On this Flash Back Friday, Jason Hartman hosts Harry Den, author of multiple financial books designed to help you keep your wealth. Harry gives us some of his predictions including an upcoming deflationary period followed by a debt bubble bursting in the US. He discusses why income properties make sense in current and upcoming environments. He also explains why the ultrawealthy and the Chinese will be lowered in the next economic downturn.

Jason Hartman 0:00
Welcome to this week’s edition of flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present, and propel you into the future. Enjoy.

Announcer 0:15
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. On now. here’s your host, Jason Dan Hartman with the complete solution for real estate investors.

Jason Hartman 1:05
Welcome to the creating wealth Show Episode Number 722 722. Thank you so much for joining me today. This is Jason Hartman and I am driving in a Lyft car to Seattle airport right now, reflecting on a wonderful venture Alliance weekend. All of our members and guests and speakers that came out for the event, just did such a great job putting it all together. And our members are such contributors and such givers. They just made it a fantastic event. We went sailing, we had a progressive dinner, we had lots of meetings and networking, and really did some business and shared some advice and some thinking that can really help people as investors. And we also had a good chance to explore some some new opportunities and talk about some new apps and websites and just just had a great time. So it was A fantastic weekend. Thank you all who are listening for making it such a great weekend. Today, our guest will be Harry dent. He’s a returning guest, of course. And he is the economist that I’ve been following since the late 90s. And his work has influenced me quite a bit. When you look at the economy and you look at demographics, it’s a very helpful way to look at things as they say, demographics is destiny. So Harry dent focuses a lot on that he’s been spectacularly wrong on some of his predictions, but right on the money on some other ones over the years. So listen to him as he talks about everything in the economy and real estate. Of course, he does the typical thing that all economists tend to do and all pundants tend to do. He talks about real estate as though it’s one solitary entity, rather than breaking it up into different markets, different types of markets, linear hybrid, cyclical, different price segments. He doesn’t do that until I asked him to do that. And then You’ll see where his discussion gets more focused during this interview. So I hope you enjoy it. And if you want to join us in Phoenix this weekend, there are a few seats still left, just go to Jason hartman.com. And click on events and join us for our technology software and real estate investing event where you can be a better investor through the use of software in your real estate business. And really just take advantage of all the great tools out there nowadays, through real estate tools. That’s actually the name of our company and partner on this event. So it should be a great event. Some of our local market specialists are flying out there, we’ll be talking about their properties, their management styles, their management teams and their marketplaces. So, go to Jason hartman.com. Get your tickets for that while you still can. And we will see you this weekend in Phoenix, Arizona. Without further ado, let’s get to our guest, Harry dent. Hey, it’s mark. pleasure to welcome Harry dent back to the show. You’ve certainly heard his name. He’s a very prolific author. I started following his work back in the mid 90s. And, you know, he’s been right on with a lot of great predictions, you know, missed a few, of course, but he’s been on with a lot of them. And it’s great to have him back. It looks like Harry dent is on a roll again with the predictions too, so it’s good to have him Harry, welcome. How are you? Nice to be back. Jason. It’s good to have you and where are you located today?

Harry Dent 4:28
Tampa, Florida.

Jason Hartman 4:29
No income tax state good place to be Yeah, exactly. You Tony Robbins rush limbaugh a whole bunch of others. Yeah.

Harry Dent 4:37
Yeah. And I was in California before this and Tony moved because they raised that I think that 14% made it retroactive a year so he said you know, I still a visa, baby. Yeah, well, he

Jason Hartman 4:49
was right about that. So so that makes a lot of sense. socialism doesn’t work. We all know that by now. And when we look around the world, you look at Greece’s is on the verge. of epic disaster again, Spain is a mess Portugal. You know, when people get the message Harry, this doesn’t work, you can’t have something for nothing.

