I sat down to write this blog post initially about the 1929
Wall Street crash and discuss the different events that lead up to it. However
I couldn't summon the energy or brain power required to think and condense a
large amount of information into a blog post. So I decided to take a little
detour again, and I know I shouldn't necessarily do this but sometimes in life
you just have to. That coupled with the fact that I get distracted very easily
especially by things I find remotely obscure and interesting. Like the topic of
this next post. Sunspots.
William Stanley Jevons was born in September 1835. He wrote
many different pieces of work including A
serious fall in the value of Gold (1863) and The Coal Question (1865). His book The theory of Political Economy (1871) argued that economics should
be a science as it concerns quantities and is therefore mathematical. He
identified what is known as the Jevons paradox in The Coal Question stating
It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The contrary is the truth.
So basically the cheaper it is to use coal to create
electricity, the cheaper electricity becomes with in turn increase the demand,
or the number of people using electricity, which in turns increases the amount
of coal required to create the electricity, so you acutally end up consuming more coal instead of less.
Amongst all these theories and ideas he also had one about
the business cycle. His theory was to do with sunspots. That the economy wasn't random but based on
outside events i.e. disruptions to our weather due to solar eruptions. The
weather would in turn affect crops which would in turn affect the markets. For the 19th century this may not have seemed
like such a crazy idea, they weren't equipped with all the technology we have
these days.
As I read around this topic I discovered that more people had
done research in the sunspot theory. Lev Pustilnik and Gregory Yom Din also looked
into this area. They looked at wheat prices and solar cycle variations. They
found correlated peaks between prices and sunspot activity for both the 17th
century (English wheat prices) and the 20th century(US wheat prices). Maybe Mr
Jevons was on to something back in the 19th Century!
Then there is also Paul Macrae Montgomery who discovered a
link between sunspots, hemlines and stock prices. So perhaps when we go to invest in the stock
market we should take a look around us and see what fashion and the weather are
trying to tell us!
Update: I have also found some who has linked many massive events in history to sunspot activity
http://www.michaelmandeville.com/earthmonitor/cosmos/solarwind/Sunspot_Cycles_Influence_Human_History.htm
Links to the papers mentioned
Influence of Solar Activity on State of Wheat Market in Medieval England (Pustilnik & Din, 2003)
Hemlines, Sunspots and Stocks (Montgomery, 1975)
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