An Unstoppable Crisis Is Set To Wash Over America. from the Massive Civil Unrest ahead
Special precautionary forecast by Harry S. Dent, Jr.
Republican Party presidential nominee Donald Trump politics may have triggered what will be unstoppable crisis set to wash over America. Added to the Russian agenda to undermine the United States democracy, the chaos could destroy the social glue that has bonded the American Nation since the declaration of independence in 1776.
The civil unrest presents the greatest danger to the United States confederation with the next president having to walk a racial tight rope that could rapture any time. A break up of the United States of America will be a dream come true for former head of Russian spy agency (KGB) President Viladmir Putin, who has never recovered from the demise of the Union of Soviet Socialist Republics (USSR). Indeed, he darws great admiration from Trump and has been implicated in wanton Wikileaks email hacking to aid the Republican candidate.
Thank you for joining us. I’m Jake Hoffberg, here at Dent Research. Today, as we witness a presidential election like no other in history, Harry Dent, one of America’s foremost economists and thinkers, joins me. He predicted Japan’s lost decade, the recession of 1990 to ’91, the biggest bull market run in US history, the largest real estate crash in US history, the 2008 credit crisis and stock market crash, and the shocking fall of oil prices over the last years. In addition, today, he will be sharing his latest prediction exclusively with us for all Americans who are reading this regardless of political party. Harry, it is great to have you with us.
Harry Dent, Jr : Thank you. Nice to be here.
Harry S. Dent, Jr.
Renowned economist Harvard graduate Bestselling author Predicted Japan’s lost decade, the recession of 1990 to ’91, the biggest bull market run in US history, the largest real estate crash in US history, the 2008 credit crisis and stock market crash, and the shocking fall of oil prices over the last few years.
Jake Hoffberg: So, Harry, let’s get right to it. You’re here to talk to us today about something that you haven’t shared with the public, not in any of your interviews or mainstream media appearances.
Harry Dent: Yeah. That’s right. I’m here to deliver an important message to every American citizen, no matter who you plan to vote for in the upcoming election. And I’m going to talk specifically about the steps you should take to protect yourself and your family. In short, I believe, as a nation, we’re on the brink of a devastating, unstoppable economic collapse that will fuel a depression and create unparalleled civil unrest.
It’s a crisis that Donald Trump can’t stop. It’s a crisis Hillary Clinton can’t stop, or the Federal Reserve, for that matter. And we’re already seeing the signs of a new American revolution because of it. And that’s the good news.
Jake Hoffberg: All right, Harry. Let’s get into the details here. How bad are you predicting this collapse is going to be?
Harry Dent: Well, first of all, it’s going to be worse than the 2008 crisis. This is the third bubble, and every bubble takes us to higher heights and then to lower lows and a deeper downturn. It’s also going to have a much larger impact on people. Again, if you thought 2008 was bad for real estate, or for stocks, or for your business, this is going to last longer and be deeper. It’s not a question of “if” this is going to happen; it’s simply a question of “when.” And the signs I’m seeing are saying it’s going to happen a lot sooner rather than later.
Jake Hoffberg: So, Harry, why now? Why are you speaking out now about all of this?
Harry Dent: Well, most Americans – especially after this disappointing but long recovery that still seems to be holding together – don’t understand how bad it’s going to be. They don’t understand that all the policies, all the free money, all the zero interest rates, and now negative interest rates, have only covered up the problem and done nothing to restructure it.
In fact, we have way more debt and imbalances and great bubbles than we had in the last peak in late 2007. That’s why this is going to be worse. Bubbles crash a lot faster than they build.
That’s why you have to start protecting yourself now and not hold out for the last couple of percentages – if we even see that.
Jake Hoffberg: Wow. This sounds like it’s going to be pretty bad. So, how did we get here and what put us in this dangerous position?
Harry Dent: Well, you know, it does sound dire. But we are in extreme times, as I keep saying. And we got here because we had a natural bubble, which occurs in what I call the fall bubble boom season, which happens throughout time – about once in a human lifetime.
But, on top of that, we had to lower interest rates more and stimulate more and encourage people to borrow more and buy bigger houses. Governments encouraged all of this because the boom, even though it was the greatest in history, was not enough. And when we tried to fix it – well, zero interest rates were not enough; now we’re at negative rates.
So, we’re not dealing with the fundamentals. We’re not allowing the economy to rebalance, and it’s going to have to do it itself. It’s probably going to do it very painfully. That’s why we’re warning people about it now. We’re telling them that we’ve already stretched this out for eight years now. This bubble burst in 2008. We created another bubble and stretched it to where we’re at now. I don’t think you can stretch it much further, and that’s why I wouldn’t want to be the person elected in this campaign.
