Renowned Harvard Economist Harry Dent joined Peak Prosperity’s Chris
Martenson to reveal his forecasts for the months ahead and discuss how
cycle trends are leading us to the point of significant financial
downturns. Harry outlines four of the most predictive trends and cycles
he uses to forecast different markets and financial assets. Don’t miss
Harry’s latest economic predictions for 2017 and on…
Transcript : welcome to crash concept where the
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economy energy and the environment are
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explored up next fresh ideas and
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insights into the fasteners that are
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driving the world is shaping your future
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presenting information you can't afford
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to live without
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here's Chris Martenson welcome to this
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peak prosperity podcast it's January
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2016 2017 and i am your host Chris
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Martenson now as i'm recording this the
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u.s. stock markets are excitedly hitting
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new all-time highs
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the dow is just cracked the 20,000 mark
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in the world equity markets are powering
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to New 17-month highs looking at
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all-time highs as well the narrative is
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that this has something to do with Trump
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although i cannot find anybody who can
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explain to me why Europe's markets
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should be anything but threatened by the
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trade stances of Trump regardless that's
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the narrative being used to explain all
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these seemingly unstoppable stock market
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advances
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however as you already well no the
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explanations put forth in the media to
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explain things are nearly always an
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accurate just plain misleading sometimes
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or just wrong
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my own favorite theory is the stock
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markets are no longer divination
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machines capable of discounting the
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future but merely liquidity gauge is
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telling us that the world's central
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banks have overdone it again important
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too much fuel into the furnace now to
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really understand the probable future
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you have to be rooted in the
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fundamentals always always always and I
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know that fundamentals are out of favor
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right now but trust me they will come
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roaring back they always do today I'm
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very excited to have with us one of the
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world's great economist yes some do
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exist and a master of the fundamentals
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carry dent Harry is the author of the
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sale of a lifetime and editor of the
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free newsletter economy and markets
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which can be found at Harry dent dot-com
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mr. debt has correctly called nearly
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every major economic trend over the past
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30 years including the 1991 recession
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Japan's lost decade the 2001 tech crash
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the bull market and housing boom
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last decade and most recently the credit
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in the housing bubble now he's saying
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that US equities are going to quote
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crash to a degree we haven't seen since
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the Great Depression and quote he has
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recently predicted a drop in the down to
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6,000 and quote when the dust settles it
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will eventually plummet to 3300 long the
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wait will see another real estate
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collapse
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gold will sink to 750 dollars an ounce
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and unemployment will skyrocket it's
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going to get ugly and quote certainly
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provocative use that i know we are all
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excited to explore with mr. dent Harry
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welcome to the program a nice to be here
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Chris
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well thanks not hearing before we dive
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into current events and your predictions
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I would love for you to tell our
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listeners about your methodology so they
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understand the basis for your views and
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predictions
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what's your framework well you know
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first what I do Chris I don't study
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government policies because government's
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react to what the real economy does in
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the real economy eighty percent of it to
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be exact is driven by consumers and
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businesses and that's mostly consumer
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spending so I definitely i look at the
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predictable things people do as they age
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and I look at things that impact
