Harry Dent: The Biggest Artificial Bubble in History Has No Soft Landing
Summary
Market Outlook: Guest argues we are in an unprecedented, stimulus-fueled bubble with no soft landing, expecting a first-leg 40–50% equity drawdown in 2–4 months when it breaks.
US Treasuries: Positions long-dated Treasuries as the primary safe haven (e.g., TLT), citing 2008 performance and the government’s ability to backstop obligations, with bonds doing best as the crisis deepens.
Shorting Equities: Prefers initial short exposure during the first crash leg (e.g., inverse Nasdaq ETFs like SQQQ/PSQ), then rotating into Treasuries as volatility rises and policymakers intervene.
AI: Notes AI leaders (e.g., Nvidia, NVDA) are poster children of the bubble and likely to lead downside, but remain top long-term growth opportunities after a reset.
Bitcoin: Expects Bitcoin/crypto to lead the crash given their outsized bubble, yet pegs Bitcoin as a prime buy post-downturn for the next cycle.
Gold: Contends gold has already bubbled more than equities recently, is not a reliable safe haven this time, and historically weakens in later crisis stages.
India and Emerging Markets: Highlights India as the “next China” and sees Emerging Markets leading the next expansion, driven by demographics and urbanization once the global deleveraging clears excesses.
Transcript
This is the first 100% artificial bubble created entirely by massive government deficits and massive government money printing. Did not do this in the roaring 20s. Did not do this in any of the bubbles in the 1800s. You know, did not do this even in the '9s. Bubbles. I'm telling you, when you're this bubbly, there there is no soft landing. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. Hello and welcome to Wealthon. I'm Maggie Lake and joining me today is Harry Dent, founder of HSN. Hi Harry. It's great to have you back on. >> Yeah, good to be back Maggie. So when we last spoke back in June, you were pretty worried about US equities. What do you when you look across the markets today, what do you see? >> Well, you know, this this is the simplest trend in all of history. It's the bubble that never ends. And there's a good reason for that. This is the first 100% artificial bubble created entirely by massive government deficits and massive government money printing. Did not do this in the roaring 20s. did not do this in any of the bubbles in the 1800s, you know, did not do this even in the 90s bubble we had. The first tech bubble, you know, was from 95 to 2000 during a boom that was really from 90 into 2000 and it bubbled in the end. That didn't have government stimulus behind it. That was just really strong economy, which I've been predicting for years. The baby boomers were going to surprise everybody by the strength of their boom because it was such a large generation. And I knew it was going to drive a boom from 1983 to 2007, which it did. And and I was even surprised it ended in late 2007. And we went into the great recession in 2008 and nine. And then everything changed because government said no more. We shall not have a recession. And they've been printing money ever since. And Maggie, nobody's got a number on this I know of except for me. It's now $30 trillion. Twothirds of that, a little more than two, about 70% of it has been massive government deficits getting only larger since 2008 when they started this whole thing. And the and the other nine trillion was money printing, just printing money and throwing it into the economy. And and so that's what this boom has been because otherwise my natural cycles where generations uh spend for about 20 25 26 years and then slow down till the next generation hits for 12 to 14. That was from 2008 into 2022 maybe 23. Okay. That's what caused all this stimulus and took so much. The government when they started this this new strong stimulus plan in 2008 they they planned they put in a trillion in 20089 and just thought that would do it. They didn't realize we were in this long slowdown. They just thought okay the economy is a little over over amped and slowing down so we'll just give it a trillion and that should fix it. Well a trillion wasn't even near enough. So so that's the story. The government doesn't know why we were going into that downturn. um and and most investors don't. Um I predicted that would happen starting in late 2007 with 2008 looking like the Great Depression and continuing to have a challenging economy for 12 to 14 years after that. Just like the 1930s, peak in 1929, big crash into 32, economy bottoms in 33, but we have another big crash in 37 into 38. And we didn't come out of that. And it wasn't World War II that pulled us out of it. Although that always helps. Wars are good for spending money. The the Bob Hope generation started their spending wave in 42 and went all the way into 1968. So again, same theory. 42 to 68, long boom driven predictably, and I mean down to the year pretty much by a generation. Then a big crash into 82 when their baby bust followed them. And then 83 into 2007, greatest boom in history. And in the 90s, I was still having to tell people, look, this isn't over. This this is gonna get bigger and bigger because this is the biggest generation to drive a boom. And of course, in 2008, it went down. And that's why the one trillion was not enough to stop a 12 to 14year slowdown. The largest generation >> now that So, it sounds like because the nature of this is different, how are you recalibrating? Well, it's very challenging uh because because you know I know where the economy should have been. I know where it is and and and again all from artificial stimulus >> and so but I don't have the I mean I mean they just kind of basically ran over the natural economy just said just rejected and and of course I mean people think they did this the roaring 20s the government ran surplus there was almost no deficits in the roaring 20s it wasn't government deficits it was a strong generation and it wasn't even from births it was from a massive immigration wave that peaked in 1907 and 1914. And I do my same 46-year peak in spinning, except that the average immigrant isn't born at zero. They come in at 30 on average. And so on a 16-year lag, you had the boom into into 1929 and then the big bust. So, so that was on demographics. That whole boom and bust in the Great Depression would have been predictable. And unlike now, governments didn't even know that they could print, you know, or they didn't, it didn't occur to them that they should run massive deficits on purpose and print massive amounts of money to counter depression. They did do all those work projects, the dams and stuff, but that came after the stock market had already bought them. So 29 to 32 was a pure bubble, pure crash, bubble up for five years, especially 90 uh 2000 uh 25 to 29 and then crashed 89% on the Dow. The Dow was like the NASDAQ today, okay? It was like the the new booming companies of the early 1900s, you know, moving mainstream at the speed of light and and that was the biggest crash we have. >> So So what happens now? like bring us up to today though because now something's changed. Now the government is driving. Is this is this a bubble that will never burst? >> Well, what what it is is a bigger it's more global. And that's other reasons because everybody's doing the same thing. We are we're not the only one. And actually I keep telling people the reason people say I always debate Peter Schiff and he's the dollar is going to crash. We're printing money. You know, we printing more money. It's got to be worth less. No, everybody's printing more money. We're printing, we printed way less than Japan compared to our economy and a bit less than Europe. Okay. So, we're we're the we're the best house in a bad neighborhood of desperate money printers. Okay. Um but Japan, you know, had a big crash and they've never they only saw new highs 30 some years later, you know, I mean, recently. And they're getting ready to crash again because they got I mean, their demographics are bad and just keep they had a bounce into 2020 and they go right back down again. So, so this is this is new because governments have never thought, well, wait a minute, it's our job to iron out these cycles and and keep major downturns like the 30s or 70s from happening. Okay? And I'm like, sorry, I've run many businesses, consulted the Fortune 500 at Bay & Company, and I know the value. I know why we have cycles. I don't just study them. cycles are the growth generator. They are the impetus. When things go down and fail, you get all these bargains and all this stuff and then the smart people start jump in and they make huge profits. Whenever you and then when it gets all bubbly, everything's get overvalued. Then it's eventually going to have to crash. This is a natural cycle. There's nothing wrong with it. Governments don't need to drive this. The greatest innovation in all history was in the late 1700s when democracy Thomas Jefferson style and Adam Smith style free market capitalism that wasn't even a word before Adam Smith came together the same time and we have been we've grown more since then Maggie since all of human history combined pretty much 300,000 years. Okay. I'm curious about that. Do you think that there is no such thing as true price discovery net right now because the government has put their hands on >> You're right. No, there's not. They kill here. I mean, this is what happens. Everybody does this. Okay. You do something new and you do, you know, like this is again I can't even compare this period to any period in history in the extent of the boom and progress 10 times standard of living just since 1900. Okay? Not going all the way back to the big bang with free market capitalism, but just think 10 times never happened. But but it's like, oh, we we have a recession or two people. Well, we can't handle that. Well, you don't get the booms without the crashes. You don't get innovation. Where does I can tell you where all the innovation comes from? Because I turned around six companies, new ventures, and new industries in the 1980s. It comes from the CR. It comes from the failures and and and the old failing and new having to step in or or companies have to totally redirect. I changed the strategies of six companies and I was at Bay & Company for that for a year and a half and we totally changed the strategies of two Fortune 100 companies because you know things were changing and they were missing the baby boom. They were still marketing to the old Pablo generation bunch of stale old products. So that's how change happened that the cycles of the dynamics success and failure boom and bust inflation and deflation. These are the key trends that create cycles which create the battery. Okay. What's a battery? Positive and negative. That's another you don't get you don't get power out of battery without positive and negative. Like you don't get progress without booms and bust because the bust rapidly clear out all the waste and failures from the boom. Okay. And those failures create whole new opportunities while new technologies are coming in the next generation to create the next boom. >> So >> and so what we we want our cake and want to eat it too. And that's my criticism. >> The the central bank should quit doing this period. The economy doesn't need your help. They just need a good structure to let free market capitalism work, including the damn recessions, >> right? Well, now it's it's not just monetary policy. It's fiscal policy, right? >> The fiscal, you're right. The fiscal is more than double. When I quoted this, 29 trillion is still going up. It's probably 31 already. Twothirds of that is the fiscal. >> We have never we have not had a balanced budget since 2001. And