Harry Dent 5:10
I know that there’s something for nothing themselves. I mean, that’s what marketers do. I hate to say it, but I mean something for nothing. People want life to be easy. They want it to be, you know, no stress, no problem, no pain. And that’s not the way life is the people who do something to make a difference in the world and who are successful do go through pain and that’s how they get gained. And you know, the markets are like this. No, we will pay we won’t let the markets go down. We’ll just print money. We’ll just fill up every hole with with free money. Yeah, I mean, how stupid is that? And and yet, I go on these financial shows and have to argue this as if it’s as it shouldn’t be.

Jason Hartman 5:51
This is this should be you know, basic economics supply and demand. You know, you increase the supply of money, you’re going to have problems but really If we look at that, and I want to make sure we talk about China, because the president of your company, Rodney just released an interesting piece about China, but why don’t we have some significant inflation with all this money creation?

Harry Dent 6:13
Well, it’s because we had a, you know, one of the greatest debt bubbles in history, in fact, the greatest and what happens once we get too much in debt. We’re no longer expanding the money supply and that debt starts to D leverage. Now, it’s deleveraging. Very slowly, because the government is stimulating the economy, but what they’re doing is basically Jason they’re fighting deflation with inflation, every major debt bubble in history, and I like them the roaring 20s and then the 1870s railroad bubble before that, and then a canal bubble before that in the 1830s. They’re always followed by deleveraging of debt, financial bubbles bursting and then money disappears, money is created by the banking system to fast and then when it D. leverages wealth. I mean, stock market goes down 89% in 1932, my wealth disappeared and didn’t come back bank loans. We wrote off about half the private bank debt and mortgages and stuff in the early 30s. So that is money created, like magic by the banking system and then disappears. Now you see it. Now you don’t and and we had debt grow at 2.7 times the rate of GDP growth from 1983 to 2008. For the entire boom. Any economist that does not see that as a problem shouldn’t be an economist and nobody saw it. Okay,

Jason Hartman 7:37
Harry, I want you to I want to make sure we just really comprehend what you just said, because I think it was very important. Say that, again, given the years and the amount of debt versus GDP, and you’re only talking about us, I assume, right?

Harry Dent 7:50
Yes, in the US. Of course, this happened around the world but the US from 1983 to 2008, where private debt peaked at 42 trillion. And the government deficit about debt back then was 10 trillion at federal level debt had grown for 25 years, 2.7 times faster than GDP. So, you know, you can’t have debt, grow that fast and not have a debt bubble not have a debt crisis, when there’s too much debt in the economy. people speculate more. They buy bigger houses, they can afford cars, all this sort of stuff. And then when the economy goes bad, they’re underwater, and they’re in trouble. And that’s what happened in 2008. And again, the government solution is we’ll just pretend like it never happened, and just keep printing money. And I’m like, Hey, if you’re gonna print money, don’t don’t give it to the banks and goldman sachs and all these people send send people a $10,000 check and you’re gonna create something for nothing, at least send it to the people. all it’s doing is going into financial institutions who are borrowing money at zero rates, leveraging up 20 to 30 times and speculating banks don’t lend money anymore. They speculate in the stock markets and commodities.

Jason Hartman 9:00
Yeah, well, Glass Steagall, you know? That’s Yeah, yeah. It’s something else but but see their argument, the powers that be unfortunately, their argument is that if we give it to the banks, of course, the banks have lobbyists and there’s all kinds of you know, crony capitalism going on. But if we give it to the banks there, their rationale is there’s a multiplier effect. If we give it to people,

Harry Dent 9:23
no, not not, no, not when you speculate. When you lend it, there’s a multiplier effect. But first of all, we don’t need the banks to lend more money. consumers and businesses borrow the most in history, private debt is twice as a ratio to GDP, what it was at the top of the 1929 bubble, and we’ve got on top of that, the government debt and on top of that, we’ve got unfunded liabilities for social security and medicare medicaid, that are alone four times our GDP. So we got eight times our GDP and total debt obligation. We don’t need more debt. What we need to do is deliver leverage, especially the private debt that got so far to control at $42 trillion. We got to work for there. That’s

