40% stock market crash by April 2021: Harry Dent Prediction - Solomon Investor
All right, welcome everybody to another episode of Solomon Investor show where we look at wisdom from the world's wisest man King Solomon and translate it for the 21st century investor covering everything between health, wealth, faith and excellence. Today, I'm joined with economist Harry dent, somebody I've been studying for. Gosh, Harry, eight years. I love your rants, and your newest book, zero hour. You know, Harry today, arguably the most unprecedented time. I mean, all the inauguration stuff in world history. I'm excited to talk to you, man. Welcome to the
show. Yeah, yeah, good to be here. But I think we first met in 2015 in Whistler, Canada, it was at a Tony Robbins Putnam partnership, Private Wealth event. And Tony
brought you in to share on econ. You know, on the economy, what was happening, what was gonna happen over the next 36 months demographics, obviously, you know, you're the guru of demographics, you won back then, you know that those are coming stock market crash. And I remember in 17, seeing, you know, the quantitive, easing, getting pulled back a little bit, everything starts to implode, I'm thinking this is that all sudden, they just ramp it back up and manipulate the market again, then in 2020, I mean, it was already going to happen. I think we can both agree it was already it was
already there's already gonna happen. Then the Fed pumps more money after the 2020 crash, which again, you predicted, unbelievable amounts this time on 35% of GDP, add up the fiscal and the monetary stimulus they did on 6% was the most they did in the year in the Great Depression with 25% employment. This is my goodness, yeah. Well, and now, you know, we're back to, you know, hitting high the record highs, and yet, our economy is completely stagnant. Sick, it's, there's a massive disconnect. And so you're convinced that the largest stock
market crash today it's coming in 2021. And, you know, with all that, I mean, time news, economy, everything is changing so fast now, like you couldn't put something out without it already having some updates. So I'd love to I just put to update. my newsletter just came out in January on Monday, and I put two daily updates since. But that's what yeah, that's the type of time we're in.
Yeah, it's crazy. Share with us right now. More on that coming stock market crash and what to be aware of? Well, you know, first thing and this is the hardest thing to get across because it's it's such a long cycle. I study cycles. And the demographic cycle is my unique cycle. I discovered in
the 80s, consulting the entrepreneurial business people and having to deal with the new baby boom they were dealing with instead of the aging Bob Hope generation, fortune 100 companies I used to consult with Bain and company we're dealing with. So I just saw this baby when I started getting demographic, okay, there's about a 40 year cycle of about 26 years generation grows and spending as they age, and then their kids leave. And then there's a downturn to next generation. That's a big thing. We I predicted so many things off of that, including the collapse of Japan in the 90s when everybody else was booming. Because demographics are destiny
demographic, the most predictable thing is when people spend money, and I don't mean just peak spending at 47 today in the US or 46, back in that boom for the boomers. But I mean cradle to grave. 84 is the peak for nursing homes. 27 is the peak for people for apartments, young people move in as they get married before they can afford a house and then everything I mean, insurance life insurance is 58. I mean, there's not
anything you can't bring up that I probably can't say, Oh, this is when that peak, nobody's aware of this economist aren't aware of it. businesses grow, grow, grow and then all of a sudden their business goes down and they go well What happened? Well, your you know, your generation your kid Pete, they don't need you anymore. You should have seen it coming in you don't so so that thing but there's a big cycle that I discovered more like eight years ago, but my co author of zero hour, he's a big cycle guy we met at a Tony Robbins thing in Miami 2008 and it's a flat thing. And and he'd been reading my books and we just hit it off. And so we end up writing a book.
Yeah. But he said, Hey, Dan says we have all of our cycles matched 80% of them. But he said Dan says 45 and 90 years cycles important. I've said oh I don't have that. So I dig dig dig. I
got all this research. It very didn't take me about a month to say oh my god, that's a technology cycle. steamships, railroads, automobiles. Yo, Jess, you know, every 45 years like a clock in more clock like than any of my cycle. But there's a more important cycle, which I knew about, but I didn't I kind of knew about but didn't know the reason, a 90 year cycle and stocks ever since stock exchanges were created and stocks became a thing. And now they're a huge thing, obviously,
late Sunday night, every 90 years, you get a super bubble and a super crash. So that's once every two generations actually a little more than two generations. So that'd be 40 and 4080. But we are hit we hit a generation cycle of down spending 2008 on which I predicted way back in the day.
Exactly. And it happened. And that's why we've been living off the QE and it wasn't just a normal, it was the baby boom, the largest generation in history. Now not spending in greater numbers. And it's so is a really deep downturn. So printing, printing, printing printing, well, that printing actually feeds right into this 90 year cycle, which peaks around 2019 to 20. So the last 90 years cycle peak, which everybody would recognize night, late 1929 peak and stocks in the late 32, crash 89% blue chip Fang like stocks went down.