since 2008, the deficits have gone up. It's going to be two trillion this year. They finally cut pulled back on the money printing. Okay, good. But the deficit is higher than ever. 2 trillion. That's 7 That's 7% of our economy. In other words, Maggie, with that big a deficit, the economy should be growing at 2% normal, 3% normal, plus this 7 8% they're adding 10%. And and we can barely grow at 2% and sustain that without ever more stimulus. So, so, so I knew the economy should have been weaker. They have hidden a major down. They have hidden the 1930s like decade. And the question which I cannot even completely answer what happens when you suppress this. I know everything about human nature in past cycles I've studied. I mean the more you suppress something the more it bounces back. You know if you push down inflation it's only going to come back. >> You know you tell a kid a teenager don't do something they're only going to do it more sort of thing. So, so that's the assumption I'm making here that that we are actually now Maggie into the millennial boom finally. All of this was because of the baby busters spending money in less numbers. It was a natural slowdown. But since 2000, beginning of 2024, the millennials are marching in. They are not as steep as the baby boomers. They don't accelerate as long, about twothirds as long, and they plateau for a long time. But still, we're back in positive trends. The problem is they've allowed debt to grow so much and so over stimulated the kind when you overstimulate economy people will just buy more now that they would have bought later and all of a sudden they're going to get to the point where nobody's going to trade up to a new house because they've already traded up two or three times in the last decade. They can't keep moving and trading up the houses. So, you bring up an interesting point though that you're that they've it's been artificially extended, but now >> totally 100% all of this is artificial, >> but now you're hitting what would be a positive demographic change. Is it possible that that timing allows for a window to deflate the bubble without it bursting? Well, here here's it does allow them to pull back this stimulus if they did it right. And and I'm telling you, when you're this bubbly there, there is no soft landing to a bubble. Okay? But if they did it right, you're right. they if they did do this and realize, well, we got some positive tailwinds. We don't now now let's pull back this stimulus kind of in a systematic way over the next several years, what what you would probably end up with is maybe a milder recession, but you you would not grow as fast. In other words, by the baby boom having their boom and not cleaning up and detoxing afterwards, we have compromised as a country the boom of the millennial generation. All the young people born in the next generation. They're already what we've done is already compromised them. Best case is what you're saying. We just kind of let this down slowly. Now we got stuff. So, but that would compromise the boom. Okay. anything they do to pull back this massive stimulus will now work against the boom. Um, but if we don't do this, this bubble's gonna it's going to go till it blow. That's my new theory. We're in a it's just going to go till it blows. And when it blows, and mark my words on this, these stupid government officials will never react fast enough because they don't even know the monster. They don't even get what they've created. >> Okay? I can't even compare this. I've studied every bubble since the late 79 in US and world history. Every one of them. Okay, this one's unique. It is everything. The Roaring 20s bubble didn't bubble real estate because it the lending was so stingy back then and so primitive. Okay. >> So, so this is bigger than ever. And if if they just blow this thing until it blows on its own, regardless of what they do, it it's going to be as bad or worse than 29 to 32. And as you say, it's global, so it's it's hard. We'll talk about the investment uh where there's nowhere to hide >> challenge, right, of nowhere to hide. Let me ask you a question because you you bring up something really interesting when you're talking about them already compromising the millennial. The as you talk about this generationally, there's another uh sort of popular conversation as people try to identify I think what you're talking about, which is this K economy, right? And it's it strikes me that many of the younger generation are on the bottom leg of the K. They're finding it really hard to get ahead. They're they're more impacted by that. Whereas the older generation and those with >> Let me give you the best example. And this should be obvious to everybody. What's their biggest challenge? The cost of housing. It's gone up four times in 20 years, >> right? >> 100 grand. I used to live in Ohio for a few years. You could get a decent nice house for 100 grand back then. That house even in boring Ohio. Sorry, Ohio people. Okay, it's 5x. That's their challenge. They can't even afford a house on even on a good salary. A bubble burst would take that out. >> We had this bubble, housing would go down. And I can predict this today. If this bubble was allowed to burst, it would go down 60 maybe 70%. And then housing would immediately be affordable. Who would be the losers? Baby boomers sitting on all this equity from the houses they don't deserve. Who would be the big winners? the millennials that could finally afford to buy a house nice house on a respectable salary. They >> The problem is the bursting bubble is so destructive that very few people benefit originally from it. Is there another option which is not politically ever popular but to uh continue to support millennials while sort of through tax policy or some other you know it's redistribution somehow but to try when you say support's one thing >> it's stimulus they've already overstimulated the economy so much I can't even it it's 10x anything done in history >> and again I assumed they must have been doing some stimulus or running some deficits to get that 20. No surpluses the whole place. There wasn't government deficit. There wasn't money printing. Okay. Right. There is I have a four- stage cycle in every book I've ever written. Okay. Innovation, growth boom, shakeout, maturity boom, innovation, early 1900s, growth boom, roaring 20s, shakeout, great depression, maturity boom, 50s and 60s, Bob Hope boom. This happens all throughout history. Okay. What we've done is interrupt this cycle after the growth boom and like you just said, we extended this growth boom that should have peaked in 2007 another 15, 16, 17 years, which means the growth boom is more bubbly, more extended than ever, which means it's only one way to crash and that's more. So I I think the most acceptable is one is one you you suggest earlier. You have to and they've done this a little bit. They have chipped down the balance sheet 2.7 trillion out of nine. Okay, that's a little start. But at the same time, they upped the deficit. The deficits now, right? This so it's you're saying there needs to be a political solution as well as a monetary solution. >> Yeah. Yeah. No. Yeah. Particularly the polit the political is more important because the deficits were 70% of this artificial bubble. Again, even without any government stuff, you'll see times 1820s and 30s, roaring 20s. You'll see times in history where there are bubbles without government stimulus. This one occurred at a time that would have been more like the Great Depression. I call it the solution. >> So, this is 100% artificial. >> If they're if they're part if they're the the cause, then it has to be part of the solution. >> They are the the the full cause. In fact, it's more than that. we would have been growing at probably negative 1% for this whole period if it hadn't been for this. So it's so so whatever the economy's done, they've added more than that because they prevented that 1 to 2% decline over a long period of time. That's exactly what happened in the 30s. You had a net decline for a long period of time. That's why it was so difficult. Unemployment got up to 25% in the first crash and and and 18% in the second. Um, so, so yeah, I think the best way is to admit you cannot keep going on stimulus. You did it during a difficult time. >> You got to bring it down. So, so at least do it systematically. Let's have a goal that we're going to cut. Uh, we're going to go back to a balanced budget within so many years. And we're going to slowly chip at that nine trillion balance sheet till we get it started at a at a trillion. Okay. Till we get back down to normal. And maybe that's done over five, six, seven, eight years. But it can't be done forever. But the point is they're doing the opposite. We're just making the bubble bigger. >> Yeah. Well, no one wants to see No, it's politically untenable for anyone to cut anything. Um is is the problem until we probably get a crisis. So, >> and you know that that's why I like the the natural thing. Nature doesn't care. Okay. We I'm telling you 10 years from now if we let this crash happen full out, we would be better off 10 to 20 years from now if we keep trying to just do it this slowly thing and work against the the economy. What happens if you go out to dinner and eat something totally poisonous? Everybody knows what happens. It starts with a D. Flush it out. What does the natural What does your body that's been around for 300,000 years as a human do when it gets something very toxic it didn't expect? It doesn't let it out slowly to make it a little less painful and comfortable. It flushes it out because it's poison. >> That's what this is. When you get bubble, bubbles are a sign that you're growing faster than you can extain. And it is not good for the economy and it overstretches everything. And there is a measure that nobody looks at except for a few economists like Dr. Lacy Hunt in Austin, Texas. That's where I first got this from. He's been speaking at my conventions for a long time. Money velocity tells you when you're having healthy growth or bubbly growth or or unhealthy unproductive. It measures if investments productive or not. It but before the roaring 20s bubble and the Great Depression, money velocity dropped the most in all of history. And now since 1997, it's dropped even more than that. that money velocity drop and this is over decades not just a couple years has always ended up in a depression because you got to flush out all the bad stuff you allowed the economy create the economy does this on its own we haven't let it >> I'm like let the economy do what it does within reason and then like you say instead of messing with the economy if like you say the millennials are taking the brunt of this this time if this happened well get send them some checks in the mail you know but don't send it to the baby boomers. The baby boomers already got a greater boom than they deserve, including their investments as they as they got older. People spend the most at 46, invest the most at 63. >> Yeah, I think that there's I think I I can understand why it's tempting to want to have a cleanse, but there's of course a human cost to that. I don't think anyone wants. >> There is a human cost. And I am telling you straight out 100% certainty from studying history more than any economist on earth, and I've gone all the way back to the Big Bang. I'm serious about this. It is better this way because the natural process is smart. That's like saying when you get really sick, don't let the stop the diarrhea. >> That's what it's like saying. I'm saying the body's smarter and the body does the right thing. I'm It's the wrong thing to fight this. You can decide to do it slower. It's not going to be as optimal for