CRASH Unstoppable Now, Beware & Prepare | Harry Dent
Summary
Market Outlook: Harry Dent predicts a significant market crash before Christmas, driven by excessive debt and unsustainable economic stimulus.
Economic Insights: The U.S. economy has been artificially propped up by $29 trillion in stimulus, masking the need for a natural downturn to purge inefficiencies and zombie companies.
Historical Context: Dent compares the current economic situation to past bubbles, emphasizing that recessions are necessary for economic health and innovation.
Investment Strategy: Investors are advised to protect themselves and not ride out the anticipated downturn, as it could lead to significant losses that are difficult to recover from.
Demographic Trends: The millennial generation is expected to drive economic growth from 2024 to 2037, but the current debt burden poses a significant risk to this potential boom.
Market Triggers: While specific triggers for the crash are uncertain, Dent suggests that the accumulation of debt and failing companies will eventually lead to a loss of confidence and market decline.
Key Takeaway: The current market conditions are unsustainable, and investors should be cautious and prepared for a major economic downturn.
Transcript
Just this morning, we've received inflation data out of the US. 2.9% highest level since January. Data was as as expected. No big surprises. 4% month overmonth CPI increase as well. But now we've got all the data dumped behind us and we're right before a Fed decision here next week. I've invited Harry Dent on the show to discuss what is happening next. He still predicts or he predicts a crash of the markets before Christmas even. So, we'll have to discuss what does he mean by that and how will that show and what will be the trigger. So, lots to discuss here in a very short time. If uh you haven't done so yet, hit that like and subscribe button. It helps us out tremendously and we much much appreciate your support. Thank you so much for doing that. Now, Harry, it is great to welcome you back on the program. Thank you so much for joining us. >> Yeah, nice to be back, Kai. >> Yeah, Harry, really looking forward to to this discussion. And as I said, we're just at the cross or right between data dump, getting all the US economic data that we could use uh for a Fed decision. Um maybe we'll start there. Maybe just to generalize a little bit as well. What was your main takeaways from last week's like overall data dump, jobs report, jobs revision, and now inflation data? >> Well, you know, I mean, it was pretty much as expected except the jobs number. In other words, in uh the CPI came out a little hot in the PPI, the producer price index, the wholesale level came out less than expected. Uh but but the jobs report at 22,000 that that was the shocker and it's not a shock to me for a simple reason, Kai. We we have been stimulating this economy for for 16 and a half years now. I mean 29 trillion and still rising at two trillion a year. And that's just the deficit. We stopped the the money printing finally and pulled back on that. But we're still running $2 trillion deficit a year. That's 78% of GDP. In fact, all of this stimulus combined over 16 now going on 17 years adds up to 7.8% average a year. K, we should have been growing at 8 to 10% because normal growth is 2 to 3% a year. So, so, so the truth is something's wrong. And I've been warning about it for a long long long time. and the government basically managed to skip over and it's called the Gen X downturn. The baby boom was set on on a precise 46-year lag. That's when the average person spends the most money. US has the best statistics on this in the world. So, I've been able to track and use this all the way back to the 1980s. Um that that there was that was the biggest boom in history 83 to 2007. Well, I was predicting back in the 80s when I said this boom would be bigger than anybody thought and people thought I was crazier than they think I am now for thinking there's going to be a big crash um because the generation was so large. But that ended in 2008 precisely, you know, when when the basic statistics would have predicted decades before and and 2008 end up being the deepest recession and governments then panicked um and and they should have because Ben Bernani, he he was the Fed chair then his thesis was the Great Depression and the truth is I was predicting and 2008 looked exactly like 1930. All of a sudden, a big crash, a deflationary trend, not not high inflation and stuff because of that. In other words, we were going from a bubble boom into a more like a depressionary economy. And and bubble booms are always followed by depressions. Recessions follow normal booms. And of course, those recessions like the 1970s can be very deep. But the 30s was a whole another thing. We we never saw 25% unemployment before that and never seen it since and may never see that level again. But the point is when you have a bubble, things get extra overvalued. The the the conditions are so good, strong growth, low inflation. That was the roaring 20s. That was the 90s. And then again from 2002 to 2007 all and now the government 29 trillion. I'm the only person that'll give people a number. This is how much money's been poured into this economy. The entire today's GDP and about 1.4 times GDP over I mean we pouring the entire GDP plus in our economy just to keep it growing at 2 to 3% which is below average. So what it tells you I if you're awake here and listening that we would have been in a major downturn and the government just kind of printed their way out of it and it was it wasn't even the printing was only a third of it money. twothirds of it was the largest longest running. We haven't had a balanced budget since 2001 and since 2008 recession started when they really kicked up the stimulus and everything. 29 trillion and and 19 of that was was deficits and and that's what we're still running. So, so this is the truth. we would have been in a much different economy. And now the trillion multi-t trillion dollar question and I don't even have a full answer for this because this never happened. What happens when an economy skips a major downturn? Because because my theory, Kai, is really simple because I was in the turnaround business in in in small in new ventures in the 80s. That's where I started after Harvard Business School and Bay & Company. We did the same thing with Fortune 100. Companies in trouble. But when companies get in trouble, something great happens. They make big changes. They refocus and get to where they should be. They cut cost dramatically, especially fixed costs, which nobody ever looks at. When I was a turnaround manager, first thing I looked at the fixed cost. I didn't want to hear about anything else. I knew I could cut them in half if they're in trouble and at least 20 30% if they're doing well. So, so, so that's what happens. Recessions are not bad. We've had a recession, a major recession or substantial every decade, usually in the first couple years like 19 to 80 82 and 20202, that sort of thing. Um, we've had that once a decade because it cleans out the economy, brings back in efficiency, knocks out what I call the zombie companies that are barely surviving by stiffing their creditors but still alive, you know, and and and and it and it keeps us efficient. So recessions aren't bad. And I've done my homework. We have the exact, if you look at history, especially since World War II in this modern economy, a ratio of recessions to booms is 70 boom, 30% recessions. That's the same exact ratio of being awake every day as people and sleeping for seven hours a night. Same ratio. So, so is some doctor going to come up and tell us, "Oh, people, we're wasting our time with this dumb sleep