Yeah, 25% unemployment, the worst downturn in history, and nobody saw it comment. And you know what, even my demographic, my demographics would say we'd still be in the late downturn of the baby boomers into 2020 23. But nobody would expect that we're going to see the worst crash at the end of what I call this winter season. And that's what we're in. And that's what they're fighting Blake. I mean, they they know it, the central bankers have tried to try to pump us out of the 2008, nine Great Recession, which was the beginning of that baby boom, down, and they had to pump way harder than they thought. And they're still doing it. 12 years later, they they thought a
trillion or two, and we'll get over this this little crisis. And what you know, they didn't understand the biggest generation is it stops spinning, we got unprecedented debt levels all around the world, but in the US and in particularly into and this is a major thing. So they had to blow us out of a debt in a generational downturn. And now what to do that the only thing they found a work normally they say, oh, we'll make interest rates low. And we'll we'll make credit easy. Well, nobody needed to borrow after the Great boom, right? It was over borrowed and over and over leveraged businesses, consumers, even governments didn't need much capacity. And so what they found
by accident when they first saved the banks with that big jolt in 2009, a quantitative easing, they realized, Oh, well, they kind of save the banks. But what it really did was pumped up financial assets. And that made at least the top 20%, particularly the top 1%. who own those those financial assets richer, and they've been spinning ever since Oh, man, I mean, yacht sales have not gone down and BMW sales have not gone, you know, on and on and on and on. And so and so. Yeah. So
that's where we're at, we're at the top of this bubble, and they're finding it harder and harder. It wanted to blow and the COVID was the perfect trigger. And they replaced an entire 20% collapse of the economy with with 3.6 trillion
of money printing monetary. And now 3 trillion going on another couple trillion with Biden coming in, in fiscal stimulus all in one year. And people don't understand how it's hard for most, it's hard to comprehend, you know, a billion, which is 1000 million for a trillion. When they're dealing with, you know, a small six
figure salary. It's hard for them to comprehend how bad this is. And if you put that inside of business, get tangible business, not a stock but a real, tangible hard asset. And you turn that upside down, you would see it's how sick it is.
So people don't understand how sick even the publicly traded companies are. You know, I mean, we talked about the zombie companies. Yeah, that's 19% of a publicly non small businesses publicly traded large company t percent of publicly traded companies not paying their debt service or interest or principal. Explain. I think there's like a numbness of a lot of people I talked to who are stuck in the market, and they just have that that the the trigger finger to get out. It's broken. Explain. If you got 19% of all publicly traded companies, zombie companies are not paying debt service interest and principal, explain really, how bad that really is? We'll see. Normally those companies would be foreclosed on, but the banks don't have to foreclose because since the Federal Reserve is giving them constant liquidity and money, they don't have to declare they don't want to declare losses, and they don't want to foreclose and the businesses don't want to be foreclosed on. So everybody gets a free ride until something
goes wrong. And then the whole thing comes down. So what do you have is it These zombie companies, you have in addition that people understand almost all of the stock market gains have nothing to do with growing earnings. earnings are not growing is wrong. That's what cheap money and excess cash flow given for free to cut companies got their taxes got by Trump, they can they can borrow money endlessly at three 4% on on a corporate bond, it used to be six 8%. They can borrow money and just buy their stock and make their earnings per share, zoom up like they're going growing like crazy. And they're not the economy used to grow in the boom before 4%. Typically,
now it's grown since 2012, when this bubble started after the recovery period. And we got into this next bubble 1.65% with $25 trillion printing by central banks globally. And seven of that by the over seven and a half by the Fed alone in this country. So so it's just to grow that slow with Yeah, well, Gears of massive stimulus, anybody with their head, even half screwed on straight that wasn't on crack heroin and cocaine. Okay, I would say there's something wrong with the economy, if you don't like it that much. And it only grows that much. In my question is always what do you think we'd
have if we hadn't thrown all this free money? That's the question that is everything. Yeah, keep zombie companies going, keeps company stocks going up when when it's so when this thing blows, it's going to be so bad people are going to say what happened, and what was anybody's smoking. So I'm just telling people in advance, and people don't like to hear it, nobody wants you to share, it's like telling a heroin addict, they're gonna die. If they keep taking more heroin every day, for the next few years. They don't want to hear it.
That's a really good point, you know, with 25 trillion being pumped in less than 2% inflation. And that's not even, you know, consumer 1.3% inflation, they can't even get it up to two sustainably, that that's not even people buying stuff. That's
literally it just with that heroin just being pumped in and everyone on the high. So you know, and we'll get to where you think different investment classes are. So you know, for you guys interested in knowing what Harry thinks right now stay to the end, I want to continue talking about the economy. Because it's really the foundation of everything. If you don't understand what's happening, that you know, the financial education, what's happening in the market, you don't understand that. You continue with bad rules and bad rules put us in bad situations and successes of bad tutor when you've been living on a manipulated market, that that success is a false success. That's a bad theory. People
don't have a clear indication of what real good discernment or real good wisdom is for their actual wealth. And so, you know, you're you're seeing we're seeing the stock market peeking and you're predicting to see the largest crash in history by April is that currently the largest since 1929, and 32, which means bigger than the GFC, and any other crap bigger than 7374. Those were 50 60% crashes, this is going to be 70 to 90%, I think closer to 90, but again, you don't know what government is going to do to even sugarcoat that but I'm telling you, if they keep doing what they're doing, there is the end result and it's called Japan 30 years of a Croma zombie economy, they've got they never D leveraged loans and foreclosed on their companies and got rid of the bad businesses and stuff. And they got people employed doing nothing, pretending like they're working. Let's talk about that. So if, if that crash is going to happen, what can I mean we've gone through quantitive easing one, you know that that that small amount of heroin didn't work, you gotta go bigger, got stronger, stronger drug to the pump for more, so we got to quantitive easing to and and that kind of had its life shelf. And then we went into quantitative easing three, I guess they'd be monetary policy three, and we're about to get three with Biden and whatever the Fed does Next, you know, and Craig, if I'm wrong, but this this is really, you know, a picture that it's unlimited printing.
Yeah. It's the beginning Mario Draghi was the first one in 2011, to say, I will print unlimited amount of money to stop this downturn and to particularly stop short sellers from selling our crappy European bonds. In Spain at the time that we're still defaulting like crazy. Those of you listening,
you gotta ask the quality question, you know, am I investing somewhere that actually has a real company backing it because, you know, essentially, Harry got two different things like say Coca Cola, then you have a shell company. And what you were saying was the shell company, the actual stock, it doesn't have any rights. The new and people are investing into this thing. But the real companies over here, but there's no revenue over here. So for every single company and stock market, if it doesn't have any revenue here, and people are investing here, it's not real revenue, a lot of the revenues that companies do have is only because central banks have propped up the copyright and and rich people are spending on stuff they normally wouldn't spend this much on. And that sort of thing.