for the you know to slow down diarrhea would not make it better. It would make it worse, but it would be less painful short term. You can choose that. But at least you're moving in the right direction. You can't just let the body get more toxic when it gets out of balance. And you can't let the economy just get more into debt and have money velocity keep crashing. Money velocity is telling you we're sick. Doesn't matter what the GDP is. Money velocity, I call it the truth meter. >> Well, I think most people feel like something's wrong. Like, you know, this is what the all the discussion around affordability, >> but it but it's h but it's it's glided along so long. I I think people felt that at first, but now it's like, well, that we haven't paid any consequence for this so far. None. Well, except the brief 9.3% inflation, which they did whittle down pretty quick. Let's see. But that was an example. They did something in the right direction for a short period of time, and that was at least in the right direction. And they did get inflation from 9.3 back down to three. But notice they cannot get it below three. I have the best inflation indicator in the world and it says inflation should be at 1%. It's all this stimulus put in that will not allow it to get back to three even when you beat it down. >> So if this is a bubble that inevitably has to burst in your mind, what where do we see the fallout first? What what are you watching in terms of early warning signs? >> Okay, the the tech sectors the best. What bubbles the most uh bursts the most? Um crypto. Um uh oh a lot of people are saying oh Bitcoin is the new money and that'll be the safe haven. Bitcoin has been the singest single biggest bubble and AI i.e. Nvidia is the poster boy there. The second these have bubbled the most people acting like these are going to be the safe haven. Yes, they do have a lot of growth for decades, both of them, but so did the auto companies when they were coming in the early 1900s and they burst in the early 20s and then they bubbled again in the ear late 20s and then they burst again. They were and they and then they went to be 10x after that. That's part of the process. So, we do need to you you have to if you don't let this bubble down, the the growth will get just get slower and slower will get more toxic. It's like gaining weight. Okay? You go from 120, 180. Well, you're going to feel that be a little slower, get sick a little more, off to be out of Well, then you get to 300. How slow are you going? That's what happens. >> And if it happens over a long period of time, people don't notice it and they just kind of accept it. >> So, what do you think the catalyst is for this to burst? >> What's something big has to fail? So I mean and I mean and then that happened in China China had their first crisis when the ever ever ever something ever >> uh suddenly had a failure. Well, China's been trying to mop that up and stimulate other companies but that happened came out of nowhere. You need some big failures so people go oh something is wrong and then consumers and business businesses and capital spending clam up. consumers clam up just enough that despite the stimulus, the economy slows enough for debts to start defaulting. And then once debts start defaulting, it's a waterfall. That that's what the government my position is. When these debts finally start defaulting and they're going to have to any the healthiest boom have bad debts, okay, the healthiest ever still have substantial because some companies are going to get it wrong and the winners keep beating up the losers and the losers fail. So something's got to be failing and debts failing. So So those debts have to be cleared out and so you can either do it fast like 29 to 32. I mean that was the bottom in the stock market for forever after that. And and we did nothing but grow even even with the rest of the Great Depression. Everything got better after that. And then the 50s and 60s was the single happiest time in all of American history. They call it happy days. Um so so that's the natural cycle. You can't just wish away massive debts unless they're productive. Now, see, here's the difference, and that's why I like money velocity. If you're borrowing and investing either either way, and the company's taking that money and and and doing something good and growing and making profits, well, then you can borrow more and you can keep doing that. Okay? I it's when that doesn't happen. And money velocities the indicator says since 1997 right in the middle when the first bub that was the first bubble starting in 95 to 2000 in the stock market before the 2000 2006 housing bubble that follow that right at the beginning of our new bubble era money velocity started saying no that this is not going in the right direction. And I'm sorry. It may look like people investing, may look like the economy is growing, but but this is not productive because we're not able to sustain the growth from the profits. We're having to keep investing and borrowing more for the growth. >> So, how should how should investors be positioning for the kind of downturn that you say is inevitable? >> Yeah. Well, well, actually, it is an everything bubble. Even the roaring 20s was not that. uh even the 1820 to 36 bubble was not that although there was huge they were super bubbly stock what you have to you have to get out of the bubble you have to get out and the simplest thing you can do is sit in cash people say well I'm not earning any money if you got cash and everything from real estate to stocks are going down the fastest in history that cash buys more okay and and consumer prices will go down as well okay but the best thing to do for a more aggressive investor is you simply not on leverage, not SQQQ. I'd buy the SQQ because this is the most liquid ETF for shorting stock, but I'd only buy a third of it for what I want to invest. So, it's like one time short. Okay. Stocks will go down the fastest in the first crash after the bubble burst and then the rest of it will be more okay. It'll take a couple years to whittle down. the first 50% of a 90% decline like in the roaring 20 like in the early 30s will happen in the first listen to two to four months by history. I studied every bubble in history. So if somebody wants to debate me on this I'd be happy to. Okay that's the reality. So so the first thing is get out of stocks and at least be in cash. But what does do well you could an aggressive investor I would say be one time short the stock market until we have this first crash where if it's 40 to 50% which history says it will be you if you're an SQ you're going to make that if you're an SQ I mean a third you're going to make 40 50% if you're 3X you can make 150% on that and then you just take that because that happens a lot and then there'll be a bounce and then the government will step have time to step back in and God knows what they'll Okay. The only thing I can trust is that first crash. >> This is where it's best to be short stocks. >> Short stock. But this is where timing matters and gets interesting and difficult. Um, how should investors weigh being early versus staying late late in the cycle? If you shorted stocks six months ago, a year ago, thinking there would be a crash, you lost money and >> you missed a lot. No, no, it that is the difficult. So, it's best I I think though I think though we stretches so far and particularly another thing you see if you look at and I'm just telling you I've looked at this stuff forever. Booms and bubbles tend to peak in in even in odd years and they tend to crash and and bottom in even years. It's just another thing. Okay. So, so right now late 25 is a perfect time. It really late 21 would have been better. That was in line with the peak of the technology cycle that I'm on. So, 2007 was the demographic. So 2021 looked like a top and that could have been a time to start shorting and and and see if if if you had and you did have a big crash in 2022, but it came right back. Okay. But but but so that's one thing but but the in the end if you do really have a deep crash like 29 to 32 or even in 202 it's the treasury bonds that'll come in. Even gold went down in 2008. Okay, gold held up at first and then went down. Not as bad as stocks, but it went down in my forecast. If I go back to the last major and mo all I'm talking about, Maggie here, and this is why it should be scary to people. I'm talking about stocks in just going back to the last low, you know, in the first and and gold back to the last low. Okay, it's just it's just that any crash would do that. That's the only place that has support. Any crash that is bigger than people that that's 48% for the S&P. That's that's 57% for the NASDAQ. That's uh 40ome percent for gold. Okay. And and so so and that first crash tells you, okay, now you can take this seriously because that's how major crashes start. But then I'm not going to hold the stocks will bounce and the government will step in. So you let that happen. Again, I can't compare after that first crash because I know the governments did not step in like people think they did until after the whole crash was over. Okay. >> Right. So, we're in a different era. >> Yeah. So, for the first crash, you're best to be short stocks if you're aggressive or be in treasury bonds, which will go up modestly. Okay. The treasury bonds do the best at the worst of the crash and the stocks do the best at the beginning. That's that's the real nature of this thing. and gold holds up kind of at first and actually gold holds up better in the early stage and gold crashes at the end when the bonds do better. So, so actually the most sophisticated strategy and that that's too much to go into here, but you do a combination of gold gold more at the beginning and and and treasury bonds more at the end of the crisis. The problem is gold learned from this last one and gold is not just going up with the bubble naturally. There's other people following PE people like Peter Schiff that are piling in because they think it's going to go up to 20 30,000 which I'm telling you I'll bet my you know what that ain't going to happen. Gold has already bubbled more than stocks in the last three to five years more. How could it be the solution to the bubble when it's one of the biggest bubbles? I mean that's just common sense. So >> So you don't see it as this safe haven? We're in a new era of hard assets. Well, well, and but but because it's already been while while people were bubbling up stocks and real estate more, other people who were suspicious of that, they did pile into gold. That's where they went. And so, gold has bubbled up more. It's actually gone up a little more than the NASDAQ and a lot more than the S&P 500 in the last three years in the final phase of this bubble. And the bubbles just get more exponential towards the end. That's another way that if you know nothing else, when you see it go this and then this and then straight up. Well, that's what it's done. Especially since late 2020. Straight up. Everything including gold, including silver. >> Yeah. >> The only thing, Maggie, that has gone down in that time period. Only major asset 10 and 30-year Treasury bonds. That's that's telling you what the safe haven is. They've gone down. People those just they gave you goods. return, but you can get better at corporate bonds or in high dividend stocks. People have ignored it. >> So, you see treasuries, you think they still are a safe haven because some people say because of the level of debts, they're not. They're not investable. >> Well, in 2008, we had a lot we had a lot of debt going into that more than any time in history. And they're the only thing that went up in 2008 when even gold. I'm telling you, Maggie, I do my homework. I don't say stuff on ideology. Okay. Um, so now this time the debt's even higher. I I do think the US dollar and the Treasury bonds could react a little different, but I'm just telling you when everything goes bad, the thing about the government that no corporation has anywhere in the world and most countries don't even have except is they can print money to pay their debts and interest that they have to. they can print it as much as they want. And when the things are crashing a lot, they don't care that they're they're going to throw their deficit up more. They they have to stop the crash and they'll pull out the fire hose and they will print more money and they can't. So So that's that's why I say the first crash, they won't catch that because it happens in a few months. After that, I'm going to have to judge this and say, "Okay, if stocks come back about 50%, then I would get back short stocks." But but I would tend to say for most kind of more growth and progressive investors be um short stocks just for the first crash. >> After that, I would be moving in progressively into the treasury bonds. You can buy that ETF, TLT. It's an average of 10 and 30-year Treasury bonds, >> and that will do better as the crisis gets worse. Stocks will keep going down, but stocks are just going to get more volatile and wacky. That's why that's why I only like stocks. The only time that the only time they're they're most predictable is when they go straight down faster than anybody expects for two to three months. Again, everyone average crash of every bubble since the stock market was created is in in the first two to four months 42%. 