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consumer spending and business growth
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everything from the aging of the
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population and people get you know it's
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been more money and it there mid mid to
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late forties get more productive his
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workers i look at technology cycles and
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when technologies come together most
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favorably for business and productivity
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of workers and and these things are
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crystal clear and they're very easy to
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forecast what I tell people against what
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economist say the long term is easy to
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forecast and see it's the short term it
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can be incredibly difficult because more
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and more cycles come in as you get more
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short-term more and more political
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factors i mean i mean just imagine how
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hard it would have been an even the
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smartest money I track didn't get this
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one to predict the Donald Trump number
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one would win against clear polls that
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said Hillary had it in the bag eighty
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percent chance of winning and then if he
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did win by surprise would go against all
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the pundits saying oh my gosh
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he's going to create so much uncertainty
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the markets are going to crash or go
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down the opposite happened that that's
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how difficult the short term can be to
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predict what the long-term yes I could
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see that Japan's baby boom generation
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was peeking decades ahead of the rest of
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the world because it was born my
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primarily at peak just before and after
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World War two art and in the japan was
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going to crash in the nineties when the
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rest of the world's baby boomers where
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they're strongest spending stages in the
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United States and Europe and other
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countries and and you know we could see
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that housing was gonna peek ahead of the
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economy because housing spending peaks
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ahead of peak spending and so i
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summarize the most important indicators
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i have I got into a tease
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I is the first one was suspending way
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it's simply a 46-year lag on the birth
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index which I adjust for immigrants
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legal and illegal that are here today
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and when they were born on average and
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and 46 years when the average family
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spends the most money in their life and
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then we get yearly updates from the
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government and the Consumer Expenditure
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survey on not only total spending and by
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age but from cradle turn to nursing
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homes
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you know what i can tell you when potato
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chips peak that's age 42 when cruise
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ship travel piece that's age 70 nursing
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homes are going to be the hottest thing
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for the next three decades we've ever
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seen because the baby boomers are just
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about to start entering that last thing
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that peeks at age 84 and largely for
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women so we look at demographics but i
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also look at geo political cycles on
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time by the way the demographics which
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we peeped predicted way back in the late
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eighties when Japan was declining we're
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predicting that we said hey the us baby
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boomers not going to peak until 2007 and
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then our economy will weaken as it did
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on that 46-year leg in 2008 we've been
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living off of QE ever since but there
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was a cycle that I had to kind of come
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up with because the second lumen bubble
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from 2002 2007 which we predicted but I
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i thought it would be much stronger
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or might look much like the first bubble
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from 95 to 2,000 I had to go back and
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dig and find out why I found a
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geopolitical cycle that it's positive
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every 17 18 years you know
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kumbaya in the world and then it's
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negative well that cycle hit in 2001 for
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obvious reasons 911 and has been
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terrible ever since that cycle doesn't
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bottom until around 2020 and then things