Jake Hoffberg: So, Harry, what do you think is going to be the biggest impact of this crisis?
Harry Dent: Well, again, it’s just like 2008 – only bigger. Instead of having a normal stock market crash, where some things go down and some things don’t, everything goes down. All the bubbles are going to burst. The real estate bubble is going to burst much more this time than it did before and be much more global. Commodities have already burst unbelievably, something we forecast – they’re down 60, 70, even 80%.
So your wealth, your net worth – across the board – could be wiped out in a matter of years. And just think of how many decades it took to build this bubble and our net worths. We have unbelievable net worths that people should be thankful for. It could be destroyed in two to three years, just like 1930 to ’32.
Businesses can suddenly be crunched and we’ll see many businesses go out of business, which also happened in the early 1930s. This can happen very rapidly. And if you think the middle class got wiped out in the last few years with lower-than-average wages, they’re going to get wiped out even more. But the difference this time is that the top 1%, who own most of the financial assets, are going to lose the most when these bubbles predictably burst, and it will be in everything: stocks, real estate, commodities.
Jake Hoffberg: So, is it just going to be the markets that are going to collapse? Or are we going to see any other effects from this next crisis that come up?
Harry Dent: Well, of course, the economy goes down. Unemployment rises. And people have to remember that we had a 25% unemployment rate during the Great Depression. We had about a 10% unemployment rate in 2008, 2009 at the worst of that crisis. But when you count the people that were underemployed or who had just stopped working, it was really more like 14% to 15%.
So, unemployment goes up. People lose their jobs. People lose their houses. This happened in 2008 and ’09. In the past, people had to put anywhere from 20% to 50% down on their house so, when you had a real estate bubble burst – like in the 1930s – people didn’t lose their house. They lost some of their net worth, but they didn’t lose their house. Well, a lot of people lost their houses or were threatened with the loss of their houses in the last crash. The same thing is going to happen – but be much worse – this time around.
So, your job’s at risk. Your house is at risk. Your net worth is at risk. And your business, if you own a business, is at risk – or the business you work for is at risk.
I tell people: “Hey, if you don’t own your own business and you have a boss you don’t like, be nice to them anyway. Because somebody is going to be fired and you don’t want to be one of ‘em.”
The same thing is true in business: if you hunker down and are leaner and meaner and more focused, you’re going to be one of the ones that survive, like in the Great Depression, and have massively more market share and growth for years and decades to follow.
So, there are huge opportunities. We’re warning people because the burst is going to come harder and faster than they think. That’s the threat. But also: the opportunities are going to be greater than any time in your lifetime. We are going to see what I call “the sale of a lifetime” on all financial assets, including your business, real estate, and your own house.
Jake Hoffberg: So, Harry, you’re saying that people are going to go out of business; they’re going to lose their homes; they’re going to lose their jobs; they’re going to lose their net worth. How else is this going to impact people? What else are we going to see as a result of this?
Harry Dent: Well, you know, there’s also the obvious – even in this transition from boom to bust we’ve started here, there’s more civil unrest. There’s more voter dissatisfaction than we’ve ever seen. Even in the Great Depression, when there was extreme income inequality between the top 1% and the everyday person, we didn’t have this sort of political polarization that we have today. You have to go back to the Civil War to see that. And I think this whole Donald Trump movement – and, to a lesser degree, Bernie Sanders – is a sign of this polarization. There are a lot of dissatisfied people.
So, we’re also in for what I call the next American revolution. And this happens on a 250-year cycle. The last time we saw this was in the American Revolution during the birth of democracy, and the Industrial Revolution during the birth of free market capitalism. These are two opposite principles that have worked since the late 1700s to increase our wealth and income more than all of history put together.
That’s how powerful that was. But this is getting destroyed as central banks take over the free market capitalist system with quantitative easing, and control markets and lobbyists and super-PAC billionaire groups who take over demography and steer elections and political policies instead of it coming from the will and the vote of the people.
So, out of this crisis, which will also have many financial opportunities, I think in the next decade we’re going to see some really long-term political reforms and changes that are going to be very good for the country. But boy, there’s going to be a lot of civil unrest and political polarization to come – more than we’ve seen – over these issues.
Jake Hoffberg: Now, you’ve said before that some of these things were almost destined to happen. How’d you figure that out? How have you decided that? Or, how have you determined that these things are going to happen in a predictable way?