42% and in the bigger ones it's 50%. And I'm expecting 50% on this one. >> Something that is different this time and didn't exist in the prior bubbles you've studied is crypto. So, how are you thinking about the role of crypto or Bitcoin or or some kind of blockchain asset? >> Um, what should it have a role in people's portfolios? How do you how can you can you handicap how that might behave or >> Absolutely. Long-term it is. Mark my words on this and and and and burn me at the post, okay? If this is wrong, if we have a crash, Bitcoin is going to lead the damn thing. Okay? The two in the in the first tech bubble. Now, I'm talking I'm not talking about 2007. That was not a bub. That was a long-term demographic. That was not bubbly. The first bubble was was 1995 to 2000 for stocks. And then when stocks crashed, people went straight into housing and drove that up from 2000 to 2006. Okay, that so that first bubble crash um that you know that's when you're seeing what what a bubble does. Okay, so so it's very rapid and and again the first crash is fast. Why is Bitcoin going to see it >> and not? Why is bit Bitcoin going to be the first? >> Okay. Oh, no. No, no. Thank you for that. The two drivers of that bubble with the new internet stocks and then in the last couple years, Amazon went public and then all of a sudden, oh, all the doggy.com and Joe.com and Sally.com and that was 200. >> It was the internet stocks like Cisco and the dotcoms like Amazon that were the leading that bubble. What is it now? What I said before, it is Bitcoin and crypto and it is AI and Nvidia. >> So, so if if if I had the simplest investment portfolio, I would get out of everything the simplest. Just get into Treasury bonds, TLT, and sit in it until this crisis looks like it's about over and it's going to take at least two years and probably closer to three by history. And then coming out of it, if I could only buy two things, what would it be? Bitcoin and Nvidia. I buy those two stocks. If you just want to be super simple, you can do something much more balanced. You I would buy India. India is the next China. There's no question about that from my demographic and urbanization research. The third world is all about urbanization. That's where they get the power. Okay? It's all about higher incomes in in in the developed world. But people go from poor to near middle class at a rapid rate. And they can stay they can they have 20,000 incomes, but just 10 years ago they had five to six. That's a hell of a boom. M >> okay so so the emerging countries are going to lead us out of this so I would really be focusing for the next boom Bitcoin crypto AI techn those are the two technology sectors the difference is crypto isn't largely in the stock market anymore so you have to play it directly through Coinbase and stuff like that okay or or buy stocks related to that okay but but it's also going to be India India is at the same place China was at in the early 80s when China was so poor I had a friend tour that in the in back then and went into the back woods and he says, "Harry, these the most vile." He called him growling, spitting. He said, "I've never seen." He says, "I've been to Africa everywhere." This guy was a big traveler. He said, "That's the worst I've ever seen back then." Well, China's not like that now. Even in the rural, you know, China has grown, has led, America's has led it in the developed world, China absolutely led this last bubble from 82 to now. China is going to crash bigger than any developed country, bigger than any I mean and bigger than any emerging country and India is going to do the same thing in the next boom. >> So I like ending on where the opportunity lies when we come out the other side. It sounds like uh you are still convinced that there is a world of pain before we have that reset. What would change your mind? What would cause you to think okay you know what this doesn't have to end in a massive bust. Maybe there's a a a sort of more moderate way out of this that can prevent that. What would cause you to change your mind? >> If if we don't stimulate further, but don't cut it back and the economy can get back to solid growth with even sub 3% inflation. 2% would be ideal. That's what the Fed wants. Then that'd be a sign, okay, well, we got over this enough and I mean because because I mean the trends are positive again. Okay. and and the emerging world is huge. >> The other the other seven billion going towards the other 10 trillion in the next several decades is going to do their thing like China China is the forbearance of what a country can do in four decades. Right? >> I'm saying by 2065 to 70 the third world is going to be we're going to be shocked. >> The whole third world is going to become like China. Look, China today is only 20ome,000 GDP per capita adjusted for purchasing power and everything compared to our 80. But they were at two to five FOUR DECADES AGO. THAT IS THAT'S that's why they boomed more than we did. The whole emerging world's going to do that. First Southeast Asia, India and then in the end Africa, all of a Africa going to have four to five billion people alone when we hit 10 billion. >> Africa is going to be the biggest country in the world. And this boom will not hit Africa in this next phase but but it will between about 2100 and 2150 which is the peak of a big long-term inflation and prosperity cycle um Africa will be fully urban and will be at its best. And that's how I learned the biggest lesson when I did global research um from a book called uh history the story of civilization by William Durant. He what he showed was that the standard of living long term because we couldn't we didn't have GDP and inflation measures at least not accurate back then it is just the growth of inflation and inflation they quote I was able to make a a a a track of general inflation all the way back to the Greek civilization 600 BC on that set 11 volume 11,000 page book by noticing every time they mention anything about inflation and that's the one thing they always talked about never mentioned GDP. They would say boom and bust but never GDP anything inflation they always mark oh prices doubled in this period prices went up 50%. I documented that back 2500 years and you saw you guess what you saw innovation period in the Greeks growth boom in the Roman Empire dark ages was the big shakeout depression and now the biggest longest maturity boom in history which has now been stripped. you see the same four stage cycle over 2025 years. >> Well, I think it's super interesting to end on on the positives in the cycle because it leaves a little room for hope that if people can get the policy right, then maybe there's a way to avoid >> Well, well, I'll tell you more than that because people care about their children more than themselves and the grandchildren need more because the grandchildren always love the parents more than the kids. Okay? are the young people are going to benefit from this that they are going to see the whole third world do merging world do what China did in the last four decades in the next four decades that is going to be a strong economy whether we are or not and America is the only one that can at least plateau through that because of our high immigration and people are moving to limit immigration we ought to make we ought to pump up the legal cut you got to cut back the legal that's just stupid okay and have people hiding here They don't, you know, have to hide here or live here and stuff and and and and illegal is not good. Okay. But immigration is our there's no way to talk people into having more kids when they get affluent. It's affluence that destroys birth rates. Affluent people have one to two kids because they want them both to get into Harvard and Stanford. Okay? It's it's poor people that have five, six, or seven. They hope enough don't starve and survive so they have some kids left. They used to lose half the kids in the good old days. So, I also don't like when I look at history, the good old days, history's not better in the past. I'm sorry. Not >> absolutely. >> We would all die of fright if we went back a 100, 500, 2,000 years. >> Well, that's that that's what, you know, even though we talk about some difficult times that might be ahead, it's important to know that progress, you know, tends to win out. So, we're going to hope that uh calm minds do as well and we could figure a way out of this. But, Harry, >> was a 500year depression. Hold that in your mind. 500year depression after the fall of the Roman Empire. >> Yeah. >> So, so we have to endure in these days 10 to 12 year depressions and we've decided to print money and B just to avoid that. Imagine going through the dark ages. That's why they call them dark. >> Yeah. Well, Harry, I think it's it's always good to look back in history and it's been it's great to catch up with you and see how you're uh thinking about this as we sort of grapple with some new challenges and and maybe um figure a way out uh and and certainly at least know how to get some protection um if if we've got some pain ahead. So, thank you so much for sharing your >> real quick. I have a free newsletter. I've got a paid one, but I have a good free you're going to hear from me every week. Two video rants a month for free. harydent.com. >> You might a little longer to see if I'm right and wrong because because there's going to be big consequence. There is no there is no mediocre solution to this. It it's either going to be a big crash or or a mediocre boom. And I don't see how you sustain this boom. But but but one way or the other, people need to be on their toes here. This is this is this is there's something big going to happen here, >> right? Challenging times. >> We couldn't agree more. Um, and if you're listening and you'd like to stress test your portfolio, you can get a free review from one of the adviserss of the Wealthon Network. Just click the link in the description or go to wealthon.comfree. Harry, thanks so much. Appreciate it. >> Thank you, Maggie. >> Thanks to all of you for joining us. We'll see you again next time.