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get more favorable again i've also track
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a technology cycle i do you just look
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back I mean this is one of the most
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clock light every 45 years you know the
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steam engine came and then peak and its
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impact in factories and then steamship
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speak on 1875 and then railroads peak in
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1920 and automobiles saturation and
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super highways and 1965 and now recently
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the internet we've all got the internet
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we've all got google email broadband all
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these things and smartphones and stuff
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and now innovations down to social media
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and to me facebook is great but it but
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it's entertainment dancing cats and dogs
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it's not not going to triple the
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productivity my research business like
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Google and email did and then finally
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there's a roughly ten year boom-bust
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cycle which I have a secret way of
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forecasting which nobody's aware of our
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and and here's the point on Chris all
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four of these cycles point down now 11
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at the next is Pete in the last several
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years all four point down into early
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2020 or so that's only happened in the
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early to mid seventies when we had were
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stock crashes back then and an OPEC
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immuno cartels and always thought the
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worst crisis since the 1930s and of
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course in the early thirties we had this
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same complete figuration of all four of
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these fundamental cycles that taken me
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30 years to hone and say decent for that
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matter
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another problem economist chris is very
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simple
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they look at so many indicators and
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short-term stuff that they can't see the
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forest for the trees that's why they
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missed these long-term trends that are
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so predictable so the next three years
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is likely to be very very light
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really be the worst we see in our
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lifetimes it will be more like the early
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nineteen thirties and and when stock
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shit this sort of debt bubble and
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financial asset bubbles crashes which
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they only do once in a lifetime like the
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early 1930s stocks are going to be down
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seventy eighty ninety percent that
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should be expected in this stage of the
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cycle after such a bubble so I've gone
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from being the most bullish economist in
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the eighties and nineties to now one of
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the most bearish because what goes up
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goes down and that's what cycles do in
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in at heart I'm of cycle guy and
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demographics just happens to be the most
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important cycle in this modern era sense
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and only sense we've had a middle class
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format that the only really since world
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war two has the everyday person mattered
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so much because they have fifty sixty
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thousand incomes and in can buy homes
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over 30 years and borrow a lot of money
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a distant this was not the case before
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the Great Depression and World War two
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so that's a brief summary of my
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fundamentals and why i am telling people
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this is not the time to believe in this
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Trump rally and I'll go into that i'll
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show you what that cannot last
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and he cannot create four percent growth
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and people should be getting real safe
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especially for the next three years now
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after that and the point of this book
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new books available i think it's going
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to be one opportunity at the next to buy
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stocks or emerging market stocks or
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commodities or gold or real estate and
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we also go into which areas are going to
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be favored by demographics and our
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cycles but there is going to be you're
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never going to see prices this low if
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you protect your capital now and
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converted to cash or safe long-term
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high-quality bonds then you are going to
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be able to take advantage of the Civil
10:48
lifetime if you don't you're going to
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see your financial assets wiped out a
