If I look at the crisisses I know, the Ponzi element can be clearly distinguished. The Russian crisis had a clear Ponzi scheme with GKO bonds running. The Asian crisis embraced attractive interest rates, high inflow of money and rocketing asset prices.

Japanese real estate crisis was fuelled by the saving policies of the postwar years. This does not look much like a Ponzi scheme, but the role of relaxed money supply (and exploding asset demand) is clearly visible.

The Great Depression came clearly from a speculative boom. Automobiles and radio were the expanding new technologies. Easy credit was stimulated. Americans were encouraged to borrow and spend. Surely, there must have been a runaway Ponzi element somewhere.

The Bush admistration is on the same path. Maybe they genuily think they can avoid critical mistakes and repeat a guilded age boom in "a right way". Or maybe "they" cynically see an opportunity to enrich an insider ring with a hidden global Ponzi machine most effectively.

It seems to me that whenever you run up a sure Ponzi scheme on the scale of a whole market, you must hit a crisis regardless of the phase of the economic cycle. Since Ponzi schemes are very unstable, consequences must be evident within a few years.

What is the sense of Kondratiev type macrocycles within this framework? I see two possible features.

For once, a prosperous phase might increase money supply greatly. This does not automatically induce a Ponzi trading, but the potential is there to be crystalized. Once the public is overexited, or the government relaxes control for maximal bang, Ponzi snowballs start rolling.

Secondly, the whole economy might contain a very weak Ponzi element. Most of the time, the Ponzi element is undetectable. But it does gain substance within decades, and then boom-busts in a few years.