Harry Dent: The Biggest Artificial Bubble in History Has No Soft Landing
Summary
Transcript
This is the first 100% artificial bubble created entirely by massive government deficits and massive government money printing. Did not do this in the roaring 20s. Did not do this in any of the bubbles in the 1800s. You know, did not do this even in the '9s. Bubbles. I'm telling you, when you're this bubbly, there there is no soft landing. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. Hello and welcome to Wealthon. I'm Maggie Lake and joining me today is Harry Dent, founder of HSN. Hi Harry. It's great to have you back on. >> Yeah, good to be back Maggie. So when we last spoke back in June, you were pretty worried about US equities. What do you when you look across the markets today, what do you see? >> Well, you know, this this is the simplest trend in all of history. It's the bubble that never ends. And there's a good reason for that. This is the first 100% artificial bubble created entirely by massive government deficits and massive government money printing. Did not do this in the roaring 20s. did not do this in any of the bubbles in the 1800s, you know, did not do this even in the 90s bubble we had. The first tech bubble, you know, was from 95 to 2000 during a boom that was really from 90 into 2000 and it bubbled in the end. That didn't have government stimulus behind it. That was just really strong economy, which I've been predicting for years. The baby boomers were going to surprise everybody by the strength of their boom because it was such a large generation. And I knew it was going to drive a boom from 1983 to 2007, which it did. And and I was even surprised it ended in late 2007. And we went into the great recession in 2008 and nine. And then everything changed because government said no more. We shall not have a recession. And they've been printing money ever since. And Maggie, nobody's got a number on this I know of except for me. It's now $30 trillion. Twothirds of that, a little more than two, about 70% of it has been massive government deficits getting only larger since 2008 when they started this whole thing. And the and the other nine trillion was money printing, just printing money and throwing it into the economy. And and so that's what this boom has been because otherwise my natural cycles where generations uh spend for about 20 25 26 years and then slow down till the next generation hits for 12 to 14. That was from 2008 into 2022 maybe 23. Okay. That's what caused all this stimulus and took so much. The government when they started this this new strong stimulus plan in 2008 they they planned they put in a trillion in 20089 and just thought that would do it. They didn't realize we were in this long slowdown. They just thought okay the economy is a little over over amped and slowing down so we'll just give it a trillion and that should fix it. Well a trillion wasn't even near enough. So so that's the story. The government doesn't know why we were going into that downturn. um and and most investors don't. Um I predicted that would happen starting in late 2007 with 2008 looking like the Great Depression and continuing to have a challenging economy for 12 to 14 years after that. Just like the 1930s, peak in 1929, big crash into 32, economy bottoms in 33, but we have another big crash in 37 into 38. And we didn't come out of that. And it wasn't World War II that pulled us out of it. Although that always helps. Wars are good for spending money. The the Bob Hope generation started their spending wave in 42 and went all the way into 1968. So again, same theory. 42 to 68, long boom driven predictably, and I mean down to the year pretty much by a generation. Then a big crash into 82 when their baby bust followed them. And then 83 into 2007, greatest boom in history. And in the 90s, I was still having to tell people, look, this isn't over. This this is gonna get bigger and bigger because this is the biggest generation to drive a boom. And of course, in 2008, it went down. And that's why the one trillion was not enough to stop a 12 to 14year slowdown. The largest generation >> now that So, it sounds like because the nature of this is different, how are you recalibrating? Well, it's very challenging uh because because you know I know where the economy should have been. I know where it is and and and again all from artificial stimulus >> and so but I don't have the I mean I mean they just kind of basically ran over the natural economy just said just rejected and and of course I mean people think they did this the roaring 20s the government ran surplus there was almost no deficits in the roaring 20s it wasn't government deficits it was a strong generation and it wasn't even from births it was from a massive immigration wave that peaked in 1907 and 1914. And I do my same 46-year peak in spinning, except that the average immigrant isn't born at zero. They come in at 30 on average. And so on a 16-year lag, you had the boom into into 1929 and then the big bust. So, so that was on demographics. That whole boom and bust in the Great Depression would have been predictable. And unlike now, governments didn't even know that they could print, you know, or they didn't, it didn't occur to them that they should run massive deficits on purpose and print massive amounts of money to counter depression. They did do all those work projects, the dams and stuff, but that came after the stock market had already bought them. So 29 to 32 was a pure bubble, pure crash, bubble up for five years, especially 90 uh 2000 uh 25 to 29 and then crashed 89% on the Dow. The Dow was like the NASDAQ today, okay? It was like the the new booming companies of the early 1900s, you know, moving mainstream at the speed of light and and that was the biggest crash we have. >> So So what happens now? like bring us up to today though because now something's changed. Now the government is driving. Is this is this a bubble that will never burst? >> Well, what what it is is a bigger it's more global. And that's other reasons because everybody's doing the same thing. We are we're not the only one. And actually I keep telling people the reason people say I always debate Peter Schiff and he's the dollar is going to crash. We're printing money. You know, we printing more money. It's got to be worth less. No, everybody's printing more money. We're printing, we printed way less than Japan compared to our economy and a bit less than Europe. Okay. So, we're we're the we're the best house in a bad neighborhood of desperate money printers. Okay. Um but Japan, you know, had a big crash and they've never they only saw new highs 30 some years later, you know, I mean, recently. And they're getting ready to crash again because they got I mean, their demographics are bad and just keep they had a bounce into 2020 and they go right back down again. So, so this is this is new because governments have never thought, well, wait a minute, it's our job to iron out these cycles and and keep major downturns like the 30s or 70s from happening. Okay? And I'm like, sorry, I've run many businesses, consulted the Fortune 500 at Bay & Company, and I know the value. I know why we have cycles. I don't just study them. cycles are the growth generator. They are the impetus. When things go down and fail, you get all these bargains and all this stuff and then the smart people start jump in and they make huge profits. Whenever you and then when it gets all bubbly, everything's get overvalued. Then it's eventually going to have to crash. This is a natural cycle. There's nothing wrong with it. Governments don't need to drive this. The greatest innovation in all history was in the late 1700s when democracy Thomas Jefferson style and Adam Smith style free market capitalism that wasn't even a word before Adam Smith came together the same time and we have been we've grown more since then Maggie since all of human history combined pretty much 300,000 years. Okay. I'm curious about that. Do you think that there is no such thing as true price discovery net right now because the government has put their hands on >> You're right. No, there's not. They kill here. I mean, this is what happens. Everybody does this. Okay. You do something new and you do, you know, like this is again I can't even compare this period to any period in history in the extent of the boom and progress 10 times standard of living just since 1900. Okay? Not going all the way back to the big bang with free market capitalism, but just think 10 times never happened. But but it's like, oh, we we have a recession or two people. Well, we can't handle that. Well, you don't get the booms without the crashes. You don't get innovation. Where does I can tell you where all the innovation comes from? Because I turned around six companies, new ventures, and new industries in the 1980s. It comes from the CR. It comes from the failures and and and the old failing and new having to step in or or companies have to totally redirect. I changed the strategies of six companies and I was at Bay & Company for that for a year and a half and we totally changed the strategies of two Fortune 100 companies because you know things were changing and they were missing the baby boom. They were still marketing to the old Pablo generation bunch of stale old products. So that's how change happened that the cycles of the dynamics success and failure boom and bust inflation and deflation. These are the key trends that create cycles which create the battery. Okay. What's a battery? Positive and negative. That's another you don't get you don't get power out of battery without positive and negative. Like you don't get progress without booms and bust because the bust rapidly clear out all the waste and failures from the boom. Okay. And those failures create whole new opportunities while new technologies are coming in the next generation to create the next boom. >> So >> and so what we we want our cake and want to eat it too. And that's my criticism. >> The the central bank should quit doing this period. The economy doesn't need your help. They just need a good structure to let free market capitalism work, including the damn recessions, >> right? Well, now it's it's not just monetary policy. It's fiscal policy, right? >> The fiscal, you're right. The fiscal is more than double. When I quoted this, 29 trillion is still going up. It's probably 31 already. Twothirds of that is the fiscal. >> We have never we have not had a balanced budget since 2001. And since 2008, the deficits have gone up. It's going to be two trillion this year. They finally cut pulled back on the money printing. Okay, good. But the deficit is higher than ever. 2 trillion. That's 7 That's 7% of our economy. In other words, Maggie, with that big a deficit, the economy should be growing at 2% normal, 3% normal, plus this 7 8% they're adding 10%. And and we can barely grow at 2% and sustain that without ever more stimulus. So, so, so I knew the economy should have been weaker. They have hidden a major down. They have hidden the 1930s like decade. And the question which I cannot even completely answer what happens when you suppress this. I know everything about human nature in past cycles I've studied. I mean the more you suppress something the more it bounces back. You know if you push down inflation it's only going to come back. >> You know you tell a kid a teenager don't do something they're only going to do