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good bit more than they were in two
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thousand eight and nine and the markets
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aren't going to come running back to new
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highs next time now hear water
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prerogative and very interesting
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information in there
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let me start here with this then because
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I think we can build off this nicely a
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very open question for myself my
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listeners all over the world as well
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obviously is is this going to be
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inflation or is this deflation you're
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talking deflation that's what I'm
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hearing a fallen in the financial asset
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prices so when I have somebody like John
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husband on or grant williams or other
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astute fed observers axel merk people
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like that who know the Fed the central
11:29
bank's well they say they committed some
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of the most egregious policy blunders
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ever because they tried to do things
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like prevent the very cycle you're
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talking about at least the business
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cycle and assets cycles they want to see
11:40
if they can smooth those out prevent
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them from going bust all of that and and
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at this point when we try and resolve
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the inflation vs deflation question
11:49
there are some who say that when this
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next sort of deflationary wave comes the
11:53
central banks will they know what to do
11:56
they're just going to keep printing
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you're saying they're going to lose that
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battle don't have that right yes it and
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i'll tell you why they've already
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printed 13 trillion dollars globally and
12:08
of course Japan and Europe are still
12:10
going at it rapid rates especially Japan
12:13
and guess what we've gotten out of that
12:15
0212 2% at best inflation and all the
12:19
developed countries that are printing
12:21
all this money it's because this money
12:22
is being printed to stop and and Kane
12:27
deflation because deflation means dead
12:29
is deleveraging banks are failing
12:31
businesses are failing prices are going
12:33
down that squeezes margin it's the gets
12:36
that's what happened in the Great
12:37
Depression deflation is a wrecking ball
12:40
now the biggest problem here as you're
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saying these other experts were
12:44
correctly saying this is terrible policy
12:47
to try to smooth out these cycles and
12:50
the economy the economy grows through
12:53
the dynamics of opposite free market
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capitalism is the opposite of democracy
12:58
just like men and women are opposites
13:00
and you know positive and negative poles
13:03
on a battery that's how you create
13:04
energy and dynamic growth inflation and
13:08
deflation are part of this cycle booms
13:10
and busts third part of these cycles in
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the bust in an inflationary and
13:15
deflationary x is when we get the
13:18
greatest enemy
13:18
nations that then move mainstream with
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the next demographic boom
13:23
so this dynamic is necessary and by
13:25
stopping this dynamic and just creating
13:28
a coma economy where Japan has been
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growing 0% now for 26 years and the US
13:34
has been growing it two percent now for
13:37
eight years and that's not going to even
13:40
last with demographics getting worth you
13:42
just basically freeze innovation you
13:44
kill the Golden Goose i call it so this
13:46
is this is terrible policy but also they
13:49
are fighting such persistent long-term
13:52
downward demographic and even
13:54
technological innovation trends and all
13:57
this sort of stopped
13:58
I mean retirement here's what happens in
14:00
an economy for the first time in history
14:02
where you have the baby boom generation
14:04
in most developed countries larger than
14:08
the millennial generation following them
14:10
as we move forward you get to the point
14:12
where there's more baby boomers retiring
14:14
the Millennials entering the workforce
14:16
all the workforce is not growing which
14:19
it's not it's negative for the next
14:21
several years then it's just above
14:22
fairly positive for decades to come how
14:25
do you grow four percent with that
14:27
productivity has been going down ever
14:29
since the baby boomers started to
14:31
retiring in the very late nineteen
14:33
nineties and it's gonna get it's gone
14:35
from sixty-seven percent now 62 and a
14:38
half percent and by the time they fully
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retired by 2024 it's going to be fifty
14:43
eight percent by projector we're going
14:45
to lose another four and a half million
14:46
of our workforce how do you grow at four
14:49
percent with a declining workforce for
14:51
decades to come
14:52
how do you grow it it near zero
14:55
productivity were the lowest
14:56
productivity rates since the Bob Hope
14:58
generation was retiring in mass in the
15:00
early eighties them down of their cycle
15:03
and it's going to get worse so so this
15:06
Trump think he's gonna like just shift
15:08
around the pie and in ship taxes from
15:10
the government to the consumer and
15:12
businesses you know in and cut off some
15:15
regulations and things like that built
15:17
an infrastructure this is not going to
15:19
happen you're not going to create four
15:21
percent growth its demographically
15:23
impossible Japan has been stimulating
15:25
much longer than us at three times the
15:28
rate of quantitative easing in the last
15:30
several years and they're still
15:32
long-term growing 0 with 0 inflation and
15:36
0 productivity and they would have had
15:38
deeply shin and bank failures if they
15:41
had not printed so much money for the
15:43
money being printed is to keep the banks
15:45
from falling over like the Great
15:47
Depression but the price of that you go
15:49
into a coma economy like Japan you never
15:52
go from what I call the winter
15:53
deleveraging deflationary season back to
15:56
the next spring mild inflation boom as
15:59
we get going from the 30 to 40 50 60 so
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this is horrible policy I if we don't
16:05
let this crisis happened and let some
16:07
banks fail and some companies fail and
16:08
gone to this we'd be over the worst by
16:11
now the great depression the worst of it
16:13
was over in three years and then we did
16:16
nothing but grow for decades after that
16:19
because we lifted a lot of debt offer
16:21
consumers and businesses when banks fail
16:23
it's because they have bad loans they
16:25