Jason Hartman 10:05
truly and remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday

Harry Dent 10:20
with a T 42 trillion in private, and 18 trillion in government and $67 trillion in unfunded liabilities for Social Security and Medicare. That’s how in debt we owe, we’ve got like 130 trillion dollars in debt and all people hear about is the 18 trillion from the government. So we have to do a big what I call a debt detox a debt deleveraging that’s what happened in the 30s was very painful. But know that after that bottom in 32, in the stock market and the bottom in the economy, unemployment, housing, everything else in 33, we turned around and grew like crazy and didn’t stop until 2008. Pretty much so So debt deleveraging is a good thing. It takes burdens off of business and consumers. But what they’re really doing, Jason is the reason they’re funneling the money to the banks. They don’t want the banks to go under, because that’s what happened in the 30s shadow run on the banks banks failed loans failed there by giving this free money, said banks and financial institutions can speculate and with a slam dunk with free money, it’s free long term adjusted for inflation, a 10 year treasury bond and it’s free short term it’s at zero rates. They basically are getting a free gift and they’re they’re able to keep alive through speculation but all that is doing is creating more and bigger bubbles than we had before the stock market is it substantial new highs now real estate in a lot of cities is substantial new highs, that means now we’re going to have to, you know, D leverage these bubbles again, and and it’s just it’s the sickest thing I’ve ever seen, that anybody would tell the public that the way to cure a debt crisis. is through more debt or by creating more money out of thin air banks created most of the debt, not the government. In that boom, I talked about 2.7 times debt growth. But now the government’s creating money, you know, 4 trillion in the US about 14 trillion around the world, central banks are just creating money throwing it in the economy, and it’s not being Lent. It’s not creating jobs. It is creating speculation. And

Jason Hartman 12:24
Okay, so, so couple comments on that. Number one, I have long said that the prosperity of the United States over the last few decades is an illusion. It’s It’s It’s a game of smoke and mirrors. We’re not really as prosperous as we think we are. You know, from from Nixon on, closing the gold window, you know, this is just like we get to we get to sort of bully our way around the world and be irresponsible because we got the reserve currency, and we got the military to keep it that way. You know, I mean this, this is not a sustainable thing. I mean, are we are we in a legitimate recovery?

Harry Dent 13:08
No, no, no, this is we would have had a depression, we were going into a depression, which is just a big debt deleveraging and financial bubble deleveraging. We were this was exactly like the early 30s. Except this time, the government’s bailed out, everybody but Lehman Brothers, and the government’s pumped money. I mean, in the early 30s, they took interest rates down to near zero short term, but they didn’t do this QE thing. They didn’t just create money and throw it in the economy. So they’ve had to, just to keep GDP growing at 2%. On average, since that crisis, they’ve had to pump $4 trillion, you know, you know, almost, you know, 20 25% of GDP. That’s the only reason we’re growing, we would have been in a depression without that actually, we would have been over it by now largely, and we would have been in better shape. And now we’re still going to have Now we’re gonna have to de leverage an even bigger bubble. More More debts been added around the world. $57 trillion, globally has been added to the debt pile since the crisis in 2008. And majority that’s coming emerging countries. And they’re suffering from falling commodity prices, which is something we predicted very strongly. In my last book, the demographic clip, we said, Hey, the only countries that have the good demographics, the emerging ones are going to get hit by plummeting commodity prices. And that’s exactly what happens. And now they’ve got more debt than ever. So it’s a global debt bubble.

Jason Hartman 14:34
Well, I I really, I totally enjoyed the demographic cliff. By the way, I thought that was an excellent book. I mean, I’ve read so many of your books over the years. But how many books do you have? By the way, I’m curious, I’ll probably seven or so.

Harry Dent 14:50
My head great boom ahead in late 92, that was prophetic. And then the roaring 2000s book I sold most of in early 1998. And then the Great Depression ahead and now the demographic clip, those are the four books, I would tell people to go back and look at.