stuff. We're not doing anything. We got to sleep three less hours and and be awake more." If we did that within three within a week, most people would be certified crazy if they didn't get enough sleep. And we all know this. So, so sleeping is necessary. Recessions are necessary. If you want a healthy economy and you don't want to have a bad recession, then don't let the booms get out of control with too much stimulus and of course the biggest problem, too much debt. What happens is we're basically purging unproductive debts and purging zombie companies, the companies that tried but failed. Even in a healthy economy, there's going to be people who try and fail and debts are going to go bad. And when it gets overextended, I mean, there's no, we can't even compare this Kai to any boom in history and how long this boom has lasted, how much debt has been accumulated in it in all sectors. I mean, government, consumer, financial, um, and and and business, okay, everybody's gone into massive debt, but government debt's only a quarter of it, okay? It's not even the biggest thing. And it's not what defaults. the government debt. The government can print money to pay their debt so they don't default. So, so I think we should have seen this second downturn to complete the first one. The first one was 2008 to9 when the baby boom stopped spending. And again, I predicted that Kai two late 2007 top five 25 years before it happened. Okay, that's how predictable that was because that was the peak of the 46-year spending peak of the largest generation history. Calculate that down to the year. Okay, now but this stimulus has gotten us out of what should have been the second downturn that should have happened around 2019 to 22 just like it happened in the late 30s after the first great depression hit. And then we would have come out of it clean, healthy, ready for the millennial boom. And the millennial boom is precisely late 2023 into 2037 before it plateaus for a long time. That's going to be a very unusual boom with a long plateau, but its rise is short. Just basically 2024 through 2037. We're in that now. That's why the economy all of a sudden started doing better in 2024 after tightening after 525 basis point tightening and and cutting the balance sheet $2.6 trillion dollar. You know this this was tightening and the economy turns around and and starts to do better. It's because the millennials are kicking in. the the reason we've had all this debt and all this printing money and stuff was to cover over the downturn from generation X. Okay, so the millennials are picking us up now. We don't need stimulus in the future. We won't need to, but we're still carrying all this debt. Okay, and that's the problem. We have to purge these debts. It's healthy for the economy to do so. So I think we're going to see the downturn we should have had from 2020 to 22 about two and a half three years just like in the Great Depression just like in the early 80s just like in the early 2000 you know that's what happens. Okay. Um we're g we're probably going to face that now and I think we're topping right about here. I I think we may have already topped in Bitcoin. That's the leader. Um uh Nvidia is the leader of AI. That's the other big new sector. That looks like a top to me. Uh or about to make one at 189 if it goes a little higher. And I think we see a major crash now. And that that will set off a recession. Uh and that will finally clear out this economy. So we can see one more what I call great boom because we don't have demographics in our favor anymore where we're plateauing demographically and we will start heading down like most countries like Japan and Korea have already been doing. But we have that until 2037. But we can't get there carrying this bubble in debt. Bubbles and debt are not good for the economy. And I'll leave you with one thought, Kai. The best indicator in history that nobody uses called money velocity. Money velocity tells you the truth. Not of the economy is growing or not. If we're investing in and getting productive returns from our investments, okay, everybody, government, consumers, business, everybody, money velocity's been falling since the first bubble in 1997 forward. The bubble started in 95. Shortly after that, money velocity collapses, which it does in every bubble in history, which says this is not productive and it's going to end badly. So, I think that ends badly now between say late 2025 and early to mid 2028. That's how long it takes to clear out a major downturn bubble. Again, never it's taken more than three. Even 29 to 32 crash was 34 months. That was the worst in history. This one probably won't be quite that bad, but it will be closer to that than anyone we've seen. And again, find an account. Even Jeremy Grantham, one of the most bearish guys out there, is predicting a 50% stock crack. He's just doing that because he knows people won't believe him. it. History says after a bubble of this magnitude, you should expect 85 to 93%. And that's what I'm expecting. Now, they're going to fight it. That's new. But the point is, this is not a time to be sitting in the stock market saying, "Oh, yeah. Uh, and I'm telling financial advisors are right 90% of the time. Stay with the markets. Rebalance. Don't jump in and out. People are terrible at that." No question. This is not one of those times. This is so big, you cannot ride out this downturn. You don't ride out an 80 to 90% or even a 70% crash and and get back to even before you die. Okay? Especially for baby boomers who people like me, you know, I'm talking about life expectancy of 15 years if I'm lucky. And that's above average. Okay? So, we don't have a long time if we get if we take a 50 60 80 90% hit to to get back to even and that's how long it took the the 29 to 32 crash. It took 23 years to get back to that the the 1929 high. 23 years. Same thing. The 68 top and the crash in the 70 took 24 years to get back to those levels. So that's what I'm talking about. A once in a-lifetime crash. It's now been put off five years, which I think is long enough that the the economy doesn't get healthier the long time it gets stretched. It gets more stretched. So it only means a bigger downturn when it happens. No, Terry, you lay out a very compelling case. Of course, all the indicators are pointing towards a crash, but you the question is you've been calling for a crash for before Christmas, actually. Like, what what should trigger that? Like, why now? Um, of course, the debt has been high. You've been laying out a compelling case. Demographics were known >> the debt high, but most importantly, they're finally pulling. It's the stimulus. I mean, anybody can cover over 29 trillion. you I nobody not nobody would have predicted the government would pour 29 trillion to fight a damn recession. That's the worst investment you can make. First of all, recessions are not bad. Okay? Wrong government, wrong economist. The wrongest thing about them why I'm so happy I didn't get a PhD in economics and took business classes instead. Okay? So that's that's the problem. So we have to clear to move forward. I mean we've done way better. I mean, avoiding a depression. You know how big that is? That's the biggest thing, the biggest intervention in the economy in history times 10, Kai, there's nothing to even compare. We didn't do this in the Great Depression. I always assumed, oh, they printed a bunch of money. No, they didn't print hardly any money back then. They ran deficits because their revenues went down, but they didn't intentionally run huge deficits and stuff. Okay. So, so this is a first and and all I can say bigger all I've learned bigger boom bigger bubble bigger burst and and again I dare anybody to compare the boom that started with the stimulus in 