it more sort of thing. So, so that's the assumption I'm making here that that we are actually now Maggie into the millennial boom finally. All of this was because of the baby busters spending money in less numbers. It was a natural slowdown. But since 2000, beginning of 2024, the millennials are marching in. They are not as steep as the baby boomers. They don't accelerate as long, about twothirds as long, and they plateau for a long time. But still, we're back in positive trends. The problem is they've allowed debt to grow so much and so over stimulated the kind when you overstimulate economy people will just buy more now that they would have bought later and all of a sudden they're going to get to the point where nobody's going to trade up to a new house because they've already traded up two or three times in the last decade. They can't keep moving and trading up the houses. So, you bring up an interesting point though that you're that they've it's been artificially extended, but now >> totally 100% all of this is artificial, >> but now you're hitting what would be a positive demographic change. Is it possible that that timing allows for a window to deflate the bubble without it bursting? Well, here here's it does allow them to pull back this stimulus if they did it right. And and I'm telling you, when you're this bubbly there, there is no soft landing to a bubble. Okay? But if they did it right, you're right. they if they did do this and realize, well, we got some positive tailwinds. We don't now now let's pull back this stimulus kind of in a systematic way over the next several years, what what you would probably end up with is maybe a milder recession, but you you would not grow as fast. In other words, by the baby boom having their boom and not cleaning up and detoxing afterwards, we have compromised as a country the boom of the millennial generation. All the young people born in the next generation. They're already what we've done is already compromised them. Best case is what you're saying. We just kind of let this down slowly. Now we got stuff. So, but that would compromise the boom. Okay. anything they do to pull back this massive stimulus will now work against the boom. Um, but if we don't do this, this bubble's gonna it's going to go till it blow. That's my new theory. We're in a it's just going to go till it blows. And when it blows, and mark my words on this, these stupid government officials will never react fast enough because they don't even know the monster. They don't even get what they've created. >> Okay? I can't even compare this. I've studied every bubble since the late 79 in US and world history. Every one of them. Okay, this one's unique. It is everything. The Roaring 20s bubble didn't bubble real estate because it the lending was so stingy back then and so primitive. Okay. >> So, so this is bigger than ever. And if if they just blow this thing until it blows on its own, regardless of what they do, it it's going to be as bad or worse than 29 to 32. And as you say, it's global, so it's it's hard. We'll talk about the investment uh where there's nowhere to hide >> challenge, right, of nowhere to hide. Let me ask you a question because you you bring up something really interesting when you're talking about them already compromising the millennial. The as you talk about this generationally, there's another uh sort of popular conversation as people try to identify I think what you're talking about, which is this K economy, right? And it's it strikes me that many of the younger generation are on the bottom leg of the K. They're finding it really hard to get ahead. They're they're more impacted by that. Whereas the older generation and those with >> Let me give you the best example. And this should be obvious to everybody. What's their biggest challenge? The cost of housing. It's gone up four times in 20 years, >> right? >> 100 grand. I used to live in Ohio for a few years. You could get a decent nice house for 100 grand back then. That house even in boring Ohio. Sorry, Ohio people. Okay, it's 5x. That's their challenge. They can't even afford a house on even on a good salary. A bubble burst would take that out. >> We had this bubble, housing would go down. And I can predict this today. If this bubble was allowed to burst, it would go down 60 maybe 70%. And then housing would immediately be affordable. Who would be the losers? Baby boomers sitting on all this equity from the houses they don't deserve. Who would be the big winners? the millennials that could finally afford to buy a house nice house on a respectable salary. They >> The problem is the bursting bubble is so destructive that very few people benefit originally from it. Is there another option which is not politically ever popular but to uh continue to support millennials while sort of through tax policy or some other you know it's redistribution somehow but to try when you say support's one thing >> it's stimulus they've already overstimulated the economy so much I can't even it it's 10x anything done in history >> and again I assumed they must have been doing some stimulus or running some deficits to get that 20. No surpluses the whole place. There wasn't government deficit. There wasn't money printing. Okay. Right. There is I have a four- stage cycle in every book I've ever written. Okay. Innovation, growth boom, shakeout, maturity boom, innovation, early 1900s, growth boom, roaring 20s, shakeout, great depression, maturity boom, 50s and 60s, Bob Hope boom. This happens all throughout history. Okay. What we've done is interrupt this cycle after the growth boom and like you just said, we extended this growth boom that should have peaked in 2007 another 15, 16, 17 years, which means the growth boom is more bubbly, more extended than ever, which means it's only one way to crash and that's more. So I I think the most acceptable is one is one you you suggest earlier. You have to and they've done this a little bit. They have chipped down the balance sheet 2.7 trillion out of nine. Okay, that's a little start. But at the same time, they upped the deficit. The deficits now, right? This so it's you're saying there needs to be a political solution as well as a monetary solution. >> Yeah. Yeah. No. Yeah. Particularly the polit the political is more important because the deficits were 70% of this artificial bubble. Again, even without any government stuff, you'll see times 1820s and 30s, roaring 20s. You'll see times in history where there are bubbles without government stimulus. This one occurred at a time that would have been more like the Great Depression. I call it the solution. >> So, this is 100% artificial. >> If they're if they're part if they're the the cause, then it has to be part of the solution. >> They are the the the full cause. In fact, it's more than that. we would have been growing at probably negative 1% for this whole period if it hadn't been for this. So it's so so whatever the economy's done, they've added more than that because they prevented that 1 to 2% decline over a long period of time. That's exactly what happened in the 30s. You had a net decline for a long period of time. That's why it was so difficult. Unemployment got up to 25% in the first crash and and and 18% in the second. Um, so, so yeah, I think the best way is to admit you cannot keep going on stimulus. You did it during a difficult time. >> You got to bring it down. So, so at least do it systematically. Let's have a goal that we're going to cut. Uh, we're going to go back to a balanced budget within so many years. And we're going to slowly chip at that nine trillion balance sheet till we get it started at a at a trillion. Okay. Till we get back down to normal. And maybe that's done over five, six, seven, eight years. But it can't be done forever. But the point is they're doing the opposite. We're just making the bubble bigger. >> Yeah. Well, no one wants to see No, it's politically untenable for anyone to cut anything. Um is is the problem until we probably get a crisis. So, >> and you know that that's why I like the the natural thing. Nature doesn't care. Okay. We I'm telling you 10 years from now if we let this crash happen full out, we would be better off 10 to 20 years from now if we keep trying to just do it this slowly thing and work against the the economy. What happens if you go out to dinner and eat something totally poisonous? Everybody knows what happens. It starts with a D. Flush it out. What does the natural What does your body that's been around for 300,000 years as a human do when it gets something very toxic it didn't expect? It doesn't let it out slowly to make it a little less painful and comfortable. It flushes it out because it's poison. >> That's what this is. When you get bubble, bubbles are a sign that you're growing faster than you can extain. And it is not good for the economy and it overstretches everything. And there is a measure that nobody looks at except for a few economists like Dr. Lacy Hunt in Austin, Texas. That's where I first got this from. He's been speaking at my conventions for a long time. Money velocity tells you when you're having healthy growth or bubbly growth or or unhealthy unproductive. It measures if investments productive or not. It but before the roaring 20s bubble and the Great Depression, money velocity dropped the most in all of history. And now since 1997, it's dropped even more than that. that money velocity drop and this is over decades not just a couple years has always ended up in a depression because you got to flush out all the bad stuff you allowed the economy create the economy does this on its own we haven't let it >> I'm like let the economy do what it does within reason and then like you say instead of messing with the economy if like you say the millennials are taking the brunt of this this time if this happened well get send them some checks in the mail you know but don't send it to the baby boomers. The baby boomers already got a greater boom than they deserve, including their investments as they as they got older. People spend the most at 46, invest the most at 63. >> Yeah, I think that there's I think I I can understand why it's tempting to want to have a cleanse, but there's of course a human cost to that. I don't think anyone wants. >> There is a human cost. And I am telling you straight out 100% certainty from studying history more than any economist on earth, and I've gone all the way back to the Big Bang. I'm serious about this. It is better this way because the natural process is smart. That's like saying when you get really sick, don't let the stop the diarrhea. >> That's what it's like saying. I'm saying the body's smarter and the body does the right thing. I'm It's the wrong thing to fight this. You can decide to do it slower. It's not going to be as optimal for for the you know to slow down diarrhea would not make it better. It would make it worse, but it would be less painful short term. You can choose that. But at least you're moving in the right direction. You can't just let the body get more toxic when it gets out of balance. And you can't let the economy just get more into debt and have money velocity keep crashing. Money velocity is telling you we're sick. Doesn't matter what the GDP is. Money velocity, I call it the truth meter. >> Well, I think most people feel like something's wrong. Like, you know, this is what the all the discussion around affordability, >> but it but