Jason Hartman 15:05
Okay, so I gotta ask you this, and I want you to answer this. Honestly, please don’t feel like, you know, you’re playing to the host here, not as if you would, but I just want to make that disclaimer. So in the Great Depression ahead, or the demographic cliff, I mean, in the demographic Cliff book, you talked about real estate and of course, you know, I’m in real estate in the investment side, and I agree with you on the mcmansions and the high end real estate that you know, I mean, you you predicted that many years ago, I want to say good 1518 years ago, you predicted around 2012, the mcmansions would start to soften I if I’m getting that right I think I am and and you’re predicting that still that that that’s that’s not a good place to put your money. My mom owns a big 9600 square foot McMansion herself I’ve been trying to convince her to sell. You know, you’re not bullish on real estate but you don’t make the distinction as Would on, you know, low end real estate sort of necessity housing versus high end real estate or, you know, different localities like, you know, high end markets. I mean, I don’t like any market with high land value. So I throw out California, the Northeast South Florida, you know, we only like these sort of cheap middle markets like you know, Memphis, Dallas Houston you know, Indianapolis, boring places you never hear about, you know, they’re just like really no milk toast kind of investments, you know, hundred thousand dollar properties. What do you think?

Harry Dent 16:30
Well, yeah, actually, there’s a huge difference for a couple reasons. The affluent, the top 10 to 20% and really the top point one to 1% even more so have done incredibly well in bubble land, and especially since 2008 everybody else has seen their wages go down their buying power, all this sort of stuff. And bidding up Yeah, they’re the ones making this mansion bubble and high end bubble you know houses selling for 100 million hundred 50 million on 8000 square foot condo and New York sold for 135 million is absolutely insane. It is nuts. And I The thing that I get that the rich people are the dumbest. They don’t think their real estate can go down because they think they’re always going to be rich and rich people like them will always want to buy this. It is the high end real estate that bubbles the most and goes down the most and as baby boomers are done buying housing, and what they’re going to do is trade down into smaller places while the millennials come with much fear and difficult to get credit and they want small places. So that everyday house is the best place to be in the very, very worst or the super expensive. I live in an expensive neighborhood and people don’t think this is gonna go down. This is gonna go down Palm Beach is gonna get plastered Manhattan, San Francisco, Vancouver on and on and on. The our number one rule is bubbles always burst and the bigger the bubble, the bigger the burst. So it is the high end that it has got the most risk and it’s by far the

Jason Hartman 17:58
thing that makes me why Want to say that maybe that’s not true is because the rich do get richer. And when you have economic policies like we’ve had, you know, the wealthy benefit from inflation, I mean, it’s just amazing to me, you have all say it, idiot, Bernie Sanders yesterday, commenting, or maybe the day before commenting on Greece and how, you know, they, they shouldn’t be willing to have austerity is if, you know, like, what is he a child? I mean, you don’t you think someone else is just gonna bail you out all the time, and you can be irresponsible?

Harry Dent 18:33
Well, and the flip side is word banks and governments made loans to those people that they couldn’t afford to pay, they made bad loans. And when you make bad loans in the free market, capitalist system, you’re supposed to lose money. So people ought to write off these loans, and Greece should default. But if Greece defaults, they’re going to lose their ability to borrow money and they’re going to be forced to live within their means for the first time in decades. It’s only What happened if they’re forced and Greeks would never choose austerity? They’re gonna get it. Yeah, they’re gonna get big. Right. Right.

Jason Hartman 19:07
But but so so these kind of policies that we have really pretty much around the world, they always benefit the wealthy class.