2009 March of 2009 was the bottom and that bottom would have come another year later and been deeper. Okay. But from that bottom here, you cannot compare any stock run in history to this in in magnitude and length and in height and bubble. So the burst has to be bad and they're going to fight that too. But they're going to have less credibility. I mean when people keep saying wait a minute we keep having a bubble and then we burst and then the government saves us and then we have a bigger bubble and then we burst again. At some point even an idiot gets this doesn't work. If I was in the turnaround manager, you know what you do when your com company gets in trouble? You refocus on where you're the best and compete because people get off that strategic focus. Important business principle and you cut costs which get out of line, especially overheads. That's what I did in the 80s. I turned around six new ventures in extreme turnaround situations. I didn't even intend to do that. I was just a consultant. I got sick of big companies advantage companies. They're too big and boring. New ventures was my thing, but I found that what everybody should for know, new ventures do nothing but fail. It's a graveyard. The good ones fail. Everybody fails. The good ones just survive it and keep going. And while 90% of their competitors go under, which is to their advantage. So, so I learned that that challenges are not bad. That's why we grow. If we don't have challenge, you can't always be nurtured. Things can't always go good. But what you have to do is you have to the companies I turned around I saved they would have died if they didn't have professional management. They were run by a founder. They didn't know anything. They didn't go to Harvard Business School which isn't you know Pandora's box or anything but it does teach you the basics of business. And you know that shakeouts are exactly what doesn't kill us makes us stronger. The economy wants to let a thousand flowers boom as it did in the 70s and 80s and any entrepreneur period the late 1890s early 90 there's periods of high innovation new ventures new technology well they have to grow up they have to get tested and shaken down to the best and then they move mainstream out of their massive efficiency and raise our standard of living more than any time in history and what we can afford and do. That's how the economy grows. And and then the the only economist I really love is George Gilder because he says the secret to capitalism is not the opportunity to grow and succeed. Yeah, duh. It's the opportunity to fail. Centrally planned economies do government industries and stateowned operas and then protect them from failing. That's why they're so inefficient. Free market capitalism allows nobody. Vision is way over uh rated. Okay. Nobody knows what's going to succeed exactly. Not even Steve. He knows it's a new thing. Supercomputer in your palm connected to the world. When he said connected the world in the late center, he didn't even know what the internet was. It didn't even exist. Wasn't even close yet. Okay. But he knew they'd somehow be connected. So he could see the general vision, but he couldn't see how it was going to work out and who was going to win. and he didn't see that that Microsoft was going to come and kick his ass because they were going to give a standard for everybody instead of a standard software to protect their own software, which was Apple's mistake, by the way. It's their only mistake. They've always been the best software. So, so there's lessons from history and and that's what the economy does. It innovates, but it has to shake out. It doesn't just encourage it. It has to be just as vigilant shaking out the losers. And that's what governments and people fight against. We want the boom. We don't want the bust. Okay? We want the innovation. We don't want the shake out of the losers. The truth is 95% of new benters get shaken out. >> Yeah. Harry, if I may stop you there. Actually, interesting thought here because our whole mentality as a society has completely changed, especially in the Western world. Woke is a term we've been using a lot, the woke mindset. Like, are we even allowed to let companies fail from that perspective? Like, how how does that fit in? It's an interesting angle. I haven't explored with any other guest Harry's like does the like our mindset that has changed as a western society sort of affect the economics the macroeconomics in that regard have you have you put any thought into that >> well you know it's simple Adam Smith brought free market capitalism a concept in the late 1700 same time industrial revolution same that was one of the most innovative times in history people didn't even realize that because we didn't see the impact of it for decades later early 1800s and beyond okay free market capitalism is system. You make rules to ensure fair competition and then you leave it alone. That's the problem. We have a recession. Oh my god. Recession's going to hurt some people. Some people are going to lose their jobs. Some businesses are going to go under. We got to stop this atrocity. No. If that's the way you're thinking, you don't understand the word free in free market capitalism and markets. Okay? Markets know how to reign in things when they get overvalued and overdone. Okay? And markets want everybody to have a shot. Again, you never know who the real innovation's going to be. Even if you know the direction of innovation, i.e. towards smaller and more powerful computers. That's easy to get. Steve Jobs predicted a supercomput in your palm back in the 70s. That's why I loved him more than Bill Gates. He was a visionary, but still he couldn't predict what companies would win, how it would evolve, when there would be shakeouts, when there would be the best boom. That's that's something I study because that's also predictable. There there's an innovation period that take it to 10%. It's the first 10% of more discriminating consumers that decide what's going to make it or not. And they should because they're the most discriminating and then it can move mainstream and get scale and become lowcost and everybody can have this. You know that cars were the ultimate luxury in the early 1900s and then was an everyday thing for people in cities. By 1929, just two decades later, that was a miracle that po that everyday people would have a car. Nobody would have thought that in 1900 and 1907 when the rich were just the first 1% were just getting those unbelievable automobiles. Okay? So, but that's the way that's the way capitalism work. It is a miracle. The key is you got to leave it alone. Nobody will leave it alone and let it do what it has to do, including we have to sleep, okay? And it has to have a recession and it has to shake out from a lot of innovators to the few winners if everybody's going to get it. That's the way capitalism works. So these people, economists, don't understand capitalism. And I have one answer for that, Kai. Never run a damn business. I ran and CEO of six businesses in the 1980s and consulted to many others. knew I couldn't run, you know, AT&T at that age at 26, 27. But when these businesses got in trouble and I could spot what was wrong, I I' I'd become CEO instantly and be able be in charge of a whole company of maybe 20, 30 employees and turn the whole damn thing around. And I love that. I could make more change in six months in a crisis than I can make in three years with business going along as usual. Just putting it out time and time because nobody likes change. This not liking change goes right out door the window when you're in a crisis and it's do or die. That's why the economy is the way it is. That's why you have to have recessions after booms. You can't have the boom and not the