It's the everyday stuff that is necessary. That is growing naturally, that is still solid. But but most companies aren't in those businesses. And they're only leveraging their own earnings by buying back their own stocks, and investing to some degree in in in in their growth, which is not even real.
I mean, we wouldn't even have 1.6. Again, if we hadn't printed as much money, we would have had negative growth sometimes up sometimes up but negative net growth for the last 10 or 12 years, instead of 1.65. And instead of 4% in good time. So that's where we would be in most businesses would be what going under, in these more cyclical businesses that are not as stable and real. And another thing that people are having a hard time grasping, you know, with this sugar daddy approach of this V curve, is that, you know, the brainwashing of I'll just, you know, just set it and forget it, or it's always going to come back. And what I
hear you saying is, you know, welcome to a new normal, it's not coming back this next this next crash, it's not going to come back, there will be no v curve. And you're not correct, right? Yeah, I just give you two examples from from the last 100 years, the 1929 to 32. The top most comparable this because it was a super bottle. From that top, you would have had to wait until 1953 to get back to even 24 years. In other words, if you were retiring, or polio in 1929, you would have suffered an 89% crash in stocks and 30% in real estate and all this sort of stuff. And you wouldn't have got back to even until you were dead. long dead. Yeah. So the same thing happened from the top
in 68, adjusted for inflation in the stock market. That was the Bob Hope generation before the baby boom, even from there that taught we didn't get back till 1993. That was 25 years later, and crashed 50 to 60%. But still didn't get back to even 420. So stocks when the financial buy sell. That's right, stocks always come back, just just go to the downside. Yes, that's true. 80% of the time, maybe 90, this is not the time, this is a
super bubble. Anybody with common sense should be able to look at this stand back and say all of this is baloney. There's not a damn thing real happening. But government's printing money and everything propped up and people buying the stocks and zombie companies limping along because they don't have to pay their debts. And and, of course, that leads to bad productivity when you got a bunch of zombie companies, right. Um, so it when it goes down, it's not going to be a normal recession. And it's
not going to be a normal crash. And it's going to take two to three years and it is going to be these types of crashes or 7090. generational downturns like the 70s are 50 to 60% crashes that take a long time, this is going to be 80 to 90% and take longer than most people listening are going to live. And in fact, there's another thing we don't have a generation larger coming this time. The millennial was only a really great point.
First ones ever to only come back to where the last generation was don't need new homes don't need more card whenever they need more of anything long term. Right? Um, and then the millennials after them are nothing burger. They don't even have a generational bump Harley, they had a birth curve, but they didn't have the immigrants that fed the baby boom and the millennials. So so we are next boom, will be millennials. But it will not be as strong and it will not go to
heights and then after that we never even get to where we are now. So there's a different future. Now that's not the case for India, the merging with there's plenty of places sure there are going to grow. But most of the places we're used to what do we use to North America and Europe and now recent in recent times, East Asia, Japan, Korea, China, blah, blah, blah, East Asia has peaked. Except for China and urbanization. All the
demographic curves have peaked their their declines are worse than our baby boom declines where Europe and US at peak forever were the best of all those three, at least are millennials take us back to where we have a boom, we just won't go to new height. So this is going to be a new world and people people aren't going to see this crash and then they're not going to see it you Got to be more selectively where you invest in the future, if you'd invested anywhere from 1974, bottom when when Warren Buffett really got hot, and nutless monkey, by the way, could have done 80% as well as him, okay? I'm just being honest, if he just started when he started, okay, so if you'd invested in anything back then late 70s, early 80s, but before the baby boom came along, your real estate stocks want you to make a fortune could have just thrown darts. And if you're smart, you make a better fortune. But that's not going to be the case, in the next boom, you're gonna have to be in Southeast Asia, and in India, to really find growth.
And that's the problem is what people don't understand is, is it doesn't just come back, that they've seen it come back so many times because of the false, you know, all the manipulation. But this is, this is not just a major sell off, that we saw in March, where you just get a rebound right away. This is a structural downtrend of the equity markets is a demographic shift. And in Japan's already seen, so what I also tell economists, what does everybody study Japan, they had their baby boom, 15 years ahead of us and 18 years ahead of Europe, they went through the same bubble, we've gone through real estates, it crashed, and then they've been living on QE forever in a zombie company, they're now 30 years into a zero growth, zero inflation economy. And they are never going to grow again ever. And they're about to see their millennial generation decline as arrows. We're not what really happened here, the
millennials pulled them out of that the millennials are peaking right now in late 2020, early 2021, and they're going to have another steeper demographic line, demographics have shifted in the developed world. And they're, we're never going to grow like we did before. All the demographic growth from here on out is going to be in the emerging world, and particularly Southeast Asia, and India. And you know, don't worry, because that's 2 billion people to invest in. So there's plenty of
growth, but it's going to be there. Africa, too. But Africa is still Third World corrupt, not the place to be for a good while, but but that's the place to be coming out and you won't go wrong, if you diversify in those areas. But if you go back and say, Oh, I'm gonna go back and buy Germany and Japan and China and US and Canada, you won't do so well.
And you'll only do very well in the US. You will your you're talking about this 19 year cycle for the stock market. And we've hit it. You're talking about a baby boomer generation 40 year generation cycle approximately, which started down in 2008.