it's h but it's it's glided along so long. I I think people felt that at first, but now it's like, well, that we haven't paid any consequence for this so far. None. Well, except the brief 9.3% inflation, which they did whittle down pretty quick. Let's see. But that was an example. They did something in the right direction for a short period of time, and that was at least in the right direction. And they did get inflation from 9.3 back down to three. But notice they cannot get it below three. I have the best inflation indicator in the world and it says inflation should be at 1%. It's all this stimulus put in that will not allow it to get back to three even when you beat it down. >> So if this is a bubble that inevitably has to burst in your mind, what where do we see the fallout first? What what are you watching in terms of early warning signs? >> Okay, the the tech sectors the best. What bubbles the most uh bursts the most? Um crypto. Um uh oh a lot of people are saying oh Bitcoin is the new money and that'll be the safe haven. Bitcoin has been the singest single biggest bubble and AI i.e. Nvidia is the poster boy there. The second these have bubbled the most people acting like these are going to be the safe haven. Yes, they do have a lot of growth for decades, both of them, but so did the auto companies when they were coming in the early 1900s and they burst in the early 20s and then they bubbled again in the ear late 20s and then they burst again. They were and they and then they went to be 10x after that. That's part of the process. So, we do need to you you have to if you don't let this bubble down, the the growth will get just get slower and slower will get more toxic. It's like gaining weight. Okay? You go from 120, 180. Well, you're going to feel that be a little slower, get sick a little more, off to be out of Well, then you get to 300. How slow are you going? That's what happens. >> And if it happens over a long period of time, people don't notice it and they just kind of accept it. >> So, what do you think the catalyst is for this to burst? >> What's something big has to fail? So I mean and I mean and then that happened in China China had their first crisis when the ever ever ever something ever >> uh suddenly had a failure. Well, China's been trying to mop that up and stimulate other companies but that happened came out of nowhere. You need some big failures so people go oh something is wrong and then consumers and business businesses and capital spending clam up. consumers clam up just enough that despite the stimulus, the economy slows enough for debts to start defaulting. And then once debts start defaulting, it's a waterfall. That that's what the government my position is. When these debts finally start defaulting and they're going to have to any the healthiest boom have bad debts, okay, the healthiest ever still have substantial because some companies are going to get it wrong and the winners keep beating up the losers and the losers fail. So something's got to be failing and debts failing. So So those debts have to be cleared out and so you can either do it fast like 29 to 32. I mean that was the bottom in the stock market for forever after that. And and we did nothing but grow even even with the rest of the Great Depression. Everything got better after that. And then the 50s and 60s was the single happiest time in all of American history. They call it happy days. Um so so that's the natural cycle. You can't just wish away massive debts unless they're productive. Now, see, here's the difference, and that's why I like money velocity. If you're borrowing and investing either either way, and the company's taking that money and and and doing something good and growing and making profits, well, then you can borrow more and you can keep doing that. Okay? I it's when that doesn't happen. And money velocities the indicator says since 1997 right in the middle when the first bub that was the first bubble starting in 95 to 2000 in the stock market before the 2000 2006 housing bubble that follow that right at the beginning of our new bubble era money velocity started saying no that this is not going in the right direction. And I'm sorry. It may look like people investing, may look like the economy is growing, but but this is not productive because we're not able to sustain the growth from the profits. We're having to keep investing and borrowing more for the growth. >> So, how should how should investors be positioning for the kind of downturn that you say is inevitable? >> Yeah. Well, well, actually, it is an everything bubble. Even the roaring 20s was not that. uh even the 1820 to 36 bubble was not that although there was huge they were super bubbly stock what you have to you have to get out of the bubble you have to get out and the simplest thing you can do is sit in cash people say well I'm not earning any money if you got cash and everything from real estate to stocks are going down the fastest in history that cash buys more okay and and consumer prices will go down as well okay but the best thing to do for a more aggressive investor is you simply not on leverage, not SQQQ. I'd buy the SQQ because this is the most liquid ETF for shorting stock, but I'd only buy a third of it for what I want to invest. So, it's like one time short. Okay. Stocks will go down the fastest in the first crash after the bubble burst and then the rest of it will be more okay. It'll take a couple years to whittle down. the first 50% of a 90% decline like in the roaring 20 like in the early 30s will happen in the first listen to two to four months by history. I studied every bubble in history. So if somebody wants to debate me on this I'd be happy to. Okay that's the reality. So so the first thing is get out of stocks and at least be in cash. But what does do well you could an aggressive investor I would say be one time short the stock market until we have this first crash where if it's 40 to 50% which history says it will be you if you're an SQ you're going to make that if you're an SQ I mean a third you're going to make 40 50% if you're 3X you can make 150% on that and then you just take that because that happens a lot and then there'll be a bounce and then the government will step have time to step back in and God knows what they'll Okay. The only thing I can trust is that first crash. >> This is where it's best to be short stocks. >> Short stock. But this is where timing matters and gets interesting and difficult. Um, how should investors weigh being early versus staying late late in the cycle? If you shorted stocks six months ago, a year ago, thinking there would be a crash, you lost money and >> you missed a lot. No, no, it that is the difficult. So, it's best I I think though I think though we stretches so far and particularly another thing you see if you look at and I'm just telling you I've looked at this stuff forever. Booms and bubbles tend to peak in in even in odd years and they tend to crash and and bottom in even years. It's just another thing. Okay. So, so right now late 25 is a perfect time. It really late 21 would have been better. That was in line with the peak of the technology cycle that I'm on. So, 2007 was the demographic. So 2021 looked like a top and that could have been a time to start shorting and and and see if if if you had and you did have a big crash in 2022, but it came right back. Okay. But but but so that's one thing but but the in the end if you do really have a deep crash like 29 to 32 or even in 202 it's the treasury bonds that'll come in. Even gold went down in 2008. Okay, gold held up at first and then went down. Not as bad as stocks, but it went down in my forecast. If I go back to the last major and mo all I'm talking about, Maggie here, and this is why it should be scary to people. I'm talking about stocks in just going back to the last low, you know, in the first and and gold back to the last low. Okay, it's just it's just that any crash would do that. That's the only place that has support. Any crash that is bigger than people that that's 48% for the S&P. That's that's 57% for the NASDAQ. That's uh 40ome percent for gold. Okay. And and so so and that first crash tells you, okay, now you can take this seriously because that's how major crashes start. But then I'm not going to hold the stocks will bounce and the government will step in. So you let that happen. Again, I can't compare after that first crash because I know the governments did not step in like people think they did until after the whole crash was over. Okay. >> Right. So, we're in a different era. >> Yeah. So, for the first crash, you're best to be short stocks if you're aggressive or be in treasury bonds, which will go up modestly. Okay. The treasury bonds do the best at the worst of the crash and the stocks do the best at the beginning. That's that's the real nature of this thing. and gold holds up kind of at first and actually gold holds up better in the early stage and gold crashes at the end when the bonds do better. So, so actually the most sophisticated strategy and that that's too much to go into here, but you do a combination of gold gold more at the beginning and and and treasury bonds more at the end of the crisis. The problem is gold learned from this last one and gold is not just going up with the bubble naturally. There's other people following PE people like Peter Schiff that are piling in because they think it's going to go up to 20 30,000 which I'm telling you I'll bet my you know what that ain't going to happen. Gold has already bubbled more than stocks in the last three to five years more. How could it be the solution to the bubble when it's one of the biggest bubbles? I mean that's just common sense. So >> So you don't see it as this safe haven? We're in a new era of hard assets. Well, well, and but but because it's already been while while people were bubbling up stocks and real estate more, other people who were suspicious of that, they did pile into gold. That's where they went. And so, gold has bubbled up more. It's actually gone up a little more than the NASDAQ and a lot more than the S&P 500 in the last three years in the final phase of this bubble. And the bubbles just get more exponential towards the end. That's another way that if you know nothing else, when you see it go this and then this and then straight up. Well, that's what it's done. Especially since late 2020. Straight up. Everything including gold, including silver. >> Yeah. >> The only thing, Maggie, that has gone down in that time period. Only major asset 10 and 30-year Treasury bonds. That's that's telling you what the safe haven is. They've gone down. People those just they gave you goods. return, but you can get better at corporate bonds or in high dividend stocks. People have ignored it. >> So, you see treasuries, you think they still are a safe haven because some people say because of the level of debts, they're not. They're not investable. >> Well, in 2008, we had a lot we had a lot of debt going into that more than any time in history. And they're the only thing that went up in 2008 when even gold. I'm telling you, Maggie, I do my homework. I don't say stuff on ideology. Okay. Um, so now this time the debt's even higher. I I do think the US dollar and the Treasury bonds could react a little different, but I'm just telling you when everything goes bad, the thing about the government that no corporation has anywhere in the world and most countries don't even have except is they can print money to pay their debts and interest that they have to. they can print it as much as they want. And when the things are crashing a lot, they don't care that they're they're going to throw their deficit up more. They they have to stop the crash and they'll pull out the fire hose and they will print more money and they can't. So So that's that's why I say the first crash, they won't catch that because it happens in a few months. After that, I'm going to have to judge this and say, "Okay, if stocks come back about 50%, then I would get back short stocks." But but I would tend to say for most kind of more growth and progressive investors be um short stocks just for the first crash. >> After that, I would be moving in progressively into the treasury bonds. You can buy that ETF, TLT. It's an average of 10 and 30-year Treasury bonds, >> and that will do better as the crisis gets worse. Stocks will keep going down, but stocks are just going to get more volatile and wacky. That's why that's why I only like stocks. The only time that the only time they're they're most predictable is when they go straight down faster than anybody expects for two to three months. Again, everyone average crash of every bubble since the stock market was created is in in the first two to four months 42%. 