have to write them down or write them
16:27
off and then that that's why they go
16:29
under and then the stronger bank take
16:31
over their assets and you reorganize the
16:33
banking system but you come out of it
16:34
with far less debt japan now has more
16:38
depth than ever we have more depth than
16:39
ever and and our deficit our government
16:42
deficit which is the smallest part of
16:44
our death private debts much larger is
16:46
is doubling every eight years has
16:49
anybody noticed this 5 to 10 trillion
16:51
under Bush 10 to 20 under Obama it's
16:54
gonna be 20 to 40 over the next two
16:56
administrations and I don't think it's
16:58
gonna be Donald Trump I said when he got
16:59
elected I i would not be surprised if he
17:02
doesn't last the first year either
17:04
because he does something so stupid that
17:08
he kind of gets pushed out or in peace
17:10
or he gets shocked if anybody's going to
17:12
get shot people who shake up things and
17:14
he's shaking up things more than anybody
17:15
in history the most rapid rate people
17:18
who shake up things like Reagan like
17:20
Kennedy like Lincoln often get shot
17:25
well now there's a this decision we can
17:29
feel the pressure is building right so
17:30
you said we got nothing for all of our
17:32
queue is not quite right we got the
17:33
world not weekend to four percent growth
17:36
we wouldn't had in week we did stop a
17:39
banking system collapse like the 30 2008
17:42
look just like 93 no I i get Republicans
17:45
say that all
17:45
find me Chris you know Terry this
17:47
quantitative easing did nothing oh no it
17:50
it did a lot the problem is there's a
17:52
big price for it kills the whole free
17:54
market system and and and kills free
17:57
markets in general they did the central
18:00
banks have taken over the bond markets
18:02
and push down long-term risk free rate
18:05
and everything else real estate bonds on
18:09
stocks are heavily impacted by the
18:12
sub-zero rates hope not just impacted
18:16
but i'll give you the other thing that I
18:17
was heading towards is that it also gave
18:20
us the largest wealth gap in all of
18:22
history you know last year 62 people had
18:25
as much well it's half the world this
18:27
year that number is eight right
18:29
this breathe sort of social injustice
18:31
and we're primates for humans like we
18:33
hate unfairness this is deeply unfair
18:35
that the central banks are printing out
18:37
of thin air and its really
18:38
preferentially showing up in a very
18:39
small set of pocket book that's not
18:42
really good for the social experiments
18:43
we have a lot of tensions around all of
18:46
this but it lets talk about what hasn't
18:47
done it hasn't led to a real resurgence
18:50
in corporate R&D and the next wave of
18:52
investments that are going to do great
18:54
things for growth or future economy or
18:56
productivity we've got you know
18:58
financial engineering we've got
18:59
speculation we've got prop trading we
19:01
got listen Rome went down this path you
19:03
debase your current so you just printed
19:05
out of thin air out here you know you
19:06
know make your coins lesser and lesser
19:08
actual metal content and people catch on
19:12
we're smart we go hey if that's the game
19:14
i'll do this all out why would i expend
19:16
effort trying to create real new valued
19:19
products and services it's risky and
19:21
it's hard work i'll just go over here
19:22
into this a highly speculative arena
19:24
pool knowing that the central bank has
19:26
got my back
19:27
they're going to bail me out if I really
19:28
screw up here and make bad enough that's
19:30
right i just thought why not just like
19:32
not slip ons and speculated tech stocks
19:35
and I know exactly it's just something I
19:38
think economy its artificial it's
19:40
growing for the wrong reasons and all it
19:43
has created and people keep saying all
19:45
the feds going to hit massive inflation
19:47
at some point no they're not the problem
19:49
with the feds policies what's going to
19:51
kill them and defeat this is all they've
19:53
done is create even greater bubbles in
19:56
debt and in financial asks that's real
19:59
state and stocks and everything then we
20:00
had in 2007 and they're going to burst
20:03
again bubbles only birth and they don't
20:05
even need something big to happen real
20:08
estate started going down before the
20:10
economy went down before the subprime
20:12
crisis got nasty because it got too
20:15
expensive and baby boomers were running
20:18
out of their home buying cycle so
20:21
bumbles always burst and so that's the
20:24
danger here is what's going to trigger
20:26
this next bubble I mean a banking crisis
20:29
is already brewing big-time worse than
20:31
greece in southern Europe and Italy
20:33
Germany has worse demographics than the
20:36
Japanese had going in the nineteen
20:38
nineties in the decade ahead and
20:40
everybody thinks Germany's going to be
20:42
the strongest country in Europe that
20:44
holds it together and Deutsche Bank is
20:46
going down you know like a flaming plane
20:48
already so that china's got bubbles in
20:52
real estate that are so extreme they're
20:54
gonna have to burst in the next few
20:56
years and when that happens you're going
20:58
to trigger a tsunami around the world in
21:01
real estate crashes so so this thing is
21:03
not gonna last much longer and these
21:06
bubbles are going to burst and that's
21:07
the price we're gonna pay for this free
21:10
money something for nothing economy were
21:13
like you say people get rid of the rich
21:15
get extremely Richard this does favor
21:18
and it's not the top 1% I look at it the
21:21
top pointone percentage that runaway may
21:24
have as much wealth as the rest of the
21:26
one percent put together these are the
21:29
people making the most money off of
21:31
three money because they can leverage
21:33
and they have the money to invest in
21:35
these financial assets and and they're
21:38
the ones that benefit while homer
21:40
simpson has very little in the markets
21:42
and only their home and of course that
21:44
home got killed in in the last great
21:47
recession and it'll get killed worse
21:49
again so you're right this is income
21:51
inequality off-the-charts that's exactly
21:54
what the economy looked like in 1929
21:56
before the Great Depression not just the
21:59
peak of a generation spending not just
22:01
the debt bubble not just financial asset
22:03
bubbles but we had the same one percent
22:07
of people controlling fifty percent of
22:08
the wealth are just like we have now and
22:11
it's kitty getting even
22:12
so yeah this is not sustainable period
22:15
and when it crashes it's going to be
22:17
worse than ever
22:18
I mean all they've done is create a
22:20
bigger bubble we've added fifty seven
22:23
trillion more debt around the world you
22:26
know to the hundred and fifty trillion
22:27
we had at the top of the last bubble and
22:30
most of this in the emerging world that
22:32
which is the least stable and is getting
22:34
crushed by crashing commodities prices
22:38
I mean what we got the worst downturn
22:40
unconvinced next three years worst
22:42
financial crisis in bubble burst of our
22:45
lifetimes and when we will not see
22:48
something that's bad against oh hey
22:50
stocks are way over value got this very
22:53
irrational trump rally which I call the
22:55
final blow off phase i don't think it
22:58
lasts past July but i do think it goes
23:00
higher i think we're going to see dr. at
23:02
least ten percent higher from here
23:04
before the economy figures out that we
23:07
can't grow at four percent no matter
23:09
what does crazy person does annie is a
23:11
crazy person he may be smart a lot of
23:13
ways but he is crazy any psychologist
23:15
would mark him off on a few things right
23:18
away arm so when adverse people going to
23:22
be surprised and in one of the things I
23:24
born people most crisp yet people say
23:26
well guys I don't want to get out of
23:28
this bubble bee
23:29
yeah maybe it's a bubble but it keeps