So there's a thing is already in a downtrend. Yeah. The the next generation behind them, these millennials have don't spend as much they don't make as much the generation after them. They're honest, they don't have a steeper curve of growth, not not even near there may be more of them. But they started from higher levels in their growth rates are nowhere near what the baby boomers were. So you're not going to have as dynamic and economy. It doesn't start there. Boom doesn't start until somewhere in 2023 to 2024. And then it'll go only till about
2036 or seven, it won't be as long a boom in between 2021 and 2023 24. That there is nothing coming to actually fill that gap when that crash comes a big crash. And you know that the crash is going to be the best thing that could happen. It's going to be very painful, but it's going to clear out a lot of debt. A lot of bad companies a lot of detox though, on a on a pedal, a little bit of devil's advocate with you. Because Fed has had many things up their sleeves from the cue. I mean, before q1 even came like that was not even
a thing that you could just pay your way out by making printing fake money. So if we understand that q1 and q2 did did something, but the more they printed, the less it did was done. And then now we've literally printed over 3 trillion and it barely was a blip on the radar. If now they can print Unlimited, here's a here's my playing devil's advocate with you. How Why? Why would there not be another V shape recovery? If it has this massive crash? What would be all the industries that could come back have already come back? Travel is not going to come back overnight. It's going
to be a year or two minimum cruise ships, airlines hotels, certain sectors of retail. commercial real estate has been cut forever. It'll come never back to where it was ever ever. Retail. There's I'd say 20% of the economy never come back. Again. My experience in Puerto Rico after the hurricane three months wipe out like COVID nothing happening and then a slow comeback even today. years later. 20% Have the small businesses and restaurants around me never ever came back and never ever will. So you don't recover and where do
people spend money especially in COVID day? Okay, people got a little extra money with all these things. What do you do I keep you I can't even travel. So are you spend money traveling? I can't go anywhere.
Are you expecting multiple publicly traded companies to shut down and actually close shop and yeah, not not get bailed out? Oh yeah, zombie companies already aren't doing much and are employing people unproductively what you're supposed to do in downturns which are healthy. By the way, God isn't an idiot, okay? We don't always boom, it's 3% a year with 2% inflation like the Fed wants, because God's smart and the Fed people are dumber crap, okay? They don't understand anything about the dynamics of growth. It's the play of opposites. You can't have booms without bus inflation without deflation. Guess where
the innovation comes with high inflation or deflation in downturns, all the innovation comes if we don't have downturns and don't clear out stuff and force people to do what he called to do forced people to go online. Now they're going Why didn't we do this before what was wrong with us? That's how innovation happens. So the Fed wants to have a machine and make everybody happy. So they in the politicians stay in office and
they're doing the wrong things, you'll get the best result and I cannot wait. We're not going to have central banks much after this. They're going to lose so much credibility when they fought this thing for over a decade created the biggest financial asset bubble, you haven't finance talking about trillions. Let me give you a good number 507 still going up trillion financial assets in the world, six times the global GDP at 86,000,000,000,006 times GDP, that number would normally be two to three, and debt would normally be one and a half to two. Now debt is four times and financial assets is six times this, you got that much trillions that's going to have to disappear, unproductive money just going into speculation not creating real jobs and real goods for real people that are sustainable, like the real businesses they're doing who will survive this downturn. It's the crappy businesses, the
speculative businesses and then all this funny money and all these zombie jobs, they disappear that clears the debt to grow again and have more productive teams get off their ass like COVID showed and do something more innovative until it gets kicked. I fully agree with that what keeps the fed from you know buying ownership into the companies in you know feed they'll just keep doing this until it doesn't work you get you get diminishing returns on anything. My thing when people when I see this thing I say look I I've spent the last decades in San Francisco and in South Beach Okay, home and drug addicts okay homeless people and everything anything you want. Anybody
understand addiction, addiction you taking more and more of a short term, enhancing drug whatever it is, it doesn't matter what it is makes you feel better or makes you perform better short term, add an X add a long term expense of your health Okay, well you keep your hand it's exponential it takes more and more they call it tolerance in the addiction industry more and more to get the same high or to keep from coming down from that high. Oh, the more and more you take the faster your body generates. Addiction only ends in one or two scenarios you die or you totally collapse after everybody told you you should stop and you don't do a nobody right you totally collapse and end up in rehab and are forced to stop or die if you don't that's all there is no other outcome when you take more and more this is a financial drug we're taking more and more QE in zero interest rates should zero interest rates be zero forever Why do you think there's a rate for interest so why is this happening productively and clear our hurdle? Zero they're gonna waste it. You can you can make money doing crazy stupid leveraged stuff. Any moron can and that's what Wall Street a bunch of morons. Harvard MBAs like me
morons making leveraged money off of cheap money without a nutless monkey could do and they'll do it until it blows up and then they'll all be out of jobs and nobody's gonna cry when Wall Street goes down. It's a great point. And you know, we both agree the writing's on the wall stock markets completely propped up, it's massive money printing machines very sick, it's stagnant. The drugs have been pumped in they're less and less effective. And so let's talk about the detox what actually what is going to happen by virtue of its its forced by the law of nature, what's gonna have to happen in that detox to actually have a full cleanse system? Well, what has happened is the system has to fail enough that the central banks can't bail it back out quick enough and that That that almost happened in COVID. But they've really I
mean, they really stepped up, they saw that coming, they knew it was going to be at 20, they're going to new is going to be a short term depression, they replaced 20% of GDP. That's really a great expense. Now that costs real money real, we had $3.2 trillion deficit in a growth period, not in a depression or downturn. Next year, and in a real downturn, it's going to be 4 trillion plus, I'm dying, addicting today, by 2024. k, federal debt is going to be 40 trillion. You know what I
predicted that years ago, because it's been doubling every two administration, five to 10, the 20. And then Trump comes in two administrations later 2024 40 is going to get there through huge deficits. You can't keep doing that. So we did this just to get over a three or six month COVID crisis 35% of GDP. So what are we going to do next time print 50%. There's a point where it just doesn't work. And where have we gotten off of that? Well, we avoided a downturn, but we are not at better levels than we were. People say, well, we're not