recession. Healthier boom, healthier recession. That's the truth. This is not going to be a healthy downturn because we've had the most debtridden zombie company. I mean zombie companies. Look at the charts on this. debts at unprecedented levels and zombie companies at unprecedented levels. There's no way this ends well and it shouldn't because we have to wash this stuff out of the economy or we'll never have. Well, free market capitalism will look like it failed. It didn't fail. Governments decided they knew better. >> No, absolutely. That the question is like like why why is it different now? Like you you've analyzed all the bubbles since 19 since the 80s there, Harry. Did you ever identify like a potential a trigger? Like we have the Fed meeting coming up next week. Is that a trigger? Um are there even triggers or is it just a a bunch of dominoes that have been lined up and the wind just blows over the first one? Like I'm >> No, nobody will ever see this coming. Nobody will ever prevent it. The trigger is when you get this much debt and this many new companies and new ventures and people borrow all this money that they they'll start some of them will start failing and then they'll and the more they fail, the more people say, "Oh, there's debt failures." and then when they oh my god there's many more coming and then that the sentiment turns negative. The government will never do the right thing. We'll never see this happening. Um what what the government could just simply do is leave it alone and that they won't do because people don't want recessions and governments don't rec want recessions on their watch and and and Trump and look look I mean I'm telling you Trump's dead dead not because he caused this recession. He walked in at the top of a bubble promising to make America great again when it has to have a major shakeout before that could happen. He walked in at the wrong time. I'd be very good at advising major politicians when to run because the truth is they don't impact the economy anywhere near what people think they do. The economy is 340 million people doing what they do when they do it regardless of all that. They can about this and that and this and that. Oh, I don't like this and I don't like the president. I don't like inflation, but they're going to raise their kids and get them through school. Damn it. Okay, that happens regardless. Governments have no nothing. They governments don't drive the economy. If they did, I'd be studying government policies way more than consumer spending habits and and and debt debt bubbles and things like that. No, that the problem, the reason people don't see this guy, nobody studied this. >> Economists don't get trained in this. Economists don't know demographics from a hole in the wall. And and the baby boom in in an affluent age proved how strong demograph I predicted the entire boom just with a 46-year lag for peak spending on the baby boom birth curve adjusted for immigrants, which was a little more difficult, but can to be done precisely. Okay, that's all simplest indicator in history. And all these economists are looking at 20, 30 different dipping in indicate. Well, but this, oh, but that doesn't matter. Those baby boomers were going to spend that money, buy those houses, get their kids through school and into college if possible, do hell or high water. And they did. >> No. Yeah. No. Harry, I want to use the last couple minutes here just to sort of also give our viewers a bit of an overview like what should they do now? You expect the crash by Christmas or perhaps by Christmas? Um, yeah. What should we do? >> That's the tough part. They're fighting it hard. I do. I think first of all, I've also studied what happens in the first crash. In bubbles, unlike most booms, the first crash is the most severe because it's going from one extreme bubble to so the first crash tends to be four, listen to this guy, 40 to 50% in stocks in two to four months. That means if it started right about now, and it's possible. I think it's possible Bitcoin already peak and stocks are following quickly in a couple weeks, then that we could see the first crash largely set in by Christmas. And that's normally a good season. So, people really won't be expecting that. And that could be 40 to 50%. Uh and and and the first wave of that first crash is usually 20 to 30% most of it. So, so if my scenario plays out, that's what I'm telling people. If you wait to see if I'm right, and I understand that, and nobody else is telling you this. Jeremy Grantham is saying, "Well, maybe 50% worst case," which some people could sit through. Okay? Well, if you saw my worst case, you wouldn't even think of sitting through this. Okay? But nobody's listening to me. You know, I'm talking to the 1%. Okay? Always have been. It's just the way it is. if if you didn't go play by the rules and don't hang out and and and drink scotch with the with the Yale League economists and stuff, you're not going to be in the mainstream. Okay? And I I've never been and don't care to be. I just study the truth and whoever wants to hear it. People don't What did Jack Nicholson say? You can't handle the truth. Okay? People don't like the truth, especially when it's bad. So, so nobody's going to see this coming, but when it does, by the time it happens, most people will sell out near the bottom of that first crash down 50%. Watch that retrace about half and say, "Oh my god, I jumped out the wrong time." Then they're jump back in. Then they're going to get whacked again. And it's going to be very painful. And >> I can't prevent that. I can just the people that'll listen to reality, I can say, "This is what happens." And again, I deal with only facts. This is actually what happens. And here's the phases of a crash. Here's the phases of a four stage cycle. Innovation, growth, boom, shakeout, downturn, maturity, boom. I can do everything's factual. Everything's proven stuff that's happened before. But but to get people to listen, that's the hard part. And it's just I'm not going to be able to warn many people if if you know and and if I'm if I'm wrong then this market's gone up so much it's due for some sort of correction. You're probably not going to miss a whole lot if I'm wrong. But you're going to miss a lot and and benefit a lot if you see something that 90ome percent of people do not see. >> Nobody never ever has happened in advance. No, herebody. Here's why, Kai. The bubble makes you high. People high on any drug don't make good decisions. That we know. Doesn't matter if it's alcohol, cocaine, crack, uh, heroin, whatever. People don't make good decisions, okay? Because they're high. They're not in reality. That's why nobody will see this. No matter what people like me or Jeremy Grantham say. >> Well, it's the it's the the well-known free money high, right? So, um, Harry, you you put out really interesting rants every one once a week on your YouTube channel. And where else can we follow your work here, Harry? >> Yeah. Yeah. Just harrydent.com. Um, you know, you just just just put in your your your um email address and and and I'm going to send you this uh this uh article every week and a rant every other week. And then then then if you fall in love at some point, you get on our paid newsletter. That's the way we operate. That's the way most newsletters. So, so you can get a lot from us just going to harry.com and getting on our free newsletter. >> Fantastic. Awesome, Harry. Really appreciate your insights. Uh, it's great having you back on. Very interesting view and we we'll see if it plays out. But the main message I take away, Harry, is really just protect yourself. You you can still be aware of anytime it's been this good, this long is a time to protect yourself if you know nothing else. >> Exactly. Fantastic. Harry, thank you so much for joining us. Much much appreciated. And to everybody else, thank you so much for tuning in to Soore Financially. This is the second last day here in Beaver Creek for us in Colorado. We are at the Precious Metal Summit meeting with over 50 companies here over the course of three days. And uh if you haven't done so, hit that like and subscribe button. It helps us out tremendously and look forward to a fantastic weekly wrap-up update here with myself on Friday. Thank you so much for tuning in. We'll be back with lots more. Take care out there. [Music]
