3) The Short-Term Debt Cycle

The short-term debt cycle, also known as the business cycle, is primarily controlled by central banks’ policies that a) tighten when inflation is too high and/or rising uncomfortably because there isn’t much slack in the economy (as reflected in the GDP gap, capacity utilization and the unemployment rate) and credit growth is strong; and b) ease when the reverse conditions exist. The cycles in the U.S. since 1960 are shown below.

短期债务周期也称为商业周期，主要受中央银行政策的控制：a）当通货膨胀率过高和/或不舒服时，由于经济疲软，收紧的情况（如GDP差距，产能利用率和失业率）和信贷增长强劲;和b）当相反的条件存在时缓解。1960年以来美国的周期如下。

These cycles can be described a bit differently by different people, but they are all about the same. They typically occur in six phases – four in the expansion and two in the recession. The expansion phase of the cycle:

这些周期可以用不同的人来描述，但是它们都是一样的。它们通常发生在六个阶段 - 四个在扩张，两个在经济衰退。 循环的扩张阶段：

The “early-cycle” (which typically lasts about five or six quarters), typically begins with the demand for interest rate sensitive items (e.g., housing and cars) and retail sales picking up because of low interest rates and lots of available credit. It is also supported by prior inventory liquidations stopping and inventory rebuilding starting. This increased demand and rising production pulls the average workweek and then employment up. Credit growth is typically fast, economic growth is strong (i.e., in excess of 4%), inflation is low, growth in consumption is strong, the rate of inventory accumulation is increasing, the U.S. stock market is typically the best investment (because there is fast growth and interest rates aren’t rising because inflation isn’t rising) and inflation-hedge assets and commodities are the worst-performing assets.

“早期”（通常持续约五或六个季度）通常从对利率敏感项目（例如住房和汽车）的需求开始，零售销售由于低利率和大量可用信贷而上升。它也得到以前的库存清算的支持，停止和库存重建开始。这个需求的增长和生产的上涨拉平了平均工作时间，然后就业。信贷增长通常很快，经济增长强劲（即超过4％），通货膨胀率低，消费增长强劲，库存积累增长，美国股市通常是最好的投资（因为那里是快速增长，利率并没有上涨，因为通货膨胀没有上升），通货膨胀对冲资产和商品是表现最差的资产。

This is typically followed by what I call the “mid-cycle” (which lasts an average of three or four quarters) when economic growth slows substantially (i.e., to around 2%), inflation remains low, growth in consumption slows, the rate of inventory accumulation declines, interest rates dip, the stock market rate of increase tapers off, and the rate of decline in inflation-hedge assets slows.

一般而言，当经济增长大幅减速（即约2％）时，通常我称之为“中期”（平均持续三或四个季度），通货膨胀率仍然很低，消费增长放缓，利率上升库存积压下降，利率下降，股市涨幅回落，通货膨胀对冲资产下降速度放缓。

This in turn is followed by the “late-cycle“ (which typically begins about two and a half years into expansion, depending on how much slack existed in the economy at the last recession’s trough). At this point, economic growth picks up to a moderate pace (i.e., around 3.5-4%), capacity constraints emerge, but credit and demand growth are still strong. So, inflation begins to trend higher, growth in consumption rises, inventories typically pick up, interest rates rise, the stock market stages its last advance and inflation-hedge assets become the best-performing investments. 其次是“后期循环”（通常开始大约两年半的时间来扩张，取决于经济在最后一个经济衰退时期存在多少松动）。在这一点上，经济增长回升至3.5-4％左右，出现了能力限制，但信贷和需求增长依然强劲。那么通货膨胀开始走高，消费增长上升，库存普遍上涨，利率上升，股市上涨，而通货膨胀对冲资产成为表现最好的投资。

This is typically followed by the tightening phase of the expansion. In this phase, actual or anticipated acceleration of inflation prompts the Fed to turn restrictive, which shows up in reduced liquidity, interest rates rising and the yield curve flattening or inverting. This, in turn, causes money supply and credit growth to fall and the stock market to decline before the economy turns down.

这通常是扩张的紧缩阶段。在这个阶段，实际或预期的通货膨胀加速会促使美联储转向限制性，这在流动性下降，利率上升以及收益率曲线平坦化或反转出现。这反过来又导致货币供给和信贷增长下滑，股市在经济衰退之前下降。

The recession phase of the cycle follows and occurs in two parts. 循环的衰退阶段跟随并发生在两个部分。

In the early part of the recession, the economy contracts, slack returns (as measured by the GDP gap, capacity utilization and the unemployment rate), stocks, commodities and inflation-hedge assets fall and inflation declines because the Fed remains tight.