there's a lot of industries we know that haven't come back jobs haven't? Correct. It's all okay. Because the government's given anybody unemployed or any business struggling, or here's money. Well, and if we're honest, I mean, the majority of small businesses are absolutely suffering. I mean, you shut the
country down, that PPP loan was a joke. A lot of the businesses don't get that even though they could is too hard if something goes wrong. And unlike the biggest zombies, they can't float a bond it three or 4% and raise money easily. They have to go to a bank and the bank says to a
small business in the COVID period where everything's uncertain, giving you a dime. And if we are it's going to be a shark race, right? It gets the money. So when when is it, Harry that the American people will actually like, click, they lose trust in the US dollar in the stock market in total? Well, you know, that click, that's what it takes. And it's looked like that before I've thought before then I had to go back to my Subscribe and Save. No, I mean, because I'm always tell look, you'll know what how you have it, when it when it really peaks, you'll have a very sharp crash, like the COVID crash. And in this case, it'll
happen the next time I'm predicting it will be 46% instead of 35%. Because every crash since 2018, is taking us to lower lows and going deeper. And there is a depth that you go to when people finally see Oh, this isn't working. We've done this now four times. And this crash is even worse, even though
they printed 10. By the way, you said earlier QE two, printing the same amount of money in eight months, that QE one printed in 18 months, a 10th of the time, they print exponentially more. So so you can see how if we had to do that, okay, let's say we got to print that much in 80 days, three or 4 trillion monetary and another two, three, there's a point where people say this isn't working. I'm running people run out of the stock market smart money for you know, so there is that point, it hasn't happened. And I feel like we're getting close here because I'm you know, now we got mobs storming the Capitol. Right? You know, and I hate to say it, but
I mean, you know, now the republicans finally figured out Donald is a little crazy. I've been saying for years, does he have to start drooling when he talks? Does his colon bag have to start leaking? While you know, while he's walking? I mean, what does it take everything he's done has been crazy, against the grain, some of the good some of the bad, but he's not a sane person. And he is incredibly selfish. And and he just threw the republicans under the bus with his $2,000 stimulus thing. How long for the sales? Well, I'll tell you, just
last night, Trump lost a lot of credibility. Yeah, other sides seen this forever, but his side is not saying people are fleeing at the speed of light. That's, that's a sign. Yeah. Endless perspectives on both sides of that. It's, it's hard because there's so many different facets, but, you know, back to the economy in in people's, you know, for my, for my listeners, it's this mindset that they've got this nest egg, whether it's 250,000, or a million, or whatever it is, and they've, they're putting it somewhere and they've been, you know, propaganda lies to put it in the stock market. You have to go that you can't get me any money on safer bond.
And so at this point, the realization for most, you know, these are the baby boomers, and they're realizing I don't, I don't have, you know, 30 or 40 or 50 years to, to recycle and let it come back. I've got to actually have a store hold of wealth, I've got to put it somewhere. It's not that because I can't have the volatility and then I've got to actually make something. So as a Solomon Investor, you know, in, what we're going to talk about is King Solomon one He wouldn't have done derivatives or quantitative easing or, you know, make films, or not being in King Solomon's age. Yeah, I mean, Old Testament age no something for nothing.
You literally worked hard for what you got. And, you know, there was, it was built on this, you know, direction of actually hearing from God, he stepped into being the king. He actually walked by faith in that he built the prosperity in actual owning, you know, actual tangibles. And it wasn't leverage leverage let him that the leveraging is what obviously guys in this in the first place, you've talked in the past about how 1913 is when the central bank's you know began. And people don't realize
that people think the central banks, the Fed, I mean, this stuff is just our friend, it's, you know, it's the doctor, it comes and helps us. And clearly, it's it's actually what has put cracks in the system. It's what created the derivatives cracks. And it's what maybe when it first started, it looks like a great shiny idea. But this is literally, we're all experiencing the turmoil that printing manipulative money, you know, actually what it does to an economy. And so just to kind of tie a bow around your prediction on the stock market.
Any more details around that April timeframe you want to share? Well, you know, again, we have now as we have this time COVID, I've always called the perfect trigger, because it's like, because again, it's like the hurricane, it does damage and you don't recover fully for a long time. And people still don't understand that they're acting like we recover fully. And as soon as we get these vaccines, we're back to normal and on a lag to that we will be somewhere but that's that's at least summer or fall in this fact, the vaccines are coming out much slower. So what we have is this danger period in the first and second quarter before the vaccines can start to prove and and and start to limit the threat and the spread of this fire. We were still going to new highs recently, you know, and and that affects the economy. And in socialization. They all I
mean, this COVID thing is, it has been much worse than expected even than I expected I thought it would have worn off by now. So this is the time where I think because of the diminishing returns, and all the uncertainties and now the mob reactions and all this stuff. And that in the next two quarters, the economy is going to keep getting weaker. And people said wait a minute, we just printed 35 we just stimulated this much. And we're weak, again, not crashing but weak. And you know, and then stocks start falling and realize
all those people, semi rich and especially the super rich and put all their money in stocks and high end real estate and stuff. And that stuff alone crap. We don't need banks to fail. We don't need loans to fail for the next crisis. $507 trillion of financial assets just loses 20% and then 30 and then 40 100 $200 trillion. Two and a half times GDP I'm predicting will disappear in the next several years and not come back. That is alone causes of depression because rich people
will be the fastest and stop spinning out and they'll be dumping their yachts at 20 cents on the dollar that they borrowed against Oh, and and loans will then fail. This is what I had an arguing with Ray Dalio. It last Tony conference in February. He had this brilliant Oh, there's this long cycle. And there's a
short cycle. They're coming together here. But he says it won't be as bad as the GFC. Because the loan exposure is not as bad. I'm like Ray, wake up. You're the problem. You're the
biggest hedge fund manager in the world. People poured money into hedge funds like yours in this overvalued stock. It's that bubble that's gonna burst not the loan bubble. And then when that causes the economy go down, all these loans will default loans are way overstated, but loans are not going to be the biggest trigger at first. It's going to be this bubble itself finally bursting. And I think that's what's ready to happen.