Harry Dent: Well, you know, today we have information that we didn’t have before. It’s called the Information Revolution. And one of the things I found out early in my career, by consulting entrepreneurial businesses, was how they were playing and doing so well in the early 80s, when Fortune 100s that I was consulting with before were literally failing. They were appealing to the new generation, the baby boomers, when they were young and starting new trends. And what I discovered was this: baby boomers were just a massive generation. But everything they did as they aged was going to affect the economy. So, I developed a whole science around demographics.
But I’ve also found other cycles, like the Geopolitical Cycle and an Innovation Cycle and a Boom/Bust Cycle that occurs just about every decade – these are things that everyday people and businesses can see and project in the future. I can’t predict every wiggle in the economy and neither can most experts that spend all their time doing that.
But, I can tell people what’s going to happen over the rest of their lifetimes and even their kids’ lifetimes with these four cycles. And these four cycles point down now at the same time. They’ve only done that once in the last century: during the mid-1970s, the last great financial inflation crisis, and in the early 30s, during the greatest deflationary depression crisis in U.S. history.
So, this says: “Yeah, we may have kept this bubble going this far, but these cycles all point down together into early 2020, approximately. The next three to four years is when this crisis is going to hit.” It will also be when the next president, whoever gets elected, is in charge. And that is not something I would want as a candidate. If I were advising a political candidate, I’d say: “Why don’t you run in the next election?”
Jake Hoffberg: So, Harry, how is it possible that a cycle can predict geopolitical events like the ones that we’re seeing right now?
Harry Dent: Well, again, there are different levels. Like this 250-year cycle: that’s very powerful. But we have a cycle that’s about 35 years out that is more predictive near-term. And it’s positive for 17 to 18 years. So, think back to 1983 through 2000. What went wrong in the world?
“Almost nothing” is the answer.
Yes, we had a little war with Iraq and some little crises here and there. But it was a good time in the world. There weren’t any major wars. Inflation was falling. Kumbaya. Everybody’s pretty happy.
What happened from 2001 on? 9/11, rising terrorism – which has gotten more extreme – two major failed wars that totally disrupted the Middle East, and one civil war after the next around the world, especially in the Middle East. And every day on TV there are more police shootings or brutality and protests against that, and racial discrimination. This is what a difficult Geopolitical Cycle looks like.
And during that cycle, stock valuations are lower, and of course civil unrest tends to be higher. So, it brings us back to: if we’re going to go into this deeper financial downturn that could threaten everything you own, it also means the civil unrest we’ve already seen is likely to intensify for the next three to four years. I’m telling people now: early in the next decade, three, four, five years from now, suddenly the world’s going to get better – demographically, economically, geopolitically. Things are going to start to get better like they did in the early 80s, after a long, difficult period.
And people aren’t going to know why. The people who listen to us are going to know why because we understand these cycles. Politicians and economists don’t have a clue about them because they study politics instead of the predictable things people do and the predictable cycles that we can prove and track throughout history.
Jake Hoffberg: So, you’re saying that the cycle we’re in right now: it’s not just about war and terrorism, but it’s also about internal political conflict as well?
Harry Dent: Yeah. The way I look at is: people – and that’s why we study people: demographically, and through technology and innovation. All of this comes from people. Geopolitical cycles come from people and their opinions and how they naturally change. Boom and bust cycles come from their speculation.
Politicians react to those cycles. Economists study politics like politics created the cycles. No. People create the cycles and then politicians react to them. If the economy’s booming too fast, they’ll raise interest rates to slow it down, like they did in the late 70s. When it slowed down like it did in 2008, they lowered interest rates and pumped money into the economy to offset it.
Politicians didn’t plan that in advance. You could predict, knowing my cycles, that when things slow down, politicians try to stimulate. But even I didn’t predict that they were going to create $10, $12 trillion of free money around the world. That’s never been done before. However, you can predict that they’re going to react. So, a lot of this has to do with politics. But politics are not the biggest cause of it.
Politicians exaggerated the bubble boom we would have had in the last couple of decades anyway, but now they’re making it worse by not letting the economy rebalance. But, again, I still look at the predictable cycles to warn people when their business, or investments, or family, or job, or anything else is in peril. And, again, the end of early 2020 will be the biggest danger period. Plain and simple.
Jake Hoffberg: In just a few moments, Harry’s going to share with you the details of several moves you can make right now to build some ironclad protection for your assets, and your future as a whole, from the chaos he’s describing. He’ll also reveal how you can grab a free copy of his just-released book, The Sale of a Lifetime, and learn how you can make fantastic profits from the great bubble burst in just a short period of time, as markets collapse much faster than such bubbles build, creating opportunities in a narrow period of time for those that see it coming.
But before we get into that, Harry, I want to talk to you about what you call “bubble blindness” in your book. Why is it that the “powers that be” can’t seem to identify bubbles when they’re happening?