Harry Dent 19:15
So you know, Jason, this is not true. This is true at times when you have a bubble boom and when you have high credit creation, yes, the wealthy get wealthy faster, and that’s been happening for the last couple decades. But what people don’t understand and when these bubbles burst, guess who owns most of the bubble financial assets, guess who owns these hundred million dollar dumb as condos in New York, and San Francisco and Shanghai and stuff. It is the Uber rich they get slaughtered. The rich went from 20% of the income in 1929. The top 1% went from 20% share of the total income which is huge, down to 8%. In the early 70s. They they did not get rich Faster after that they got the everyday person advanced, we had the first middle class society to emerge in all of history from the Great Depression and after World War Two, so I’m telling people, it’s the rich that are going to get smacked the hardest. So it’s not gonna be easy. Homer Simpson,

Jason Hartman 20:14
I bet I bet people will be happy to hear that because the Uber rich I think are just ridiculous. They’re the crony capitalists, and they

Harry Dent 20:23
think they’re invulnerable. Every person I know, that has owned something, you know, super expensive real estate in Martha’s Vineyard or London, or New York or San Francisco or Sydney, Australia or Vancouver. I can’t talk one of these people out but they think these places will never go down and people like them will never stop buying and they are going to be so wrong. It’s going to be unbelievable.

Jason Hartman 20:45
That that whole market in you know, Uber rich real estate market. It operates on one principle, the greater fool theory, no matter how much I paid, some greater fool will come along and pay more there. There’s no sense to it. There’s no cap cashflow metric, there’s nothing magical about it.

Harry Dent 21:03
Well guess who the greater fools are today Jason, the wealthy Chinese, just like the Japanese were in the late 80s Japanese had a big bubble while nobody else did in the world and it made them a lot wealthier and they go around start buying real estate in London, New York Pebble Beach and stuff. Today, I know why they don’t care about the price, Jason because they’re laundering money, they’re getting money out of their country and this is the only legal way they can do it. They pretend like they’re moving temporarily to California to get their kids in a good college and they buy as expensive real estate as they can because they’re trying to get their money out of China before the bubble blows they’re not

Jason Hartman 21:40
yes they’re looking for the Brinks truck. Okay. And America has always been the Brinks truck not I’m not sure if that will continue. But you know, it’s it’s a it’s a game of relativity, right? It’s just all we have to be a slightly better than everybody else right as a place to put your money. And, and that’s what the South Americans are doing in Miami and South Florida. That’s what the Chinese are doing everywhere we

Harry Dent 22:02
go to Miami is Brazilians with bags of cash from activities, buying condos. They don’t haggle either. But but it’s more than anybody. Now the Chinese are the last fool standing because the Russians got do this. They got killed by the ruble being smacked the Brazilian economy is doing really horrible. So it’s really now made the Chinese of last fools and I tell you, when they’re real estate and stock market implodes, and this is beginning already and we’ve been forecasting this for years that China was going to be the biggest bubble burst China was going to take down the world more than any single country. When that real estate bubble implodes, these wealthy people are not going to have the money to buy these 50,000,020 million hundred million dollar condos and houses.

Jason Hartman 22:44
Yeah. Okay. So tell us more about China like I mean, you’ve spoken about the Chinese demographic problem with one child policy and, you know, you wait, what, I don’t know how far you push that out. But I want to say it’s like 15 years from now, China has a big lopsided demographic where you got too many older people, not enough younger people. I’m not sure that the number of years but you’re the expert. What what tell us more about China? It’s interesting.

Harry Dent 23:11
Yeah, they’re the only emerging country that doesn’t have strong favorable demographic trends. their workforce has already peaked in 2012. It slows and kind of kind of flattens out over the next decade, and then about 10 years from now. They start aging as fast as Japan did in the 1990s and stuff. So China doesn’t have the demographics, they overbuilt their infrastructures, their industry, their housing, their offices by I’d say basically 12 to 15 years out. So they’ve been building stuff for nobody 27% of condos and in Chinese cities are empty. You got whole cities like Ordos built for a million people, nobody there, got empty malls and stuff. So they’ve been building stuff just to drive the economy and keep people employed. And what happens to these? Right now there’s 240 illegal rural migrants in Chinese cities that have no access to health care, welfare, education, anything. They’re only legal back in their rural areas, which are now paved over, they can go back they’re trapped in these cities with low skills. They’re an underclass and when this machine a building stuff for nobody stops, they’re going to be dead. They’re just going to be trapped in these cities. And the only positive thing is there’s going to be a bunch of empty condos for them to squat in. But But these China is the last place I’d want to be in the world right now because they’re gonna have unbelievable urban unrest when this happens.