How much higher can stocks go? even notice after all the stimulus, they went back up at first COVID now that is all my stocks now are in s&p, NASDAQ Russell all of these are narrow channel just edging. And I think they're getting ready to blow between now and mid 40s. My forecast in the next crash in within two to four months will be 45% in the s&p and over 50% of the tech stocks and Russell 2000 and that's when rich people and everybody's gonna feel it and say this failed again. And that's when the rich people are going to go back and say Hmm, not buying another BMW not buying another yacht yacht buying another my third vacation house in Australia which I'll never get to but it's a good Investments sort of stuff, all that stuff will stop and then boom, you will not be able to print enough money when that gets enough. So
how does that? How does that integrate with your four year presidential cycle and how that ties into a, you know, a bull market? Well, yeah, the four year presidential cycle is done. That is because the Fed used to pump it was the Fed pumping a little and then not in the material. That's done only pump. Yeah, that cycles gone. What cycle is still here other than the 90 year and the 40 year generation 20 year cycles, booms and busts within that generation, and is particularly the 40 year, which is the demographic, the next the last the last 20 year cycle, a 40 year cycle hitting 82 and then 2000 to 20 year and then 40 year cycle and 20 hit it the end of 2022. So this crack, I had to
had Blake, this target, back to the 80s. When I came out with my demographic theories in this whole boom and bust, the baby boom by 2022 to 20 will be at the bottom of their cycle downturn. And this 20 and 40 year cycles will intersect in late 2022. And late 2022 will be the lowest we ever see the stock market in our lifetimes or our kids lifetime. predicting that back then just on basic cycles. And now they've just delayed the
top of this a bit but I'm talking, the more they pump it up, the faster it'll crash. I say by the end of 2022, early 2023. Stocks will be down 70 90% real estate, unlike the GFC down 34% will be down 50% and high end real estate will be down 70 and junk bonds will be down 60 we're gonna destroy that 200 trillion globally in the US that number out 125 financial assets trillion is about $60 trillion disappears. That's three times our GDP poof, gone. You think you can spend your way or you can print your way? Oh, okay. Well, I'll tell you the number the Fed in the US would have to print 60 trillion to offset that deficit. If they can get away with that
work. Right. And yeah, there's the Ponzi scheme has to stop. Ponzi scheme has to stop. Yeah, this has been the greatest I have to give it to him. This has been the greatest and anybody like me who's fought it looks like a total idiot. And I'm sorry, in people I had a guy
in Australia, he's the Donald Trump of Australia real estate King there. And he's like he was even saying back years ago, he said, Well, Harry, I get it demographics are slowing down real estate is kind of overvalued. But why can't we just kind of get up here and stay here? Why don't we go down, I said, I'm not gonna say his name. I said, Joe, if you can find me one time that real estate or stocks have gone up in this trajectory and overvalued and gone up there and stayed there, I will kiss your ass in public. And I have no risk of that because you will not find one that I've already learned.
That's a good point. And so kind of tying a bow around this for some of our listeners. We have central banks in the late stages of taking over the free market capitalism. They destroyed it destroyed. So I just said they call it democracy. Nobody
decides election and Donald Trump's finishing it off. And the central banks have taken over free market capitalism by setting interest rates and driving the economy. They would not letting it grow and rebalance the way I do naturally. It knows better. So we're on need of a detox. Yeah, we need a detox now on that I was when I was Australian one guy stood up. He said, You know what Paul Keating said what you're saying he said when we find the only had one recession in my lifetime in the early 90s. And Paul Keating stood up and
said, this is the recession we had to have. That's wisdom. They needed a detox. And they did that for a year and then boom, they haven't had a recession. And they're gonna have one now. Yeah, and this is like this is the financial literacy that people need to understand is you know, and this is why King Solomon would actually not be in the stock market he wouldn't actually be in the in the paper in the shell companies in this Ponzi scheme he would actually be in those hard assets, hauling sand to people building beaches. Okay, so you go Yeah, yes, the actual hard assets and so so let me ask a couple questions that don't get talked about very much. I mean, they have more fresh for some of my listeners and that's the the new stuff that's happening you get you know, China just rolled out their own DVDs see the central bank digital currency and you know, the US is now expected to assume the next year proud, you know, their digital currency and begin this this new shift from our actual currency or physical tangible currency to the digital currency. My question for you is, do you
believe that they can actually one, keep control of the actual currency? I guess go there? Do you believe that they can actually control understand crypto, we can talk about that a second, but do you believe they can actually keep control of the currency? No. And good thing that is not the outcome we need, we need the green, we need digital currencies, backed by a standard like Bitcoin, when it gets valuable enough and stable enough, I'm believing that could happen. And within a decade, maybe less, all it has to be is 400,000 a coin to have the same value as all the gold in the world. And in less than that, maybe 150,000 just to be all the investment goal. And that's not
enough to back the economies now. But still is there's some number it's enough to back and when enough people own it traded instead of this illiquid, crazy limited thing, then then it could be more stable and in Bitcoin could become or something like that a standard for a digital system that creates money out of natural transactions, including loans, loans or way we create money. Now, the difference is central banks are always in the business of stimulating their economy, pushing more loans, and lower interest rates and tax savings and all this sorts of the manipulate everything. Oh, and
they want to push down their currency by their current. So their exports are more competitive, even though they're not this is all cheating. This is all a not in the interest of real business in the free market system. And that's why they're destroying it by printing money and taking over. So what the new