23:30
going up here's the problem with bubbles
23:33
they're going to go down typically
23:34
eighty percent 7290 wherein especially
23:38
in stocks and commodities but half of
23:40
that crash and most of bubbles in
23:41
history has come in the first two to
23:44
three months when the markets finally
23:46
get it and the smart money runs like
23:48
crazy and the dumb money and most people
23:50
are in upholding stocks to go down forty
23:52
to forty-five percent in two to three
23:54
months this happen in 29 crashed it
23:57
happens in the nikkei crash and in 1990
24:01
it happened in the tech rec on in early
24:04
two thousand and it happened just last
24:07
year you can see this just last year
24:09
China's second stock bubble burst
24:13
forty-five percent in the first three
24:15
months in late 2015 and you had everyday
24:17
household lost everything they were
24:20
getting money on margin stuff the
24:22
government encouraged this stupidly to
24:24
try to offset
24:25
real estate slow down and then people
24:27
just got wiped out so that's the danger
24:29
if you hold out right now I think this
24:32
Trump rally has enough behind it that
24:35
people are probably okay into the summer
24:37
but i tell you it we see this market
24:39
keep going up into the summer and we we
24:41
start approaching that classic crash
24:44
season from late july too late October
24:46
i'm going to tell people you've got to
24:48
get out you just got to be safe if you
24:51
miss another five percent and hey you
24:53
could have gotten slammed you know forty
24:56
percent in three months so better to do
24:58
that now you that at the heart of all of
25:02
this of course so so you've got these
25:03
big trends you name these four big
25:05
trends and they have a very good both
25:08
explanatory and predictive power and
25:10
makes sense right we can say well what
25:11
is an economy its wealth people buying
25:13
and consistently stuff so maybe we
25:15
should track the people i get it now
25:17
what you talked about those with the
25:18
debt the federal debt United States
25:20
doubling every eight years using my my
25:23
handy-dandy rule of 72 that's a
25:25
9-percent compounded annual rate of
25:28
growth so nine percent alright and
25:30
verses that reverses gdp exactly it's
25:33
been growing anywhere with 2% recently
25:35
in 33 and a person event I mean wewe and
25:38
that's one starts statistically quote
25:40
from 1983 2008 in the baby boom debt
25:44
grew at 2.6 times the rate of gdp any
25:48
economist that does not see that turning
25:50
into a debt crisis down the road should
25:52
not be an economist and should be barred
25:55
from practicing the most retarded and
25:57
say hold this
25:58
ok it's not okay well it's not in so you
26:02
know that the Cunard I have to bat
26:04
around all the time somebody say well so
26:06
it lets you japan it's the ultimate
26:07
Petrie to show this why that country
26:09
hasn't gone down in flames right now I
26:11
don't understand because the total
26:13
amount of debt that they're carrying
26:14
right now per household is about a
26:16
million dollars per household write its
26:19
result two charts and that's what I'm
26:20
looking at the total debt of the country
26:22
people over Chris they owe it to
26:24
themselves
26:25
what do you say to that one Harry well
26:28
first of all the greatest amount of debt
26:30
in our economy all economies developed
26:33
world is private debt 3 23 times
26:36
typically government debt as much as
26:39
four times in the boom and and that is
26:41
owed to banks and then people like that
26:44
and they go under or you go under when
26:47
you can't pay it or you lose your house
26:49
or you buy stocks on margin and you lose
26:52
everything so it's not rude and
26:55
governors themselves ok but you know a
26:57
lot of his death is supposed to be used
27:00
I mean our government finance be used to
27:03
pay us social security and health care
27:05
which is underfunded by guest get this
27:08
about 70 trillion dollars just like a
27:11
lot of pension fans fun plans have to
27:14
report the amount of pensions or or
27:17
healthcare benefits they promised their
27:19
workers that has not been funded in an
27:22
investment in a conservative investment
27:24
plan to meet those the government 70
27:26
trillion unfunded so they get in in in
27:30
in a debt crisis or they can't grow
27:32
their debt further because nobody wants
27:34
to buy their bonds anymore because their
27:35
debt ratios are hot
27:36
how are they how are they going to pay
27:39
our benefits when they're not gonna be
27:40
able to pay them despite the debt crisis
27:42
but that only makes it worse so it's it
27:44
served to say oh we owe it to ourselves
27:48
just let me know studies show that when
27:50
government debt gets above ninety two
27:52
hundred percent it starts to slow gdp
27:55
growth it's a burden on the economy it's
27:57
the same thing when household debt you
28:00
know it gets to you know a hundred
28:02
percent or more of gdp it slows their
28:06
spending because they're paying more and
28:08
more interest in the government's paying
28:09
more and more interest than right now it
28:12
is is we talked about earlier by
28:14
suppressing the artificially pushing
28:17
their bond rage down 20 short term and
28:21
more like two percent long-term instead
28:23
of typically five to six percent with
28:25
the inflation rate so that they're
28:26
cheating they're able to to handle this
28:31
debt burden short-term because they push
28:33
they buy their own bonds and push race
28:35
down
28:35
well that's cheating and that's not
28:36
gonna laugh in a long-term we're going
28:38
to go back to you know treasury bonds
28:41
being more like five to six percent and
28:44
then they did japan would be bankrupt
28:46
overnight their entire budget would be
28:48
interest if we just went back to normal
28:51
you know
28:53
weight percent inflation in five to six
28:55
percent long-term bonds they be bankrupt
28:57
overnight and and we would have interest
29:00
would start to consume a huge portion of
29:03
our government budget so so no this this
29:07
is not sustainable and and it's just
29:09
another ridiculous bubble talk when you
29:11
get in bubbles
29:12
I'll tell you why people are stupid
29:14
that's what these books about Chris
29:16
people never see bubbles because they
29:18
don't want to they're in denial they're
29:20
getting something for nothing
29:21
their house is going up at fifteen
29:23
percent a year instead of the normal
29:25
three percent a year with inflation
29:27
stocks are going up at twenty percent
29:29
higher year instead of the normal seven
29:31
percent or something like that and in
29:33
and in their mortgages costing them four
29:36
percent instead of six to seven percent
29:38
in the car my car loans and leases are
29:40
two percent now they used to be at six
29:43
percent we're getting a free lunch
29:45
people love that it makes them feel good
29:47
make sure you feel high when somebody
29:50
like me says sorry folks we're in a
29:52
death bubble in a financial asset bubble
29:55
and every one of these that looks like
29:57
this in history has busted and it busted
29:59
horribly wanted to have people got wiped
30:02
out people want to shoot me they want to
30:04
shoot the messenger
30:05
they don't want to hear at CNBC Kate's
30:08
me some people in fox business like me
30:10
because they see they understand the
30:14
debt is not good like this but most
30:17
people just don't want to hear it now is
30:20
you know let's let's section the people
30:22
out a little bit there was this really
30:23
interesting article just came out the
30:24
most recent issue of the new yorker
30:26
where the very wealthy including tech
30:29
mogul who really made it like the
30:30
startup founder co founder of reddit but
30:33
as well as many hedge fund managers
30:35
private-equity people they're very
30:38
wealthy people they've obviously got
30:39
access very good information and they're
30:41
they're buying bunkers in New Zealand so
30:44