CRASH Unstoppable Now, Beware & Prepare | Harry Dent
Summary
Transcript
Just this morning, we've received inflation data out of the US. 2.9% highest level since January. Data was as as expected. No big surprises. 4% month overmonth CPI increase as well. But now we've got all the data dumped behind us and we're right before a Fed decision here next week. I've invited Harry Dent on the show to discuss what is happening next. He still predicts or he predicts a crash of the markets before Christmas even. So, we'll have to discuss what does he mean by that and how will that show and what will be the trigger. So, lots to discuss here in a very short time. If uh you haven't done so yet, hit that like and subscribe button. It helps us out tremendously and we much much appreciate your support. Thank you so much for doing that. Now, Harry, it is great to welcome you back on the program. Thank you so much for joining us. >> Yeah, nice to be back, Kai. >> Yeah, Harry, really looking forward to to this discussion. And as I said, we're just at the cross or right between data dump, getting all the US economic data that we could use uh for a Fed decision. Um maybe we'll start there. Maybe just to generalize a little bit as well. What was your main takeaways from last week's like overall data dump, jobs report, jobs revision, and now inflation data? >> Well, you know, I mean, it was pretty much as expected except the jobs number. In other words, in uh the CPI came out a little hot in the PPI, the producer price index, the wholesale level came out less than expected. Uh but but the jobs report at 22,000 that that was the shocker and it's not a shock to me for a simple reason, Kai. We we have been stimulating this economy for for 16 and a half years now. I mean 29 trillion and still rising at two trillion a year. And that's just the deficit. We stopped the the money printing finally and pulled back on that. But we're still running $2 trillion deficit a year. That's 78% of GDP. In fact, all of this stimulus combined over 16 now going on 17 years adds up to 7.8% average a year. K, we should have been growing at 8 to 10% because normal growth is 2 to 3% a year. So, so, so the truth is something's wrong. And I've been warning about it for a long long long time. and the government basically managed to skip over and it's called the Gen X downturn. The baby boom was set on on a precise 46-year lag. That's when the average person spends the most money. US has the best statistics on this in the world. So, I've been able to track and use this all the way back to the 1980s. Um that that there was that was the biggest boom in history 83 to 2007. Well, I was predicting back in the 80s when I said this boom would be bigger than anybody thought and people thought I was crazier than they think I am now for thinking there's going to be a big crash um because the generation was so large. But that ended in 2008 precisely, you know, when when the basic statistics would have predicted decades before and and 2008 end up being the deepest recession and governments then panicked um and and they should have because Ben Bernani, he he was the Fed chair then his thesis was the Great Depression and the truth is I was predicting and 2008 looked exactly like 1930. All of a sudden, a big crash, a deflationary trend, not not high inflation and stuff because of that. In other words, we were going from a bubble boom into a more like a depressionary economy. And and bubble booms are always followed by depressions. Recessions follow normal booms. And of course, those recessions like the 1970s can be very deep. But the 30s was a whole another thing. We we never saw 25% unemployment before that and never seen it since and may never see that level again. But the point is when you have a bubble, things get extra overvalued. The the the conditions are so good, strong growth, low inflation. That was the roaring 20s. That was the 90s. And then again from 2002 to 2007 all and now the government 29 trillion. I'm the only person that'll give people a number. This is how much money's been poured into this economy. The entire today's GDP and about 1.4 times GDP over I mean we pouring the entire GDP plus in our economy just to keep it growing at 2 to 3% which is below average. So what it tells you I if you're awake here and listening that we would have been in a major downturn and the government just kind of printed their way out of it and it was it wasn't even the printing was only a third of it money. twothirds of it was the largest longest running. We haven't had a balanced budget since 2001 and since 2008 recession started when they really kicked up the stimulus and everything. 29 trillion and and 19 of that was was deficits and and that's what we're still running. So, so this is the truth. we would have been in a much different economy. And now the trillion multi-t trillion dollar question and I don't even have a full answer for this because this never happened. What happens when an economy skips a major downturn? Because because my theory, Kai, is really simple because I was in the turnaround business in in in small in new ventures in the 80s. That's where I started after Harvard Business School and Bay & Company. We did the same thing with Fortune 100. Companies in trouble. But when companies get in trouble, something great happens. They make big changes. They refocus and get to where they should be. They cut cost dramatically, especially fixed costs, which nobody ever looks at. When I was a turnaround manager, first thing I looked at the fixed cost. I didn't want to hear about anything else. I knew I could cut them in half if they're in trouble and at least 20 30% if they're doing well. So, so, so that's what happens. Recessions are not bad. We've had a recession, a major recession or substantial every decade, usually in the first couple years like 19 to 80 82 and 20202, that sort of thing. Um, we've had that once a decade because it cleans out the economy, brings back in efficiency, knocks out what I call the zombie companies that are barely surviving by stiffing their creditors but still alive, you know, and and and and it and it keeps us efficient. So recessions aren't bad. And I've done my homework. We have the exact, if you look at history, especially since World War II in this modern economy, a ratio of recessions to booms is 70 boom, 30% recessions. That's the same exact ratio of being awake every day as people and sleeping for seven hours a night. Same ratio. So, so is some doctor going to come up and tell us, "Oh, people, we're wasting our time with this dumb sleep stuff. We're not doing anything. We got to sleep three less hours and and be awake more." If we did that within three within a week, most people would be certified crazy if they didn't get enough sleep. And we all know this. So, so sleeping is necessary. Recessions are necessary. If you want a healthy economy and you don't want to have a bad recession, then don't let the booms get out of control with too much stimulus and of course the biggest problem, too much debt. What happens is we're basically purging unproductive debts and purging zombie companies, the companies that tried but failed. Even