system needs to get. We're not going to get there overnight. The crash is the first thing, destroy the credibility destroy forever the credibility of Central Bank, we didn't have one for 1913. We may not have one except for emergency lending after this may not have one and I hope not okay, because we didn't need one before. And right away 1913 at 20 years,
what do you have the bottom of the greatest depression after the greatest bubble in history? It's true, who is the first central banker john law in France in the early 1700s, he in England did the same thing following his link pumped up a whole bubble and then it crashed. That was the biggest the first big stock crash in all history. When there weren't even stock market, the biggest companies supported by Governor's the world crashed because they pumped him up with the same thing we're doing now. It's so interesting, you know, and with that, so that we get the IMF and the G 20 of his entire agenda, no control. And we're not just changing from the the currency, there's this physical currency we have currently is not just changing from one currency to another, and we're looking at more of a form of socialism. And so do you believe
this is not so this is the ultimate free mode? Okay, think about this for a minute. We got 50 states the United States What if every state had their own central bank and their own currency and their own money laws all that stuff? It'd be crazy to be very hard to do business of course Europe has gotten away from that with the EU and the EU is problem is not that the EU promise you got strong states and weaken it. And they create this spiral where the the overland of the weak states and then they default on the strong states. So that's the
problem the EU, the EU thing and having one currency is is an advantage if you do it right. It's crazy to have all these central banks around the world stimulating cheating doing all this stuff and not have one global currency that has its own global standard and central governments cannot cheat without paying a hefty price and therefore they don't cheat as much that's what the gold standard did for a long time kept governments from cheating and when they did well then we all got off of it. And now what do we have what away once we got off the go then what is the greatest bubble in history? And still with central banks now even stronger because of that? So do you believe that America that this is this direction to central banks is Do you believe that going into a socialist communist mindset? No when you have this sort of thing you bring back when you make it a fair playing field globally and make money real and don't over distort it and make it too easy and reward unproductive all this stuff rewards on productive investment. Money velocity is my
favorite indicator so simple. a moron could understand it. It tells you how fast loans and stuff are turning up. are you investing productively or not? Money velocity has been going down since the tech bubble of the late 90s. It's going down down down to the lowest level we're almost at depression levels even in this boom. So we need to invest money reward that we need a global free market system that can't be cheated and bastardize like this one. That's the tree we have to bring free
market capitalist yet. Moving and dynamic So but you're talking about something like Bitcoin it's outside of the actual control of any central banks. It's a global standard, right? Okay, so this kind of central banks want to create their own digital currency. So they can still manipulate their economy right? They're gonna fail nobody's gonna want their stupid digital currency.
Yeah, and so that's what I'm talking about as the US is actually trying to create their own digital currency. So they can continue this manipulative you know, socialist cycle where they can actually have control why we need the Bible the birth until these people lose credibility for what they've done. And people see him as the moron something for nothing policies, just get reelected and keep the dumb peasants happy by printing money and keep the bubble going. When people see what they really are hucksters, shysters, then they won't listen to them anymore, and they won't want their digital currency. Once they fail. Yeah, you've got two different things here. You've got you've got this capitalist mindset that if if, if you're if you're controlled by a central system, it's a manipulative system, you can't really be a capitalist system.
This isn't a central top down. See, here's the point. It is a bottoms up system. Democracy is a bottoms up system on voting and free markets supposed to be bottoms up, we'll be right that has that has gone back the top down through central banks getting power and government. They're manipulating the economy, a bottoms up economy, cleanse itself, your body doesn't need half the crappy given and all this stuff. It
knows how to heal itself. If you just do some healthy simple thing. It knows how to heal itself. And 90% of the drugs we're taking are making us sick or not. That's just so that's what we're doing in the economy. So when you learn that lesson, you live differently. And so we have to have this crash. Number
one, no, no, no. I have in my cycles. I have another big cycle. 250 year revolutionary cycles, I mean, Protestant revolution in Europe, early 59 American Revolution, which kicked the crap out of monarchies forever first bottoms up governments even chance ever because of that, we're right into that, again, it was the Catholic Church that had to be brought to their knees in the Protestant Reformation. It was monarchies controlling you know the aristocracy in with it with the American Revolution Democracy Now it's central banks are going to be brought to their stupid knees. These pardon my hope these douchebag economists that have never had sex or run a business, these are the people running our monetary system.
Look at every one of Janet Yellen, sex and run a business, huh? Right. I'm with you. Understand, that reminds me more of like, Hitler came into power, they had to actually first print money and crush the economy, and then wipe out all the you know, small entrepreneurs and small companies. So understanding this you've got a crypto, you know, this birthing is could become something stable, like a Bitcoin over time, it's not going to be the safe haven in the downturn, it may at first like gold, gold was not the safe haven in 2008, when when the crap hit the fan, okay. It will not be gold nor Bitcoin will be this time, but it emerges out of this the and when I do give and I give a lot of lectures to the crypto industry, even though I'm not an insider and don't understand their industry, I do understand how new technologies emerge. And they do they see my scenario is paving the way opening up the fairway for these crypto digital currencies to emerge more clearly, because central banks are only blocking this.