Jason Hartman 24:48
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday. Wow, that’s, that’s a big Do when you look at economy as large as China and a population as large as China? I mean, will the Communist Party survive that? I wonder?

Harry Dent 25:06
I don’t think so don’t The only thing they got going for them is older people don’t rebel and revolt like younger people do. And like you said, they have an aging problem, which is unique in the emerging world because of their one child policy all the way back to the 70s is when that started. So that’s, that’s hitting them now. And like I said, it’s going to hit them much bigger 10 years from now, by time they get to that real point of demographic weakness. They’re going to have gone through a 10 year digestion of all this overcapacity of everything. So, you know, I, when we do finally have this crash in this reckoning, I’d invest like crazy in a place like India and many other emerging countries, but I still wouldn’t I still wouldn’t be bullish on China. Even after they have a major crash,

Jason Hartman 25:49
what was what’s going to cause their crash like specifically?

Harry Dent 25:53
Well, you see, the stock market has started going down crazy because there’s too much speculation and went up 160% in one year. While the economy declined, because the app but because people in China saw that real estate, the greatest bubble in history finally started going down so you couldn’t make money there. So they all of a sudden became stock flippers. So people just buying stocks and they said two thirds of the people who open new accounts there which were meteoric and the rates of opening new accounts, two thirds of them didn’t even have a high school degree. So this is the dumb money piling in the markets. And now what’s it doing? It’s just falling apart. The government had to step in and get brokerage firms to pony up $20 billion to buy stocks to bully the markets. They told all their pension plans in the country. You can only buy stocks we will not it’s against the law to sell stocks. Do you understand how desperate This is? So this bubble, this bubble is going down just like 1929 did. And the US government at first did the same thing. They had brokerage firms step in and purposely buy stocks and it only worked for a couple weeks and next thing you know the market was down you know 89% couple couple years later, so this is not going to work. It may work a bit temporarily but when a government has to step in and tell people it’s illegal to sell stocks, and you have to pump up prop up the market. It’s just I’ve never seen anything this insane and the one thing I’ve done more than anybody is study history. And and this is central bankers gone mad. Yeah.

Jason Hartman 27:27
It really is. It really is. Well, speaking of central bankers, any thoughts on Janet Yellen, you know, bring us back to the US and, and just, you know, any of your predictions, you you predicted some amazing declines for gold. You know, I’m sure you view the stock market as being in a ginormous bubble right now. But, you know, tell us what do you think is going on here?

Harry Dent 27:48
Well, again, you know, they’ve reinflated the bubble. They’ve done it now. For six years, things are starting to crack Greece, the neck, but then you know, the next problem is gonna be it’s not just Puerto Rico and Illinois in Chicago, the United States, the frackers that’s a trillion dollar industry with 600 billion of highly leveraged debt that is going to default and make Greece look like nothing. And that’s just one sector and it’s going to start killing the junk bond market. And then of course, Portugal, Spain, as you said earlier, I mean, we’ve just got a whole string of debt defaults coming around the world, you can only keep a bubble going for so long and whoever is sitting in the chair IE Janet Yellen, ie the next president, whoever it is, when this bubble burst is going to take the blame for it, even though they didn’t create it. But Janet Yellen has followed Bernanke he Bernanke he didn’t create this bubble either yet to blame it on more on Alan Greenspan and and George No, I think Greenspan

Jason Hartman 28:43
was the bubble Maestro, you know, yeah,

Harry Dent 28:45
but but they can blame and nobody wants a bubble to burst on their watch. That’s why these central bankers just keep printing money. They really don’t have any other option as soon as they if they were to stop printing money, this bubble would burst so fast. It’d be unbelievable and we’d be in a depression, you know, within six months.