42% and in the bigger ones it's 50%. And I'm expecting 50% on this one. >> Something that is different this time and didn't exist in the prior bubbles you've studied is crypto. So, how are you thinking about the role of crypto or Bitcoin or or some kind of blockchain asset? >> Um, what should it have a role in people's portfolios? How do you how can you can you handicap how that might behave or >> Absolutely. Long-term it is. Mark my words on this and and and and burn me at the post, okay? If this is wrong, if we have a crash, Bitcoin is going to lead the damn thing. Okay? The two in the in the first tech bubble. Now, I'm talking I'm not talking about 2007. That was not a bub. That was a long-term demographic. That was not bubbly. The first bubble was was 1995 to 2000 for stocks. And then when stocks crashed, people went straight into housing and drove that up from 2000 to 2006. Okay, that so that first bubble crash um that you know that's when you're seeing what what a bubble does. Okay, so so it's very rapid and and again the first crash is fast. Why is Bitcoin going to see it >> and not? Why is bit Bitcoin going to be the first? >> Okay. Oh, no. No, no. Thank you for that. The two drivers of that bubble with the new internet stocks and then in the last couple years, Amazon went public and then all of a sudden, oh, all the doggy.com and Joe.com and Sally.com and that was 200. >> It was the internet stocks like Cisco and the dotcoms like Amazon that were the leading that bubble. What is it now? What I said before, it is Bitcoin and crypto and it is AI and Nvidia. >> So, so if if if I had the simplest investment portfolio, I would get out of everything the simplest. Just get into Treasury bonds, TLT, and sit in it until this crisis looks like it's about over and it's going to take at least two years and probably closer to three by history. And then coming out of it, if I could only buy two things, what would it be? Bitcoin and Nvidia. I buy those two stocks. If you just want to be super simple, you can do something much more balanced. You I would buy India. India is the next China. There's no question about that from my demographic and urbanization research. The third world is all about urbanization. That's where they get the power. Okay? It's all about higher incomes in in in the developed world. But people go from poor to near middle class at a rapid rate. And they can stay they can they have 20,000 incomes, but just 10 years ago they had five to six. That's a hell of a boom. M >> okay so so the emerging countries are going to lead us out of this so I would really be focusing for the next boom Bitcoin crypto AI techn those are the two technology sectors the difference is crypto isn't largely in the stock market anymore so you have to play it directly through Coinbase and stuff like that okay or or buy stocks related to that okay but but it's also going to be India India is at the same place China was at in the early 80s when China was so poor I had a friend tour that in the in back then and went into the back woods and he says, "Harry, these the most vile." He called him growling, spitting. He said, "I've never seen." He says, "I've been to Africa everywhere." This guy was a big traveler. He said, "That's the worst I've ever seen back then." Well, China's not like that now. Even in the rural, you know, China has grown, has led, America's has led it in the developed world, China absolutely led this last bubble from 82 to now. China is going to crash bigger than any developed country, bigger than any I mean and bigger than any emerging country and India is going to do the same thing in the next boom. >> So I like ending on where the opportunity lies when we come out the other side. It sounds like uh you are still convinced that there is a world of pain before we have that reset. What would change your mind? What would cause you to think okay you know what this doesn't have to end in a massive bust. Maybe there's a a a sort of more moderate way out of this that can prevent that. What would cause you to change your mind? >> If if we don't stimulate further, but don't cut it back and the economy can get back to solid growth with even sub 3% inflation. 2% would be ideal. That's what the Fed wants. Then that'd be a sign, okay, well, we got over this enough and I mean because because I mean the trends are positive again. Okay. and and the emerging world is huge. >> The other the other seven billion going towards the other 10 trillion in the next several decades is going to do their thing like China China is the forbearance of what a country can do in four decades. Right? >> I'm saying by 2065 to 70 the third world is going to be we're going to be shocked. >> The whole third world is going to become like China. Look, China today is only 20ome,000 GDP per capita adjusted for purchasing power and everything compared to our 80. But they were at two to five FOUR DECADES AGO. THAT IS THAT'S that's why they boomed more than we did. The whole emerging world's going to do that. First Southeast Asia, India and then in the end Africa, all of a Africa going to have four to five billion people alone when we hit 10 billion. >> Africa is going to be the biggest country in the world. And this boom will not hit Africa in this next phase but but it will between about 2100 and 2150 which is the peak of a big long-term inflation and prosperity cycle um Africa will be fully urban and will be at its best. And that's how I learned the biggest lesson when I did global research um from a book called uh history the story of civilization by William Durant. He what he showed was that the standard of living long term because we couldn't we didn't have GDP and inflation measures at least not accurate back then it is just the growth of inflation and inflation they quote I was able to make a a a a track of general inflation all the way back to the Greek civilization 600 BC on that set 11 volume 11,000 page book by noticing every time they mention anything about inflation and that's the one thing they always talked about never mentioned GDP. They would say boom and bust but never GDP anything inflation they always mark oh prices doubled in this period prices went up 50%. I documented that back 2500 years and you saw you guess what you saw innovation period in the Greeks growth boom in the Roman Empire dark ages was the big shakeout depression and now the biggest longest maturity boom in history which has now been stripped. you see the same four stage cycle over 2025 years. >> Well, I think it's super interesting to end on on the positives in the cycle because it leaves a little room for hope that if people can get the policy right, then maybe there's a way to avoid >> Well, well, I'll tell you more than that because people care about their children more than themselves and the grandchildren need more because the grandchildren always love the parents more than the kids. Okay? are the young people are going to benefit from this that they are going to see the whole third world do merging world do what China did in the last four decades in the next four decades that is going to be a strong economy whether we are or not and America is the only one that can at least plateau through that because of our high immigration and people are moving to limit immigration we ought to make we ought to pump up the legal cut you got to cut back the legal that's just stupid okay and have people hiding here They don't, you know, have to hide here or live here and stuff and and and and illegal is not good. Okay. But immigration is our there's no way to talk people into having more kids when they get affluent. It's affluence that destroys birth rates. Affluent people have one to two kids because they want them both to get into Harvard and Stanford. Okay? It's it's poor people that have five, six, or seven. They hope enough don't starve and survive so they have some kids left. They used to lose half the kids in the good old days. So, I also don't like when I look at history, the good old days, history's not better in the past. I'm sorry. Not >> absolutely. >> We would all die of fright if we went back a 100, 500, 2,000 years. >> Well, that's that that's what, you know, even though we talk about some difficult times that might be ahead, it's important to know that progress, you know, tends to win out. So, we're going to hope that uh calm minds do as well and we could figure a way out of this. But, Harry, >> was a 500year depression. Hold that in your mind. 500year depression after the fall of the Roman Empire. >> Yeah. >> So, so we have to endure in these days 10 to 12 year depressions and we've decided to print money and B just to avoid that. Imagine going through the dark ages. That's why they call them dark. >> Yeah. Well, Harry, I think it's it's always good to look back in history and it's been it's great to catch up with you and see how you're uh thinking about this as we sort of grapple with some new challenges and and maybe um figure a way out uh and and certainly at least know how to get some protection um if if we've got some pain ahead. So, thank you so much for sharing your >> real quick. I have a free newsletter. I've got a paid one, but I have a good free you're going to hear from me every week. Two video rants a month for free. harydent.com. >> You might a little longer to see if I'm right and wrong because because there's going to be big consequence. There is no there is no mediocre solution to this. It it's either going to be a big crash or or a mediocre boom. And I don't see how you sustain this boom. But but but one way or the other, people need to be on their toes here. This is this is this is there's something big going to happen here, >> right? Challenging times. >> We couldn't agree more. Um, and if you're listening and you'd like to stress test your portfolio, you can get a free review from one of the adviserss of the Wealthon Network. Just click the link in the description or go to wealthon.comfree. Harry, thanks so much. Appreciate it. >> Thank you, Maggie. >> Thanks to all of you for joining us. We'll see you again next time.