it here's the thing i run into here yet
30:46
is that the retail level like that the
30:48
average person on the street very hard
30:50
to communicate some of the stuff to
30:51
definitely shooting the messenger and
30:53
people who really don't want to believe
30:54
otherwise but the people who are the
30:56
most worried right now are the people
30:58
who have the most experience in the
30:59
financial markets
31:00
I mean you know I talked with guys and
31:02
gals with decades of experience you know
31:03
running headphones for 30 years and they
31:05
look at all of this
31:06
is a dis is a mess and it worries them
31:09
because they're worried that when this
31:11
next turn comes it's not going to be
31:13
like your grandpa has turned where
31:14
humans and little red orange and red
31:16
coats start trading pieces of paper and
31:18
things get a little out of hand these
31:19
are computers making decisions at
31:22
Lightspeed operating in microseconds
31:25
saying uh we're out of this market
31:27
potentially so they're worried about
31:28
these flash crashes that we see in small
31:31
markets really somehow you know
31:33
perpetuating across the larger market
31:35
structure that is I think we've had an
31:37
SEC asleep at the wheel we I believe
31:39
that you know are using cell arnoc and
31:42
another guy's is demonstrating that
31:44
these are broken markets in many
31:46
respects because we don't really have
31:48
the same governing structures on them
31:50
that we used to it it's uh it's a little
31:53
bit worrisome and maybe you've seen this
31:55
as well you know when you see something
31:57
like the dollar or the pound for us
31:59
treasuries move by whole percentage
32:01
points in a matter of minutes you know
32:03
6789 Sigma move shouldn't happen once
32:06
every ten million to a billion year kind
32:08
of stuff it just speaks to me that this
32:11
is a reason to be edgy and the edgy as
32:13
people I know are the ones who are the
32:15
most sophisticated in these markets and
32:17
I don't know that most people have
32:18
really connected those dots yet
32:22
yeah that's that that's what i call the
32:23
smart money and and and that's what I
32:26
track i look at the commitment of
32:28
traders got small percentage of traders
32:30
who with the commercial headers always
32:33
tend to be on the right side of the
32:34
market at a major top there hedged
32:37
bearish and a major bottom their heads
32:40
bullish and that's the people in and
32:42
these people are are you know are the
32:45
people who understand this and are
32:47
saying oh my god this thing's gotta go
32:49
down there the people who understand the
32:51
higher market goes the more vulnerable
32:53
it is for most investors the moment the
32:56
longer they see real estate or stocks go
32:59
up the more confident they get that they
33:01
won't fall and that's different that's
33:04
that's a total misunderstanding of
33:06
history and investing so you're right
33:09
only a small percentage of people get
33:11
this and it's the same people i talked
33:13
to I i just i'm just not going to be a
33:17
mainstream forecaster at this point
33:19
because I'm
33:20
everybody's hoping this works out and
33:22
everybody's much as people no trumps got
33:25
the impulse control of a grease fire and
33:27
he's kind of a crazy person they're like
33:29
well but we hope he does some stuff and
33:32
turns it takes us back to four percent
33:33
they're hoping anybody that looks at the
33:36
fundamentals anybody that looks at
33:38
cycles debt cycles financial assets
33:40
cycle anybody that looks at bubble this
33:42
whole book has so many charts showing
33:45
that all these bubbles look alike they
33:47
look like the male orgasm chart from my
33:50
own masters and Johnson's back in the
33:52
late fifties and that's exactly what
33:54
they are they're like a financial orgasm
33:56
and orgasms can only go so far till it
33:59
gets too intense and then when they end
34:01
they end rapidly and that's what happens
34:05
with bubbles so I go out of my way to
34:06
say look everybody politicians are
34:09
telling you that's not a bubble goldman
34:10
sachs is saying it's not a bubble
34:12
economist are saying it's not a bubble
34:14
CNBC saying it's not a bubble don't
34:17
listen to these people this looks like a
34:19
bubble quacks like a bobble walks like a
34:21
bubble this is a bubble in bubbles only
34:24
do one thing they don't have soft
34:26
landing they burst violently in the
34:28
typical stock bubble as i said earlier
34:30
is eighty percent that's how much cheap
34:32
and ultimately went down in the Great
34:35
Depression of eighty-nine percent for
34:36
the US stock market we were kinda like
34:38
the China that up-and-coming coming most
34:41
leverage country back then so China
34:43
probably will be ninety percent us will
34:46
probably eighty percent and and that's
34:48
not something you want to sit through
34:50
because after that bubble burst in the
34:52
early thirties stocks took 24 years to
34:55
get back to those 1929 highs you'll be
34:59
dead as a retiree if you wait for stud
35:01
you listen to your stockbroker and say
35:03
well he'll say stocks Goldberg no always
35:06
come back and we have you diversified I
35:08
also ask investors to look at your new
35:10
2008 crash portfolio
35:12
how did diversification work for you
35:14
there when real estate went down
35:16
commodities went down gold and silver
35:18
included every stock market in the world
35:20
emerging markets developed market small
35:23
cats large jobs all went down
35:26
how did that diversification work for
35:28
you it didn't
35:29
well Harry I got to get to the heart of
35:31
the sense i'm going to assume that
35:33
that the safest investment here in your
35:36
view is cash that I'm getting not
35:38
japanese yen either but US dollars is
35:40
that is that fair
35:42
Jack cash and US dollars because the US
35:45
dollar versus other currencies was the
35:47
only one that really rallied and then
35:49
when 2008 meltdown happened it went up
35:51
twenty-seven percent in three or four
35:53
months not because we have good monetary
35:56
policies where the best house in a bad
35:58
neighborhood demographically and we have
36:01
less quantitative easing cumulative than
36:04
Europe and way way less than Japan so
36:07
the WF & dollars but also the highest
36:10
quality bonds in the Great Depression
36:12
for that entire decade where stocks and
36:16
real estate and commodities and
36:17
everything else got decimated the the
36:20
long-term treasury bonds and triple-a
36:22
corporate bonds the highest quality
36:24
long-term bonds roughly doubled in value
36:27
which include their dividends and they
36:30
take higher dividends or there are now
36:33
with with a bounce and heels are paying
36:35
a higher higher dividends and stock and
36:37
I think these years could bounce a
36:38
little farther later this year so yeah
36:41
it's the safest assets highest-quality
36:43
bonds you can bet on the US dollar going
36:46
up at least in the early stage of the
36:47
crisis new ups and ETF attracts that the
36:50
US dollars at a hundred it's forty-five
36:53
percent higher than when the great
36:55
recession started in january 2008 and it
36:57
bottom and i think it's going to at
36:59
least a hundred twenty so US dollar US
37:02
Dollar Index or dollar bullish funds
37:04
highest-quality US government and in
37:08
triple-a corporate bonds and just good
37:10
old cast nothing wrong with having
37:12
liquid cash that everytime assets go
37:15
down you can buy more of them and you've
37:17
got the cast to do it because don't
37:18
think anybody's going to lend you money
37:20
to buy stocks are real estate at the
37:22
bottom of this next crisis you gotta
37:24
have cash or or high quality stuff and
37:27
you can sell those bonds any day and
37:29
guess and in these bonds not only have
37:31
could get three to three-and-a-half
37:33
percent yield on something safe they
37:36
appreciate when deflation brings those
37:38
yields back down the bonds appreciated
37:41
from 1931 in 1941 a 10-year bull market