Harry Dent: Well, first of all, bubbles are just extreme cycles. And people really don’t like the cyclical nature of life. They like the good cycle. They like fall, but they don’t like the winter season when it gets too cold. They like booms in the economy but they don’t like busts. But these cycles are absolutely necessary. The greatest innovations in efficiencies in businesses occur in the downturns and set the stage for the next upturn. A winter season bust in our economy clears the decks and sets the stage for the next spring boom, like we saw in the 40s, 50s, 60s, and so on.
So, number one: people don’t like cycles. But the second and most important thing is this: when a bubble finally occurs, people are getting something for nothing.
So okay, you work hard – yeah, yeah.
But what about when you’re just sitting in your house and it’s going up at 10, 15% a year when it used to go up at 2% to 3%? Well then, wow – you’re getting rich doing nothing! When the stock market’s going up 20, 30% a year instead of the normal 5% to 10%, again, you’re getting something for nothing. It’s a free gift, and it’s a high. And people don’t want the high to end.
And people also know, historically, in the back of their minds: when a bubble bursts, it’s going to be devastating. So they go into bubble blindness. They pretend it doesn’t exist. And then every expert, every politician and economist and analyst and businessperson, and even Warren Buffet says: “This is not a bubble.”
And the central bankers say: “This is not a bubble.”
And people go: “Okay.” Because that’s what they want to believe.
So we tell people that bubbles are totally obvious. They follow a totally predictable pattern that I’ve outlined in this book. And they typically crash twice as fast as they build. And most of that happens in the first few months. So, if you understand bubbles, you&rrsquo;ll see how big of an opportunity they are on the way up, but also how to protect yourself on the way down, and how to position yourself, when the next bubble bursts, for “the sale of a lifetime,” where, again, you can make money – extreme profits – in short periods of time.
So, people are blind. That’s why I wrote this book. I’ve written many books on cycles and demographic trends, but this one is mostly about bubbles, and how you’ve got to get real and admit and see this is a bubble, or else you’re going to be in real bubble trouble in the next few years.
Jake Hoffberg: Now, Harry, you’ve studied hundreds of bubbles throughout history. And you came to an interesting conclusion about what actually causes them. So, what’s causing this bubble right now? Who’s responsible for it?
Harry Dent: Central banks – starting in the 1987 crash. Alan Greenspan, who was the Federal Reserve Chairman – every time the stock market crashed or we had a recession – he stepped in and pushed interest rates down and tried every stimulus possible. What this does is it keeps the economy from rebalancing. These little crashes and corrections and recessions are like a common cold. They come now and then to clear out your system and make you healthier.
So the more this doesn’t happen, the more unhealthy you get, the more they push down interest rates and prevent recessions and make the world seem risk-free, the more everybody speculates. People speculate in bubbles everywhere, anyway. The longer stocks go up, the more real estate goes up, the more people say: “Why am I working so hard? Why don’t I get rich speculating?”
So we had the tech flippers and then the real estate flippers. And now we’ve got both of those coming back. So, everybody’s fed into this bubble. But central banks have especially set up the economy to take an already natural bubble and make it much more extreme and create much greater imbalances in the economy and markets. And that means we have to have a bigger bubble burst. It’s just that simple.
The more you ignore a bubble, the more you keep it going – just like a bad drug habit, the worse the detox is when you finally have to come down. And that’s what we’re saying. This bubble is going to burst. It’s not a matter of “if,” it’s just a matter of “when.” And when it does, it’s going to come at you harder and faster than you can imagine.
Jake Hoffberg: So, are you saying that central banks, politicians, have just corrupted the natural order of cycles and that they’ve tinkered with it and made this worse?
Harry Dent: Yeah. They have. I mean, there are two things you’ve got to remember: if you go back 250 years, the biggest cycle was free market capitalism and democracy coming together. And when you look at the charts of the progress we’ve made in terms of our standard of living and stock prices and economic growth since then, it’s phenomenal. We have corrupted that because, in politics, special interests and lobbying have taken over. All Congress does is get paid and bribed to favor policies of this business, or this industry. They’ve taken over democracy. And campaign finance? Well, you’ve got these super-PACs and billionaires that are basically deciding who runs, or who doesn’t.
Mitt Romney was singlehandedly vetoed this time by the Koch brothers. Two billionaires just said, “If Mitt runs, we’re out.” Now, I don’t know whether he should be the candidate or not. I’m just saying: two billionaires shouldn’t make that decision. So, we’ve corrupted democracy, especially with special interests.