in a healthy economy, there's going to be people who try and fail and debts are going to go bad. And when it gets overextended, I mean, there's no, we can't even compare this Kai to any boom in history and how long this boom has lasted, how much debt has been accumulated in it in all sectors. I mean, government, consumer, financial, um, and and and business, okay, everybody's gone into massive debt, but government debt's only a quarter of it, okay? It's not even the biggest thing. And it's not what defaults. the government debt. The government can print money to pay their debt so they don't default. So, so I think we should have seen this second downturn to complete the first one. The first one was 2008 to9 when the baby boom stopped spending. And again, I predicted that Kai two late 2007 top five 25 years before it happened. Okay, that's how predictable that was because that was the peak of the 46-year spending peak of the largest generation history. Calculate that down to the year. Okay, now but this stimulus has gotten us out of what should have been the second downturn that should have happened around 2019 to 22 just like it happened in the late 30s after the first great depression hit. And then we would have come out of it clean, healthy, ready for the millennial boom. And the millennial boom is precisely late 2023 into 2037 before it plateaus for a long time. That's going to be a very unusual boom with a long plateau, but its rise is short. Just basically 2024 through 2037. We're in that now. That's why the economy all of a sudden started doing better in 2024 after tightening after 525 basis point tightening and and cutting the balance sheet $2.6 trillion dollar. You know this this was tightening and the economy turns around and and starts to do better. It's because the millennials are kicking in. the the reason we've had all this debt and all this printing money and stuff was to cover over the downturn from generation X. Okay, so the millennials are picking us up now. We don't need stimulus in the future. We won't need to, but we're still carrying all this debt. Okay, and that's the problem. We have to purge these debts. It's healthy for the economy to do so. So I think we're going to see the downturn we should have had from 2020 to 22 about two and a half three years just like in the Great Depression just like in the early 80s just like in the early 2000 you know that's what happens. Okay. Um we're g we're probably going to face that now and I think we're topping right about here. I I think we may have already topped in Bitcoin. That's the leader. Um uh Nvidia is the leader of AI. That's the other big new sector. That looks like a top to me. Uh or about to make one at 189 if it goes a little higher. And I think we see a major crash now. And that that will set off a recession. Uh and that will finally clear out this economy. So we can see one more what I call great boom because we don't have demographics in our favor anymore where we're plateauing demographically and we will start heading down like most countries like Japan and Korea have already been doing. But we have that until 2037. But we can't get there carrying this bubble in debt. Bubbles and debt are not good for the economy. And I'll leave you with one thought, Kai. The best indicator in history that nobody uses called money velocity. Money velocity tells you the truth. Not of the economy is growing or not. If we're investing in and getting productive returns from our investments, okay, everybody, government, consumers, business, everybody, money velocity's been falling since the first bubble in 1997 forward. The bubble started in 95. Shortly after that, money velocity collapses, which it does in every bubble in history, which says this is not productive and it's going to end badly. So, I think that ends badly now between say late 2025 and early to mid 2028. That's how long it takes to clear out a major downturn bubble. Again, never it's taken more than three. Even 29 to 32 crash was 34 months. That was the worst in history. This one probably won't be quite that bad, but it will be closer to that than anyone we've seen. And again, find an account. Even Jeremy Grantham, one of the most bearish guys out there, is predicting a 50% stock crack. He's just doing that because he knows people won't believe him. it. History says after a bubble of this magnitude, you should expect 85 to 93%. And that's what I'm expecting. Now, they're going to fight it. That's new. But the point is, this is not a time to be sitting in the stock market saying, "Oh, yeah. Uh, and I'm telling financial advisors are right 90% of the time. Stay with the markets. Rebalance. Don't jump in and out. People are terrible at that." No question. This is not one of those times. This is so big, you cannot ride out this downturn. You don't ride out an 80 to 90% or even a 70% crash and and get back to even before you die. Okay? Especially for baby boomers who people like me, you know, I'm talking about life expectancy of 15 years if I'm lucky. And that's above average. Okay? So, we don't have a long time if we get if we take a 50 60 80 90% hit to to get back to even and that's how long it took the the 29 to 32 crash. It took 23 years to get back to that the the 1929 high. 23 years. Same thing. The 68 top and the crash in the 70 took 24 years to get back to those levels. So that's what I'm talking about. A once in a-lifetime crash. It's now been put off five years, which I think is long enough that the the economy doesn't get healthier the long time it gets stretched. It gets more stretched. So it only means a bigger downturn when it happens. No, Terry, you lay out a very compelling case. Of course, all the indicators are pointing towards a crash, but you the question is you've been calling for a crash for before Christmas, actually. Like, what what should trigger that? Like, why now? Um, of course, the debt has been high. You've been laying out a compelling case. Demographics were known >> the debt high, but most importantly, they're finally pulling. It's the stimulus. I mean, anybody can cover over 29 trillion. you I nobody not nobody would have predicted the government would pour 29 trillion to fight a damn recession. That's the worst investment you can make. First of all, recessions are not bad. Okay? Wrong government, wrong economist. The wrongest thing about them why I'm so happy I didn't get a PhD in economics and took business classes instead. Okay? So that's that's the problem. So we have to clear to move forward. I mean we've done way better. I mean, avoiding a depression. You know how big that is? That's the biggest thing, the biggest intervention in the economy in history times 10, Kai, there's nothing to even compare. We didn't do this in the Great Depression. I always assumed, oh, they printed a bunch of money. No, they didn't print hardly any money back then. They ran deficits because their revenues went down, but they didn't intentionally run huge deficits and stuff. Okay. So, so this is a first and and all I can say bigger all I've learned bigger boom bigger bubble bigger burst and and again I dare anybody to compare the boom that started with the stimulus in 2009 March of 2009 was the bottom and that bottom would have come another year later and been deeper. Okay. But from that bottom here, you cannot compare any stock run in history to this in in magnitude and length and in height and bubble. So the burst has to be bad and they're going to fight that too. But they're going to have less credibility. I mean when people keep saying wait a minute we keep having a bubble and then we burst and then the government saves us and then we have a bigger bubble and then we burst again. At some point even an idiot gets this doesn't work. If I was in the