在经济衰退的早期阶段，由于美联储持续紧张，经济收缩，收益回落（按国内生产总值差距，产能利用率和失业率衡量），股票，商品和通货膨胀对冲资产下滑，通货膨胀率下降。

In the late part of the recession, the central bank eases monetary policy as inflation concerns subside and recession concerns grow. So interest rates decline and the lower interest rates cause stock prices to rise (even though the economy hasn’t yet turned up) while commodity prices and inflation-hedge assets continue to be weak. The lower interest rates and higher stock prices set the stage for the expansion part of the cycle to begin.

在经济衰退的后期，中央银行放松货币政策，因为通胀忧虑，经济衰退担忧增加。所以利率下降，利率下降导致股价上涨（即使经济尚未上涨），而商品价格和通货膨胀对冲资产仍然疲软。较低的利率和较高的股价为周期的扩张开始了阶段。

Although I have referred to average time lags between each of these stages of the cycle, as mentioned from the outset, it is the sequence of events, not the specific timeline, which is important to keep an eye on. For example, given the previously described linkages, inflation doesn't normally heat up until the slack in the economy is largely eliminated, and the Fed doesn't normally turn restrictive until inflation rises. An expansion that starts off after a deep recession (i.e., one that produces lots of slack) is bound to last longer than an expansion that begins with less excess capacity. Similarly, as the cycle progresses through its various stages as a function of the sequences just described, the rate at which it progresses will be a function of the forcefulness of the influences that drive its progression. For example, an expansion that is accompanied by an aggressively stimulative central bank is likely to be stronger and evolve more quickly than one that is accompanied by a less stimulative monetary policy. Also, exogenous influences such as China’s entry into the world economy, wars and natural disasters can alter the progressions of these cycles. What I am providing is a description of the classic template: not all cycles manifest precisely as described.

虽然我已经提到了周期的每个阶段之间的平均时间滞后，从一开始就提到，这是一系列事件，而不是具体的时间表，这对于保持关注很重要。例如，鉴于以前所述的联系，通货膨胀通常在经济松弛很大程度上被消除之前通常不会升温，而在通货膨胀上升之前，美联储通常不会受到限制。在深度衰退之后开始的扩张（即产生大量懈怠的扩张）必然会持续比以较少的过剩能力开始的扩张。类似地，随着循环作为刚刚描述的序列的函数的各个阶段进行，其进行速率将是驱动其进展的影响的有力性的函数。例如，伴随着激进的中央银行的扩张可能会比那些伴随着较不刺激性的货币政策的扩张更加强大和演变。另外，中国加入世界经济，战争和自然灾害等外部因素也会改变这些周期的进程。我提供的是对经典模板的描述：并不是所有的循环都按照描述精确地显示。

For the sake of brevity, I won’t go into great depth about short-term debt cycles here.

为了简洁起见，我不会深入了解这里的短期债务周期。

The Interaction of These Three Forces 这三个力量的相互作用

While the economy is more complicated than this Template suggests, laying the short-term debt cycle on top of the long-term debt cycle and then laying them both on top of the productivity line gives a good conceptual roadmap for understanding the market-based system and seeing both where the economy is now and where it is probably headed. For the sake of brevity, I won’t digress into a complete explanation of this. But I will give an example.

虽然经济比这个模板所说的复杂得多，但是将长期债务周期放在长期债务周期之上，然后将它们放在生产率线上，为理解市场制度提供了一个很好的概念路线图并看到经济现在在哪里，哪里可能在哪里。为了简洁起见，我不会完全解释这一点。但我会举个例子。