Central banks have totally taken over the financial markets. Because by setting short- and long-term market rates, you effect the valuations of all other assets. Real estate is directly impacted by that. Stock valuations are directly impacted, and so on. They are basically setting the markets, deciding if we’ll have a recession or not, controlling interest rates. So, they’ve taken over free markets and hijacked capitalism. We’ve just killed the golden goose, the two things that’ve made us rich, just because we don’t want to go through a downturn and see some bubbles burst. And that is cowardly, especially by our politicians and central bankers.
I mean, to me, they don’t understand the economy, so I don’t listen to them at all. To miss that much, to not understand how the dynamics of boom and bust and inflation and deflation and innovation create our growth, by a play of opposites, and to then try to kill those opposites, and kill the very cycles people don’t like – and people do the same thing. They don’t like cycles and don’t realize cycles work to their advantage. This is what’s killing our economy and what is creating the setup for the greatest downturn and financial collapse since the Great Depression.
Jake Hoffberg: So, this is all very interesting, but I wanted to back up. You’d mentioned that special interest have taken over democracy. What does that mean, and how is it playing out right now?
Harry Dent: Well, again: political decisions are made all the time. All Congress-people do – our elected officials – are basically get taken to dinner, out on boat trips, out on everything you can imagine. And you can’t imagine some of the stuff these guys get for free. They’re being entertained constantly by special interests who want this to happen, or not to happen.
Now, every time I hear businesses say: “Oh, we love free market capitalism and love competition,” I’m like, “Baloney. You guys don’t like it at all. You guys will lobby and get a political favorite rule or anything you can do to get ahead of your competitors, or to put your industry over some other industry.” You shouldn’t let the foxes run the hen house. But that’s what’s been happening.
Lobbying should not be allowed. That’d be the first reform I would make if I happened to be president: no lobbying. If there needs to be a study of whether this is effective or not, or if this should happen in this industry or not, it should be done by an independent firm and be paid for by Congressmen instead of these guys getting bribed and being given studies by the foxes about what should happen in the hen house.
Democracy was created in the first place to give everybody a say and to counter the massive power of the 1% that tends to control as much as 50% of the wealth. And now, democracy’s not doing that. Because special interests decide almost everything, including the information we get, or not, about what we need to know about the products we buy.
Jake Hoffberg: So, how has that affected the middle class, the everyday investor, jobs, the workforce? How has that affected that?
Harry Dent: Well, again, when you get an environment where certain industries are favored, or certain trade deals are made – and a lot of that’s politics, and a lot is to favor certain special interests – people start losing their jobs, or their wages start going down. I mean, yes, the Chinese have lower wages. That’s a good thing. But the Chinese cheat like crazy. They pirate technology. They don’t pay their pollution costs. They’re polluting more than any country in the world, and not paying for that, which is a competitive advantage over the regulations we have to face, and for Europe even more so. That’s cheating. The Japanese pushed their currency down purposely to make their goods more competitive, say, with U.S. producers. That’s cheating.
So, it’s one thing when a country works harder, or invests more, or has lower wages. It’s another thing when they’re cheating. And this is a part of the special interest thing. Political systems around the world are corrupted by special interests who structure things in their favor. And if it’s in their favor, then it’s probably not in your favor, as the average worker or person.
Jake Hoffberg: So, is that what’s driving things like Brexit and populism that’s popping up everywhere?
Harry Dent: Absolutely. The same goes for the rise of Trump and Sanders, and all this. This is happening everywhere. After Brexit, the stock markets took it like it was no big deal. This is a big deal. We’re going to see Brexit around the world. We’re going to see a Texit (Texas exit). We’re going to see Italy exit. We’re going to see France leave.
I mean, I think our country’s going to see a subtle civil war in the coming years, where parts of the country say: “Look: we’re going to start setting our own rules and regulations. We may be a part of the U.S. dollar and trade, but we just can’t agree with other sections of the country.” That’s what’s happening in Europe. So, globalization – this is another trend we’ve tracked. It’s been going on for decades and decades. It’s part of this information revolution, and it’s peaked.
We have an Innovation Cycle that says the Internet has peaked in its impact, and the Internet is starting to have more problems than good because of the hackers and the trolls and all this crazy stuff happening, with security always threatened. So, again, if you don’t study cycles – everything goes in cycles. What I do is study cycles so that other people don’t have to. Because it takes a lot of work to find out which cycles are important and which cycles are peaking or growing. And, again, most of my cycles look the worst they’ve looked since the 1930s.
Jake Hoffberg: So, let’s jump back over to what’s going on here in the U.S. and the next American revolution, and how you see things playing out over the next couple years.