37:45
after stocks and everything crashed so
37:47
so the bonds that what bonds of the one
37:50
bubble that are getting a setback now
37:52
but the one bubble that will be the last
37:54
burst many years from now i agree with
37:57
that now this brings me to my final
37:58
question which is really about gold and
38:00
I'm not gold and silver are two separate
38:02
words to me I don't lump them together
38:03
gold the monetary asset to me and that's
38:06
primarily why i like it and so here's
38:07
the question as we get into this
38:10
deflationary aspect which I agree with
38:12
you feel like like the end stage to all
38:13
of this
38:14
I no longer trust of the statements of
38:18
any of the major commercial banks i
38:20
think there's going to be an enormous
38:21
banking crisis with that so when you say
38:23
cash if that means cash in the bank i
38:25
think we have to understand which bank
38:27
matters because not all are created
38:28
equal some of them are carrying
38:29
derivatives that nobody can understand
38:31
at this point and gold to me is that is
38:33
potentially a means of having a monetary
38:36
assets outside of a system that frankly
38:38
I've lost a lot of faith in if not all
38:41
of my trust especially with the baling
38:43
provisions and the sneaky war on cash
38:46
stuff courtesy of summers and rode off
38:47
and all those other casting of slimy
38:49
characters and whatnot but but it feels
38:51
to me like like people are being herded
38:53
into a banking system that is just like
38:55
the last corral you ever want to get
38:57
caught in right potentially so when you
38:59
say cash
39:00
what do you mean by that and second
39:01
halves gold into that story
39:03
okay first of all very good question you
39:06
have to have your cash for your safe
39:08
bonds or your dollar index or whatever
39:10
in a brokerage account whether it being
39:13
a bank or brokerage firm I i like to be
39:15
with online brokerage firms because
39:18
they're they're not banks that also lend
39:20
money against real estate and can can
39:22
get crippled and stuff but it if you
39:24
have it in the bank in a checking
39:26
account or savings account they do lend
39:28
that money out into these bubbles
39:30
especially in the real estate and when
39:32
they lose that money your money may not
39:34
be will not be there as it wasn't in in
39:36
early 30 so if you're in a brokerage
39:38
account they can't lend against that
39:40
even if it's in a bank
39:42
I'd rather have it i have my money you
39:44
know with schwab or or or somebody like
39:47
Scottrade because they're not in the
39:49
business of lending or investment
39:51
banking and all this sort of stuff are
39:54
so that's first thing second thing gold
39:57
Gold correlates with one thing long-term
39:59
and one thing only and that's inflation
40:02
also short term gold is an inflation
40:06
hedge that's why it was such a great
40:07
investment in what I call the summer
40:10
season of high inflation and recession
40:12
or stagflation that's a part of my 80
40:15
years cycled it works like a clock and
40:17
but it's not a deflation hedge gold
40:21
people don't get gold was a bigger
40:22
bubble and then the stock market gold
40:24
went up eight times in 10 years between
40:27
2001 and 2011 we told people to get out
40:31
of silver and gold and silver retested
40:34
it's 1984 bubble hi previous bubble high
40:37
and we said this was like a good time to
40:39
get out gold when a little higher in to
40:41
intercept member but basically told
40:43
people get out this is a bubble bubbles
40:45
have to burst and these things followed
40:47
the commodity cycle which is a 30-year
40:49
clock gold did not provide that safe
40:53
haven i look back into late 2008 when
40:56
things really melted down and look like
40:58
we're going in a great depression and
41:00
major banks failing and General Motors
41:01
could have gone on there and AIG and all
41:04
this sort of start gold went down
41:06
33-percent silver went down fifty
41:10
percent they did not protect you
41:12
so I don't trust go for gold erases
41:16
bubble and I look in this book and
41:17
principles and bubbles is they they they
41:20
build up exponentially when they burst
41:22
burst and half a time typically took
41:25
them to built and they go back to where
41:27
the bubble started not the whole bull
41:29
market whatever that is when they
41:31
started to diverge from the fundamental
41:33
trends and go up more expedient enjoyed
41:35
gold has to go down to four hundred
41:37
dollars to race that bubble and it could
41:40
possibly get worse retest those 2001
41:43
lows around 250 i'm looking for gold to
41:46
hit seven hundred give or take in the
41:48
next year or so and i'm looking i'm not
41:50
gonna be interested in gold to it gets
41:52
at least the 400 and then i would love
41:54
it because the next commodity cycle can
41:56
be driven by emerging countries who are
41:58
horrible huge consumers are gold and
42:01
silver huge consumers of commodities as
42:03
a percentage of their income and the
42:05
biggest producers and exporters of
42:07
commodities so I think the next
42:08
commodity cycle is going to be a doozy
42:11
but commodities have already crashed and
42:13
won't turn around until at least 2020
42:15
and and then it goes at 400 bucks
42:18
tonight say you know what I'd buy this
42:20
and think you could go to 4,000 over the
42:22
next commodity cycle and that next
42:24
commodity cycle women peak until about
42:26
2038 2014 so I do not like gold
42:30
it's not a safe haven in a deflationary
42:33
environment it is the safe haven an
42:35
inflationary environment and of course
42:37
once this quantitative endless
42:40
quantitative easing breaks down all
42:42
these bubbles burst again and again real
42:44
question to to summarize their the
42:47
reason you get deflation in this winter
42:50
season is it when deputy leverages money
42:52
disappears loans are written off of that
42:54
money disappears when bubbles burst like
42:57
the dowel goes from 22,000 down to four
42:59
thousand eighty percent of people's
43:02
wealth disappears and doesn't come back
43:04
for a long time that creates less money
43:06
chasing the same goods and financial
43:08
assets and everything else and that
43:10
creates deflation and prices not
43:13
inflation and certainly very much
43:16
non-mainstream views and we have been
43:18
talking with harry reid and author of
43:20
the new book the sale of a lifetime it's
43:23
a chock full of just fascinating
43:25
thinking and of course somebody you
43:27
should be listening to an editor of the
43:29
free newsletter economy and markets
43:30
found that Harry dent dot-com Harry
43:33
anything else you need to tell people
43:35
about events or how they can follow you
43:36
more closely now I think the best thing
43:40
you're not free newsletter so that's
43:41
where you can get the notice i mean i
43:43
think we got you know limited months
43:45
maybe six months left in this market i
43:47
want by the middle of this year you to
43:49
be convinced to make some very hard
43:51
decisions because everybody else
43:53
including your stockbroker and your best
43:55
friend are going to turn the media and
43:57
everything is going to tell you
43:58
otherwise you need to make some hard
44:00
decisions and you're not going to do
44:01
that unless you're convinced so so yes
44:04
get the book and get on our free
44:06
newsletter we also have paid in his
44:07
letters if you want to get more depth
44:09
but but but you need to be convinced so
44:11
so get serious about this and and okay
44:14
this doesn't happen in the next couple
44:16
years and then I'm gonna quit my
44:17
profession and be a limo driver the gold
44:19
coast of Australia alright well you'll
44:21
be fighting the 44 fairs with me
44:24
at that point I'm so Harry thank you so
44:26
much for your time today
44:27
let's do this again sometime soon okay
44:29
thank you Chris
The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many more
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