Example: The table below shows each of the cyclical peaks and troughs in the Fed funds rate, when they occurred, the magnitudes of changes up and the magnitudes of the changes down (in both basis point terms and percentage terms), since 1919. These are the interest rate changes that caused all of the recessions and expansions over the last 90 years. This table shows 15 cyclical increases and 15 cyclical decreases. Note that these swings were around one big uptrend and one big downtrend. Specifically, note that from the September 1932 low (at 0%) until the May 1981 high (at 19%), every cyclical low in interest rates was above the prior cyclical low and every cyclical high was above the prior cyclical high – i.e., all of the cyclical increases and decreases were around that 50-year uptrend. And note that from the May 1981 high in the Fed funds rate (at 19%), until the March 2009 low in the Fed funds rate (0%), every cyclical low in the Fed funds rate was lower than the prior low and every cyclical high in interest rates was below the prior cyclical high – i.e., all of the cyclical increases and all of the cyclical decreases were around a 27-year downtrend. Each cyclical decline in interest rates incrementally reduced debt service payments, lowered the de-facto purchase prices of items bought on credit to make them more affordable and boosted the value of assets a notch (having a positive wealth effect). So, debt continued to rise relative to income and money, though the trend in debt service payments was essentially flat, until interest rates hit 0% and this could not longer continue, at which time the government had to print and spend a lot of money to make up for the reduced private sector credit creation and spending.

示例：下表显示了自1919年以来，联邦基金利率，发生变化幅度，变动幅度和变化幅度（基准点和百分比）的每个周期性高峰和低谷。是导致过去90年来所有经济衰退和扩张的利率变动。该表显示15个周期性增长和15个周期性下降。请注意，这些波动大概是一个大的上升趋势和一个大的下跌趋势。具体来说，从1932年9月份的低点（0％）到1981年5月份的高点（19％），每个周期性低利率都高于以前的周期性低点，每个周期高点都高于以前的周期高点，所有的周期性增长和下降都在50年的上升趋势之内。并注意到，从1981年5月份联邦基金利率（19％）来看，直到2009年3月联储基金利率（0％）低点，联邦基金利率每周期低点低于先前的低点周期性高利率低于之前的周期性高点，即所有的周期性涨幅和所有的周期性下跌都是大约27年的下降趋势。利率周期性下降逐步减少，偿还贷款项目的实际购买价格下调，使其更加实惠，并提高了资产价值（具有积极的财富效应）。所以债务收益相对于收入和金钱继续上涨，尽管偿还债务的趋势基本持平，直到利率达到0％，而不能再持续下去，届时政府不得不打印和花费大量资金弥补私营部门信贷创造和支出的减少。

Again, for the sake of brevity, I won’t go into greater depth about the three forces' interactions here. As mentioned at the outset, this chapter is meant to just to give you a brief explanation of how I believe the economic machine works. For those who are inclined to learn more, the following chapters: “II. Debt Cycles: Leveragings & Deleveragings” and “III. Productivity and Structural Reform: Why Countries Succeed & Fail, and What Should Be Done So Failing Countries Succeed,” examine these processes in much greater depth. In chapter II, “An In-Depth Look at Deleveragings” reviews the mechanics of deleveragings across a number of cases and why some are beautiful and others ugly. The chapter concludes with detailed timelines of two classic deflationary and inflationary deleveragings – the U.S. deleveraging of the 1930s and the Weimar Republic deleveraging of the 1920s – to make clear the important cause and effect relationships at work and to convey an up-close feeling of what it was like to go through the experiences as an investor. Chapter III has two parts: “Part 1: The Formula for Economic Success”, “Part 2: Economic Health Indices by Country, and the Prognoses that They Imply” and “Part 3: The Rises and Declines of Economies Over the Last 500 Years”. The first discusses how different countries’ shares of the world economy have changed and why these changes occurred. The second examines in more depth the drivers of long term growth, the logic behind them, and what they say about the economic health of countries today.

再次，为了简洁起见，我不会更深入地了解这三种力量的相互作用。一开始就提到，本章的目的只是简单地说明一下我相信经济机器如何运作。对于那些倾向于学习更多的人，以下几章：“二。债务周期：杠杆与去杠杆“和”三。生产力和结构改革：为什么国家成功和失败，以及如何做好国家成功，“更深入地研究这些过程。在第二章中，“深入剖析Deleveragings”评论了许多情况下去杠杆化的机制，以及为什么有些是美丽的，而另一些则是丑陋的。本章总结了两个典型的通货紧缩和通货膨胀脱杠剂的时间表，即20世纪30年代的美国去杠杆化和20世纪20年代的魏玛共同体去杠杆化 - 明确了工作中重要的因果关系，并传达了一种最近的感觉就像经历一样，作为投资者。第三章有两个部分：“第一部分：经济成功的公式”，“第二部分：国家经济健康指数及其所预测的预测”和“第三部分：过去五十年经济增长和衰退” ”。第一个讨论世界经济中不同国家的份额如何变化，以及为什么这些变化发生了。第二部分更深入地研究了长期增长的驱动因素，背后的逻辑以及他们对当今国家经济健康的看法。