Harry Dent: Well, first we have the next economic collapse. Something happens like Italy defaulting. Now, you know, when Greece defaulted, they were almost able to bail out enough and reach enough political compromise. But there’s no way to deal with Italy defaulting. And behind them is Portugal, and then Spain behind them. This is something central banks have pushed off and simply can’t handle.
China has created a bubble, especially in real estate by overbuilding infrastructures, of epic proportions – to the extent that it’s never been seen in history. It’s the greatest bubble I’ve ever seen of all bubbles. That is starting to crack. And when that bursts, there’s no amount of central bank stimulus in Europe and the United States that can counter the impacts of it. That will send a tidal wave around the world.
So, when something goes wrong – like the subprime mortgage crisis in 2008 – the economy breaks down, and then voters get really dissatisfied, and then you have some level of civil unrest, and then you have more and more calls for reform. I’m telling you: what’s going to happen in the next three to four years in politics, and maybe even out seven to eight years, is people are going to be looking for radical changes, not incremental, not more of the same, not the establishment. They’re going to be looking for revolutionary adjustments.
Jake Hoffberg: So: revolutionary. That seems pretty intense. What exactly are they looking for?
Harry Dent: No lobbying. Lobbying ends: it’s against the law for Congress-people and our officials to take money and research and all types of entertainment and gifts from people who are lobbying for something that may be against the interests of the American public, which is happening en masse. Campaign finance reform. You can’t have billionaires giving tons of money and having concentrated effects on primaries, or the political system. There’s a limit to how much people can accept in contributions. I could go on and on.
Central banks. Central banks need to be saying: “No. This is your role. Your role is not to stimulate and control the economy. Your role is to provide liquidity when we have a crisis short-term, not to try to drive the economy long-term. Where did you get that role? Who gave that to you? You’re not supposed to have that.”
I’ve got 22 reforms in my books. But they are just examples. These are radical changes in policies that are needed to restore free market capitalism and its balance, democracy.
Jake Hoffberg: So, Harry, when you say “radical change,” what exactly are people looking for?
Harry Dent: Well, again, people are looking to get the American dream back. Of course, that’s something Trump’s playing on – the ability to build wealth over time, which has been very hard in this roller-coaster, bubble-burst kind of economy. The ability to live as you want and retire longer-term, for your kids to have a better life than you had, for the middle class to come back after losing ground.
And people are looking for higher incomes again. People haven’t gotten a raise. In fact, their incomes have gone down, adjusted for inflation, since 2000, and they’re actually sitting very close to where they peaked in the early 1970s boom economy. People have gone nowhere for decades when the stock markets and the economy’s had the greatest boom in history.
Now, how does this happen? When central banks and special interests favor those in the top 1%, and the rich, and the people who have the most power, they gain more at the expense of other people. That’s part of what’s happened here, and this is why the middle class feels so disempowered.
Jake Hoffberg: So, Harry, is that why we’re seeing the rise of Trump and populism? Is it because of everything you’re saying?
Harry Dent: Yeah. Exactly. It explains why the American electorate either wants to nominate a political outsider who talks tough and promises to restore our power in the world, or an avowed Socialist to combat income and wealth inequality by attacking Wall Street and the top 1%.
The politics, again, are more polarized than I’ve ever seen in U.S. history outside of the Civil War, largely, in part, to this great income and wealth inequality in the developed world, but also to a lot of the foreign competition and trade deals that were made in the name of globalization. Again, some of those were very good, but there were a lot of politicians that made some bad decisions. Of course, Trump is campaigning heavily against that.
Again, this is why I see the most potential for civil unrest in the United States, and China particularly, who has 250 million migrant rural workers that aren’t even registered citizens in the cities they’re working at, with very low skills, and they’re building stuff for nobody. When that music stops, those people are going to be trapped with nowhere to live. They can’t even go back to the rural areas because they built empty condos on that.
So, I see the United States, because of our extreme political polarity, and I see China, because of the extreme government top-down overbuilding, as probably the two countries with the most civil unrest. But we’re seeing civil unrest in South America and the Middle East and in Africa, and everywhere I’ve been. Even Europe. It’s just that I think we’re probably one of the more extreme.
Jake Hoffberg: That’s a scary thought, and definitely a reality that I want to hear your strategies on how we can protect our families and our assets from. We’ll get back to that in a moment. But there’s something I’ve got to ask you: is there anything we can do to stop this or prevent this from happening?
Harry Dent: No, not really. I mean, this has gone on so far. And politicians have convinced everybody, and are being backed up by people that are trusted, like Warren Buffet, who are saying: “This is okay; the government’s doing the right thing; we’ll come out of this.”
We won’t come out of this. You can’t stop what’s going to happen. But you can change your strategy. In other words, you can’t change the wind, but you can reset your own sail.
