74 years apart, while financial ones have occurred 20-50 years apart (there is strong indication in the longer perioids, that many of hte internaional / war causes also were compounded by financial ones, possibly evening the average to about 20 years)
What’s interesting here isn’t the regularity that these recessions occur, but the regular separation of time in which they do so, and how it, once again, links up with human generations and career lifetimes.
In essence, people who experienced industrial recessions learned how to avoid them, and people who experience financial recessions learned how to avoid them, but may have been caught by the other kind later in life.
Comparing the Time Line with Human Lifespans
You can almost see a heartbeat in the time line of events.
Older generations retiring, and that “first hand” and “second hand” knowledge working its way out of the system.
Are We Any Different?
As we have experienced a correction in 2008, is this the start of something bigger, or the end of a regular change that occurs in the financial work every few generations?
This can be extended to deal with more than just the financial world – every industry and fashion likely goes through the same cycles – there are different people involved, but often similar stories play out.
What made them successful and others in their time not?
What comparisons can you draw with what is going on in your world today?