turnaround manager, you know what you do when your com company gets in trouble? You refocus on where you're the best and compete because people get off that strategic focus. Important business principle and you cut costs which get out of line, especially overheads. That's what I did in the 80s. I turned around six new ventures in extreme turnaround situations. I didn't even intend to do that. I was just a consultant. I got sick of big companies advantage companies. They're too big and boring. New ventures was my thing, but I found that what everybody should for know, new ventures do nothing but fail. It's a graveyard. The good ones fail. Everybody fails. The good ones just survive it and keep going. And while 90% of their competitors go under, which is to their advantage. So, so I learned that that challenges are not bad. That's why we grow. If we don't have challenge, you can't always be nurtured. Things can't always go good. But what you have to do is you have to the companies I turned around I saved they would have died if they didn't have professional management. They were run by a founder. They didn't know anything. They didn't go to Harvard Business School which isn't you know Pandora's box or anything but it does teach you the basics of business. And you know that shakeouts are exactly what doesn't kill us makes us stronger. The economy wants to let a thousand flowers boom as it did in the 70s and 80s and any entrepreneur period the late 1890s early 90 there's periods of high innovation new ventures new technology well they have to grow up they have to get tested and shaken down to the best and then they move mainstream out of their massive efficiency and raise our standard of living more than any time in history and what we can afford and do. That's how the economy grows. And and then the the only economist I really love is George Gilder because he says the secret to capitalism is not the opportunity to grow and succeed. Yeah, duh. It's the opportunity to fail. Centrally planned economies do government industries and stateowned operas and then protect them from failing. That's why they're so inefficient. Free market capitalism allows nobody. Vision is way over uh rated. Okay. Nobody knows what's going to succeed exactly. Not even Steve. He knows it's a new thing. Supercomputer in your palm connected to the world. When he said connected the world in the late center, he didn't even know what the internet was. It didn't even exist. Wasn't even close yet. Okay. But he knew they'd somehow be connected. So he could see the general vision, but he couldn't see how it was going to work out and who was going to win. and he didn't see that that Microsoft was going to come and kick his ass because they were going to give a standard for everybody instead of a standard software to protect their own software, which was Apple's mistake, by the way. It's their only mistake. They've always been the best software. So, so there's lessons from history and and that's what the economy does. It innovates, but it has to shake out. It doesn't just encourage it. It has to be just as vigilant shaking out the losers. And that's what governments and people fight against. We want the boom. We don't want the bust. Okay? We want the innovation. We don't want the shake out of the losers. The truth is 95% of new benters get shaken out. >> Yeah. Harry, if I may stop you there. Actually, interesting thought here because our whole mentality as a society has completely changed, especially in the Western world. Woke is a term we've been using a lot, the woke mindset. Like, are we even allowed to let companies fail from that perspective? Like, how how does that fit in? It's an interesting angle. I haven't explored with any other guest Harry's like does the like our mindset that has changed as a western society sort of affect the economics the macroeconomics in that regard have you have you put any thought into that >> well you know it's simple Adam Smith brought free market capitalism a concept in the late 1700 same time industrial revolution same that was one of the most innovative times in history people didn't even realize that because we didn't see the impact of it for decades later early 1800s and beyond okay free market capitalism is system. You make rules to ensure fair competition and then you leave it alone. That's the problem. We have a recession. Oh my god. Recession's going to hurt some people. Some people are going to lose their jobs. Some businesses are going to go under. We got to stop this atrocity. No. If that's the way you're thinking, you don't understand the word free in free market capitalism and markets. Okay? Markets know how to reign in things when they get overvalued and overdone. Okay? And markets want everybody to have a shot. Again, you never know who the real innovation's going to be. Even if you know the direction of innovation, i.e. towards smaller and more powerful computers. That's easy to get. Steve Jobs predicted a supercomput in your palm back in the 70s. That's why I loved him more than Bill Gates. He was a visionary, but still he couldn't predict what companies would win, how it would evolve, when there would be shakeouts, when there would be the best boom. That's that's something I study because that's also predictable. There there's an innovation period that take it to 10%. It's the first 10% of more discriminating consumers that decide what's going to make it or not. And they should because they're the most discriminating and then it can move mainstream and get scale and become lowcost and everybody can have this. You know that cars were the ultimate luxury in the early 1900s and then was an everyday thing for people in cities. By 1929, just two decades later, that was a miracle that po that everyday people would have a car. Nobody would have thought that in 1900 and 1907 when the rich were just the first 1% were just getting those unbelievable automobiles. Okay? So, but that's the way that's the way capitalism work. It is a miracle. The key is you got to leave it alone. Nobody will leave it alone and let it do what it has to do, including we have to sleep, okay? And it has to have a recession and it has to shake out from a lot of innovators to the few winners if everybody's going to get it. That's the way capitalism works. So these people, economists, don't understand capitalism. And I have one answer for that, Kai. Never run a damn business. I ran and CEO of six businesses in the 1980s and consulted to many others. knew I couldn't run, you know, AT&T at that age at 26, 27. But when these businesses got in trouble and I could spot what was wrong, I I' I'd become CEO instantly and be able be in charge of a whole company of maybe 20, 30 employees and turn the whole damn thing around. And I love that. I could make more change in six months in a crisis than I can make in three years with business going along as usual. Just putting it out time and time because nobody likes change. This not liking change goes right out door the window when you're in a crisis and it's do or die. That's why the economy is the way it is. That's why you have to have recessions after booms. You can't have the boom and not the recession. Healthier boom, healthier recession. That's the truth. This is not going to be a healthy downturn because we've had the most debtridden zombie company. I mean zombie companies. Look at the charts on this. debts at unprecedented levels and zombie companies at unprecedented levels. There's no way this ends well and it shouldn't because we have to wash this stuff out of the economy or we'll never have. Well, free market capitalism will look like it failed. It didn't fail. Governments decided they knew better. >> No, absolutely. That the question is like like why why is it different