You can do things to protect yourself. And, again, since most people are not going to see this, and most politicians and economists have no interest in telling them what’s going to happen because they’ll just panic and make it worse, you can profit immensely if you just do the simple things that help you benefit from a collapse and deflation, instead of a boom with inflation. That’s going to be the simple change in trend. How do you make money from deflation?
And you know what? Nobody knows how to do that because we haven’t had deflation in our economy since the 1930s. How many people were alive back then today? I don’t know anybody.
Jake Hoffberg: I certainly don’t, either. So, Harry, according to your research, we’re sitting on top of the biggest bubble ever. It’s been inflated largely by central banks’ monetary policies. Lobbyists have hijacked democracy and inflated asset prices to sky-high valuations. And, according to your prediction, when this bubble finally bursts, no one’s going to be safe: the 1%, the middle class – everyone’s going to get hit by this.
Harry Dent: Yeah. That’s right. It levels the whole bubble. Everything goes down. Debt deleverages. Banks lose. Businesses have trouble. It’s a challenge to everybody. So, it is really, in some sense, a survival-of-the-fittest sort of thing. So the people who’re fit, the people who’re lean and mean, the people who see it coming, are going to do better than ever. For the people that don’t – well, there are going to be a lot of casualties.
Jake Hoffberg: Okay. Well, now that you’ve warned us about this impending disaster and how all of your cycles are pointing down right now, what can people do right now to protect themselves and prepare?
Harry Dent: Well, the biggest thing is: get out of the bubble. In other words, your real estate, whatever is in your stock plan, any other investments you own, including gold: these things have all been in bubbles to different degrees, and they’re all going to crash. You get out while they’re still near their top or maybe at their top, if you’re lucky. You’ve been given basically a free gift by these bubbles. Things are worth more than they should be, so you cash out now. Then you wait, like Joseph Kennedy did in the early 1930s, for the crash, and then you start buying stuff at 10, 20 cents on the dollar. It’s the “sale of a lifetime,” and it doesn’t get better than that.
But you don’t have the resources to do that if you don’t protect the assets you have now and maximize the cash flow in your life and in your business. Cash and cash flow are king. Some people can short the markets, and there are good trading systems we have at Dent Research that can take advantage of this. But for most people, just protect what you have, and let this crash happen. Then the opportunities come one after the next.
Jake Hoffberg: Harry, correct me if I’m wrong, but you’ve taken steps yourself to prepare you and your family for this upcoming crisis, haven’t you?
Harry Dent: Yes, of course I have. I have not owned real estate. I didn’t when I was living in Florida, since late 2005, when we warned the bubble was about to burst, which it did.
I have owned one property in the Caribbean, because it’s secluded; it’s my safe place to go. It’s had improved zoning, which has protected me from downside. That’s the only real estate I own. I don’t have money sitting in stocks like most people, and things like that. So, I have a safe place to go where I am living now, in San Juan, Puerto Rico. I rent a very nice condo with great views. I don’t own it, because that’s in a bubble.
So: be in a safe place. Be out of real estate that’s not strategic to your life. Again, my vacation property is my getaway, and it is strategic, and I can’t replace it. However, I own as little as possible. Plus I’m in a business, and I’ve obviously positioned Dent Research to grow if this downturn happens – just like anybody’s business can.
Jake Hoffberg: Well, Harry, that’s a really bold move: moving to a different country. But, understandably, not everyone can do that. They can’t just sell everything and move. So what else can people do today to help protect their families from this crisis?
Harry Dent: Well, again, people can sell most of their financial assets. People can lease and rent more than they buy things in their business, or in their personal life. Yes, not everybody can move to the Caribbean, or Switzerland, or somewhere like that. Frankly, people ask me: “Why did you pick Puerto Rico? The country’s bankrupt.”
You know what my answer was? “At least they know they’re bankrupt. We don’t know we’re bankrupt here.”
They have problems. They’re having to deal with it. They don’t have the quantitative easing we have to just blow their way out of it and cover it up. So, I feel better being down there.
But, for example, if you’re living in a big city, you’re going to be safer if you’re in the more ex-urban areas of that city. You’re going to be safer almost anywhere in the middle of this country, where we didn’t have as big of a bubble. And you’re going to be less safe on the coast, in the most bubbly cities.
Do not just avoid bubbles in your investment. If you’re in a really bubbly area, there are going to be more bankruptcies, more foreclosures, more civil unrest, and rising property taxes and all types of stuff to make up for it. So it’s really just common sense. Get out of the bubble and live in as safe a place as you can.
Jake Hoffberg: Great. So do you have an exact date on when you believe all of this is going to happen?