Jason Hartman 29:05
Yeah. Okay, so a couple just rapid fire things. So what’s the future hold inflation, deflation,

Harry Dent 29:12
deflation. Long term, we’ll go back to an inflationary economy at mile levels, but but deflation always follows. And deflation is a sign that a bubble is bursting a credit bubble. debt is being written off and financial bubbles are coming down to earth and it destroys we have, I estimate and this is a big figure, Jason 100 out of 220 $5 trillion in financial assets, including loans and mortgages around the world. 100 trillion of that could disappear in the next several years. 100 trillion dollars disappears, that’s less money chasing the same goods. That is deflation. I’ve had this debate with the gold bugs over and over and over again. And I keep winning the bets I keep saying gold is an inflation hedge and a really good One did wonderful in the 70s when inflation was a trend, but what the gold market realized in 2013 that’s why it dropped so strongly that the Japan just tripled their QE, the US just committed to QE three forever, and inflation kept going down. So the markets finally got that we’re not going to get inflation in a deflationary world. And the only reason we have mild inflation is because of all the money that’s printed so far. So gold is going to go down. We’re going to see deflation. Dow I think the next stop is below 6000. And that’s not the final stop. I think the Shanghai is going to go from 5200 down to 1000. At least

Jason Hartman 30:41
listeners Do You Do you hear what he’s saying? So the Dow is going to go below 6000. You were talking about the Chinese stock market. Where’s that going?

Harry Dent 30:48
1000 from 5200. You know,

Jason Hartman 30:51
so that’s, that’s going down by 80%.

Harry Dent 30:53
You Wow. That’s the 70% now, I’ll tell you the neat pattern and I don’t understand people in so denial on Wall Street. This is a simplest pattern, it was the same thing that happened in the late 60s, early 70s. When the last generation p, you get you get the market keeps going to new highs and then crashing to new lows. It’s called a megaphone pattern. So we’re right back at that, you know, we’re in the third bubble. We’re right at the kind of a resistance line around 18,000 on the Dow, and the next new low in that pattern would be projected to be just below 6000. So I have a specific reason for having that target. That may not be exactly what happens. But that is what you should expect. When when a debt bubble burst when when a financial bubble burst. Every burst is going to take the market to lower lows because we’ve pumped up the economy even more and got more out of balance. The economy knows how to balance itself. I tell people like hey, you eat some bad sushi. Your body knows what to do flush it out as soon as possible. It’s poisonous. The body’s good at this. That’s what the economy wants to do. And central banks keep interfering. Do

Jason Hartman 31:59
you know what does good metaphor for that’s a great metaphor, you just made it. So I’ll just add to that a little bit. It’s like, you know, you go to the doctor, the traditional Western medicine type doctor, and you say, Well, you know, my back hurts, they give you a painkiller to cover it up. You don’t fix the problem. If you go to a more holistic thing, they actually look at the problem. Whereas what we do in the, you know, Keynesian economy is we just cover things up. We cover up symptoms that are too painful, you know, we don’t want to experience them.

Harry Dent 32:28
Yeah, you know, Keynes, I mean, brilliant guy in some ways, and people abused what he said. But basically, he was the original pusher. He invented financial drugs, and it got acceptable in economics starting in the early 70s. Like you say, with Nixon, everybody else, we’re all Keynesian ‘s now. We’ve been printing money borrowing money, running deficits, running trade deficits, creating debt Ever since then, because you’re supposed to borrow more and run deficits in bad times to offset The private economy but you’re supposed to run surpluses, we haven’t run a surplus and hardly anything since the early 70s. So we’ve gotten addicted to financial drugs, and we can’t kick the habit. And boy, when you go down, when we finally come down, I don’t see how it couldn’t be worse than the Great Depression. And that’s the worst downturn we had in history. And by the way, what preceded the Great Depression, the creation of the central bank, the Federal Reserve, they prevented the economy from rebalancing. So we got bigger and bigger bubble. And so when it first it was horrific, and that’s what we’re going to

Jason Hartman 33:30
get again. Yeah, no, no, I did. So you know. It’s hard to argue with that. It certainly does. Okay, what about interest rates? Where are they going?