now? Like you you've analyzed all the bubbles since 19 since the 80s there, Harry. Did you ever identify like a potential a trigger? Like we have the Fed meeting coming up next week. Is that a trigger? Um are there even triggers or is it just a a bunch of dominoes that have been lined up and the wind just blows over the first one? Like I'm >> No, nobody will ever see this coming. Nobody will ever prevent it. The trigger is when you get this much debt and this many new companies and new ventures and people borrow all this money that they they'll start some of them will start failing and then they'll and the more they fail, the more people say, "Oh, there's debt failures." and then when they oh my god there's many more coming and then that the sentiment turns negative. The government will never do the right thing. We'll never see this happening. Um what what the government could just simply do is leave it alone and that they won't do because people don't want recessions and governments don't rec want recessions on their watch and and and Trump and look look I mean I'm telling you Trump's dead dead not because he caused this recession. He walked in at the top of a bubble promising to make America great again when it has to have a major shakeout before that could happen. He walked in at the wrong time. I'd be very good at advising major politicians when to run because the truth is they don't impact the economy anywhere near what people think they do. The economy is 340 million people doing what they do when they do it regardless of all that. They can about this and that and this and that. Oh, I don't like this and I don't like the president. I don't like inflation, but they're going to raise their kids and get them through school. Damn it. Okay, that happens regardless. Governments have no nothing. They governments don't drive the economy. If they did, I'd be studying government policies way more than consumer spending habits and and and debt debt bubbles and things like that. No, that the problem, the reason people don't see this guy, nobody studied this. >> Economists don't get trained in this. Economists don't know demographics from a hole in the wall. And and the baby boom in in an affluent age proved how strong demograph I predicted the entire boom just with a 46-year lag for peak spending on the baby boom birth curve adjusted for immigrants, which was a little more difficult, but can to be done precisely. Okay, that's all simplest indicator in history. And all these economists are looking at 20, 30 different dipping in indicate. Well, but this, oh, but that doesn't matter. Those baby boomers were going to spend that money, buy those houses, get their kids through school and into college if possible, do hell or high water. And they did. >> No. Yeah. No. Harry, I want to use the last couple minutes here just to sort of also give our viewers a bit of an overview like what should they do now? You expect the crash by Christmas or perhaps by Christmas? Um, yeah. What should we do? >> That's the tough part. They're fighting it hard. I do. I think first of all, I've also studied what happens in the first crash. In bubbles, unlike most booms, the first crash is the most severe because it's going from one extreme bubble to so the first crash tends to be four, listen to this guy, 40 to 50% in stocks in two to four months. That means if it started right about now, and it's possible. I think it's possible Bitcoin already peak and stocks are following quickly in a couple weeks, then that we could see the first crash largely set in by Christmas. And that's normally a good season. So, people really won't be expecting that. And that could be 40 to 50%. Uh and and and the first wave of that first crash is usually 20 to 30% most of it. So, so if my scenario plays out, that's what I'm telling people. If you wait to see if I'm right, and I understand that, and nobody else is telling you this. Jeremy Grantham is saying, "Well, maybe 50% worst case," which some people could sit through. Okay? Well, if you saw my worst case, you wouldn't even think of sitting through this. Okay? But nobody's listening to me. You know, I'm talking to the 1%. Okay? Always have been. It's just the way it is. if if you didn't go play by the rules and don't hang out and and and drink scotch with the with the Yale League economists and stuff, you're not going to be in the mainstream. Okay? And I I've never been and don't care to be. I just study the truth and whoever wants to hear it. People don't What did Jack Nicholson say? You can't handle the truth. Okay? People don't like the truth, especially when it's bad. So, so nobody's going to see this coming, but when it does, by the time it happens, most people will sell out near the bottom of that first crash down 50%. Watch that retrace about half and say, "Oh my god, I jumped out the wrong time." Then they're jump back in. Then they're going to get whacked again. And it's going to be very painful. And >> I can't prevent that. I can just the people that'll listen to reality, I can say, "This is what happens." And again, I deal with only facts. This is actually what happens. And here's the phases of a crash. Here's the phases of a four stage cycle. Innovation, growth, boom, shakeout, downturn, maturity, boom. I can do everything's factual. Everything's proven stuff that's happened before. But but to get people to listen, that's the hard part. And it's just I'm not going to be able to warn many people if if you know and and if I'm if I'm wrong then this market's gone up so much it's due for some sort of correction. You're probably not going to miss a whole lot if I'm wrong. But you're going to miss a lot and and benefit a lot if you see something that 90ome percent of people do not see. >> Nobody never ever has happened in advance. No, herebody. Here's why, Kai. The bubble makes you high. People high on any drug don't make good decisions. That we know. Doesn't matter if it's alcohol, cocaine, crack, uh, heroin, whatever. People don't make good decisions, okay? Because they're high. They're not in reality. That's why nobody will see this. No matter what people like me or Jeremy Grantham say. >> Well, it's the it's the the well-known free money high, right? So, um, Harry, you you put out really interesting rants every one once a week on your YouTube channel. And where else can we follow your work here, Harry? >> Yeah. Yeah. Just harrydent.com. Um, you know, you just just just put in your your your um email address and and and I'm going to send you this uh this uh article every week and a rant every other week. And then then then if you fall in love at some point, you get on our paid newsletter. That's the way we operate. That's the way most newsletters. So, so you can get a lot from us just going to harry.com and getting on our free newsletter. >> Fantastic. Awesome, Harry. Really appreciate your insights. Uh, it's great having you back on. Very interesting view and we we'll see if it plays out. But the main message I take away, Harry, is really just protect yourself. You you can still be aware of anytime it's been this good, this long is a time to protect yourself if you know nothing else. >> Exactly. Fantastic. Harry, thank you so much for joining us. Much much appreciated. And to everybody else, thank you so much for tuning in to Soore Financially. This is the second last day here in Beaver Creek for us in Colorado. We are at the Precious Metal Summit meeting with over 50 companies here over the course of three days. And uh if you haven't done so, hit that like and subscribe button. It helps us out tremendously and look forward to a fantastic weekly wrap-up update here with myself on Friday. Thank you so much for tuning in. We'll be back with lots more. Take care out there. [Music]