Harry Dent: I do see more signs that this bubble could finally burst somewhere between late 2016 and very early 2017. I have a hard time seeing it lasting past that. The elections could also affect that. If things start crashing into the election, it’s going to favor the outsider candidate. On the other hand, if somebody like Trump wins, who’s more of a wildcard, Wall Street’s not going to like that at first.
Of course, I’m also saying that Italy is going to be in default mode by early 2017. That to me is the first big trigger that’s going to be hard for central banks to deal with. So, I think it’s coming – we’re going to top by early 2017 at the latest. Then we’re going to see two to three years of the worst crash that we’ve seen since 1930 to ’32.
Jake Hoffberg: You’ve also talked about oil and gold: that we’re going to see oil prices collapse, and, controversially, gold, you’ve said, is going to collapse to $700, and then tumble down to as low as $400 or $450 after that.
So, to summarize, you believe that there’s a genuine voter revolt taking hold of this country that’s ushering in an anything-but-what-we’ve-got-right-now revolution that will cause greater civil unrest as an unstoppable depression washes over America. You believe that this economic crisis will cause a depression like we haven’t seen since the 1930s, where the Dow and the S&P will resume their precipitous slides.
And, according to what we believe is the world’s greatest economic indicator, they’ll tumble as much as 70% to 80%, reaching 5,500 or lower on the Dow in the next three years, maybe even as low as 3,300 to 3,800, after which they won’t start to recover again until around late 2022.
Banks will crash again, but even bigger and harder than they did in 2008, as it becomes nearly impossible for most clients to pay back the insurmountable debt loads they now owe, and the government will try to bail out only the biggest banks, but they won’t be able to this time. Oil and gold will be hit hard. The two most-talked-about commodities are going to continue to freefall.
Harry Dent: That’s correct. And for some people, the only warning you’re going to get is me talking to you right here and now. You’re not going to hear about this on the news until it’s already happened. The government won’t say a word because it would cause panic and just make this bubble burst faster. And yes, the crisis could arrive literally overnight. There will be very little warning. We’re already seeing important warning signs, but believe me: I’m not just trying to scare you here. At this point in my life, all I want is to help Americans and others around the world protect themselves and position themselves to profit when the dust clears.
The only question is: will you take the steps necessary to get ready? I sure hope so. Because as I’ve been telling you in this presentation: the downside is enormous while the gains in this desperate QE (quantitative easing) and free-money world are declining fast. However, the opportunities will be huge if you’re prepared when we get the greatest reset since 1929 to 1932.
As dire as all this sounds, and as difficult as the years ahead will be for most people who don’t see this coming, this is not the end of America or the world economy, as some would have you believe. It is the beginning of the next revolution in politics and business and technologies, and the beginning of another global boom that will be dominated, this time, by demographics in emerging countries, in countries like India and Southeast Asia. So, there are different places we’re going to have to invest when this crash happens. We’re going to guide you through that.
Jake Hoffberg: Good point, Harry. Now, I know our viewers are wondering how they can protect themselves and take advantage of the myriad of opportunities that will arise from the next crash.
Here at Dent Research, we have a team of economists, demographers, researchers, and investment analysts working diligently to prepare our members for what lies ahead. You’ll know what’s coming next, where the immediate opportunities are, and where to park your money for the longer-term.
We’ll tell you when assets such as real estate have finally and truly bottomed out, in case you want to snap up bargains or ride the next real estate boom higher. More importantly, we’ll tell you which countries and regions will bounce back the strongest, and when. In short, you’ll have everything you need at your disposal to survive and prosper from the volatile times ahead.
This is the most important shift in the economy you will see in your lifetime.
Harry Dent: Yeah. Thanks, Jake. It was my pleasure to be here. I just want to remind folks that, as on-the-money as my research and forecasts have been in the past about the ’90, ’91 recession, the crash of Japan in the 90s that nobody expected, the unprecedented bull market from 1993 to early 2000, the real estate crash of early 2006 forward,
I’ve never been more certain about what’s ahead for America than I am right now. Because what I’ve learned, very simply, is that the greater the boom and bubble, the greater the burst. And we have seen the greatest bubble in all of modern history.
And given the tireless research I’ve done on the subject and my history of successful forecasting in the past, I know I can help you prepare and prosper in the weeks and months ahead. Because, while everyone else will be wondering what hit them, you’ll have seen it coming in plenty of time, and you’ll have a clear, profitable plan in place. So, I urge you to join me now.
Jake Hoffberg: Harry, thanks again for joining us. And, for you at home, if you’d like your free copy of Harry’s latest book, Sale of a Lifetime, go ahead and click the link below now.