Harry Dent 33:39
I think that, well, junk bonds are going to get crucified. So you’re going to see a huge spike in that, like we’ve already seen in Greece in some of the Southern European countries, fracking bonds are going to totally default. What’s going to happen is, interest rates are all going up. Now, despite quantitative easing around the world. That’s a sign that central banks are finally losing control of zero long term rates. It’s some point, the safest, the highest quality government and corporate bonds like a Coca Cola bond or a 10 year Treasury, their rates are going to go down for them when the deflation sets in, but they’re going to keep spiking up for junk bonds and riskier bonds because there’s going to be growing default risk, the more governments and the more companies default, the more the bond market worries about it, the more it raises rates, the more credit costs the more default so it’s a vicious spiral so so interest rates are going up for most bonds, which is going to kill the bond market. But ultimately, after maybe six or eight months, and this happened in the Great Depression, there was an initial spike in all rates, including government bonds, but after that, the government and the triple A corporates did well their rates came down, their bonds appreciated and and the risky bonds just rates kept going up. So this is something that you look at it past debt crisis is what you’d expect,

Jason Hartman 34:59
right? But what about what about mortgage rates though?

Harry Dent 35:02
mortgage rates will tend to come down because they they play off of the 10 year Treasury

Jason Hartman 35:09
and 30 mil weather right yeah right

Harry Dent 35:11
so yeah I tell people you know you might want to get up on arm right now but but maybe three or four years from now you’re probably going to get the lowest cost mortgage of your life

Jason Hartman 35:21
very interesting. Very interesting good stuff Harry, give out your website.

Harry Dent 35:25
Okay, it’s Harry dent calm we’ve got a free newsletter economy and markets I’ve also got no other products and things you can look at I’ve all I’ve also got an unpublished chapter on China you can download it Harry dent calm so so that’s the best place to go daily newsletter for free and if you you know if you like us after a while you can subscribe to our, our big boy newsletter and and I would get that chapter on China. The book was just too big the demographic Cliff to put that in there so I let people download it for free on our website.

Jason Hartman 35:59
Good stuff here. denne it’s always such a pleasure to have you on the show. And it’s so interesting to talk to you and look at these patterns. And so much of this stuff is based off of demographics and, and when that interplays with the economics and the fiscal and the monetary policy, it just gets really fascinating. So it’s great to have you back and we look forward to having you on the show again. Thanks for joining us today.

Harry Dent 36:20
Okay, thank you, Jason.

Harry Dent 36:22
I’ve never really thought of Jason as subversive. But I just found out that’s what Wall Street considers him to be. Really

Harry Dent 36:29
now How is that possible at all?

Harry Dent 36:31
Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life.

Harry Dent 36:41
I know. I mean, how many people do you know not including insiders who created wealth with stocks, bonds, and mutual funds? those options are for people who only want to pretend they’re getting ahead.

Harry Dent 36:54
Stocks and other non direct traded assets are a losing game for most people. The typical scenario do is you make a little you lose a little and spin your wheels for decades.

Harry Dent 37:05
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win.

Harry Dent 37:15
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Harry Dent 37:30
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Harry Dent 37:44
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Harry Dent 37:55
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Harry Dent 38:03
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Harry Dent 38:10
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Harry Dent 38:18
store. If you want to be able to sit back and collect checks every month, just like a banker, Jason’s creating wealth encyclopedia series is for you. This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individually realized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.