Sure, I fully agree. And yeah, I mean, you see it slowly gaining legs. You see you know, people like Michael sailor investing 500 million of his, you know, publicly traded companies Treasury into bitcoin, you see, it used to be obviously just a mom and pops. I mean, even three months ago, I would have said, it's a terrible investment now. Now it's something you got to look at you got it, you got to keep it in your extra peripheral, you got to understand where the economy is going. John's one of the biggest traders in the world is now using Bitcoin as his hedge against inflation instead of gold because it's more powerful and more leveraged, and it's having bigger moves. And I don't think there's going to be
inflation, but he thinks there might with all this money printing, the point is he would have bought gold heads that in the past he is buying Bitcoin, right? That's a good point. I think there's a call it digital gold. It's not yet but it was. Yeah. But a very could become that you're right. And I think
there's 20 different institutions now that have filed paperwork and with the US securities exchange commission last quarter, you know, prepping to invest into a grayscale Bitcoin trust. So I mean, it's moving that direction, which do you see? I see that as a life raft, to get out of the system to gather the central bank system. Do you see that? Yeah, but number one, the central bank system Some hat is too big and in the way it has to fail, gotta break. And then these life rafts can grow and prove themselves out of the ashes. And they think they're just going to take it over, I don't see it that way, I see the old system failing, because this bubble burst, that Bitcoin will may go up to 300,000 even and then crack back to three to 10,000 and then become the next great growth thing for decades. You know, just like, I I actually, when I'm talking to the crypto people, I say, You are the internet on a 17 to 20 year lag. Same you're emerging
now, like the.com, the doctrines were crazy overvalued in the early stages, and then crashed 94% folks, or 94%, including Amazon, okay, and then became the greatest boom in history in technology for 20 years after that. So after 18 years, Okay, I see bigger, going higher at some point crashing with the rest of this bubble and emerging out of it as the new digital monetary system. And in fact, the best definition of blockchain Bitcoin is the potential standard for such a digital system. The block the definition for blockchain is more important. It is simply the
digitization of all money and financial assets, making it private and transparent. At the same time of efficient, fast moving adaptive dynamic, it is ultimate, underpinning for free market capitalism on a global level, which no other system can be no central bank control systems can ever be global, because everybody's cheating for their own good, right, we got in this bubble, everybody out cheating, everybody with more and more bubbles, until it blows. That's what we're doing blowing up bubbles to cheat. Because whoever cheats the most wins in the short term, at the end, the whole thing blows, we're doubling down, doubling down. And when it's gonna blow,
that's not a good system. It's not a good system at all yet, so the central system has to break, it's got to actually be destroyed. And out of those ashes come new things. Coming back to just the big picture. 10,000 foot up big picture is, you know, it's really good for us to turn and look at why we're actually investing in him in the first place. And it was never to ride the roller coaster. You know, for most people, they're
not doing the day trading and actually doing that, set it and forget, they're doing this long game. And so it's now time for especially for my baby boomers, it's now time for you to actually process. You know, if you haven't already, everything Harry's saying, because the writing is on the wall. If
you're in the market. I mean, when you're when you're in your head, you're dead when you're in the market, you're gonna die. It's It's literally upside down. Harry's explained that in a very
clear pathway. And that's why as a Solomon Investor, the things that we know that are tried and true, you know, are those tangibles that we can control that we can actually control the traffic, the marketing, the actual sells the closing, we buy low, we have appreciation, it's not sexy. You know, it's not the things that have all the rotates or highs and all the smoke and mirrors but but actually makes money. So the the wedding venues
are self storage and mobile home parks. I mean, this is the stuff that actually makes cash flow businesses needed in good and bad times. Yeah, that's, that's the real stuff that'll do the best and grow. And then we grow out with that. And then more stuff gets added, you know, as we get wealthier again, but that but the most important part is really simple. This is not an ordinary bubble,
even, it's not an ordinary, ordinary boom. And it's not an ordinary recession or downturn. This is a once in a lifetime thing. If you do not see it, you will largely be wiped out by it. And most people will unfortunately, and they were in 29 to 32. everyday people lost their jobs and rich people lost all their money. And you know what, who's going to lose the most here, the rich who's gaining the most from the Bible, the richest people the top point, 1% 1% 10% and 20%. The
80% have almost nothing in the stock market or bubbly real estate in Omaha somewhere Okay, or Ohio. They don't. It's the rich, they're going to get hit when this thing finally goes down. And that's going to cure our income, the highest income inequality since guess when the late 20s in the last great bubble, which always makes the rich richer. This is going to cure the inequality policy overnight, and economists have some 20 year plan to deal with it. Gonna cure
it overnight. Just let the body do a detox. Just let the economy have a detox. We will solve so many problems so far. It'll be painful. Anybody go through a detox now and watch a heroin addict when they go down. Okay, it's not pretty, but it's the only way to get the drugs out of your system and get healthy again. And when you Do boom, got a clean slate? That's all we got to do. That's the big thing. So they're not going to do it by
choice. So they're just going to have to blow so the hard part for me and for you harder for me is to figure out when the damn thing is gonna blow it's gonna blow and I think the hi I just keep telling people here's the times when it's likely I say February March Watch out doesn't happen then Okay, then then I'll have you know another time but that's that's the risk period now the closer we get to those vaccines, they can get to the vaccine then we may just end up like Japan and just stay in a zombie company never grow but never have a deep downturn. The detox Japan never had detox their financial assets debt but their depths never detox at all. If they have more debt than ever
Yeah, this is a season that many if they're actually walking in wisdom, they can actually make a lot of money but the majority you know, the the veils on their eyes, they're leaning on their own understanding they're they're looking at what's you know, happening, the propaganda in the news and I appreciate your wisdom, my man, thank you for laying it all out. Thank you for always speaking into the future so that we can actually see where we're going. If my listeners want to hear more from you, is it the best place Harry dent calm to get the newsletter got a free weekly newsletter to get to know us? I advise you get on that and get on a real one soon. But still, it's a nose as long as you want Harry dent calm. And in. This is a good time to be listening to somebody other than whoever else. You're listening to you because there aren't many people on it. I'm just telling
you aren't many people in the gold bugs don't even understand this. And they've been warning about a crisis. They think it's going to be an inflationary crisis instead of deflation. That's the opposite outcome. Yes, the opposite outcome, the opposite roles and beliefs of how you would even invest that changed everything. Yes. So go
to harrys.com get on his free newsletter that allows you to see the width and depth of everything he's doing what he's putting out. He puts a lot out in the actual newsletter, you'll actually also get his his video rants on YouTube, that in that that's in the newsletter as well. So, I mean, guys, that's that's priceless in itself. But if you're serious about financial literacy, the time is now for you to actually gain that wisdom. And so Harry, thanks again, my man. Learn to
do it again. Yeah, as the news progresses, we'll catch up again and do us again. Appreciate your time my buddy. Talk to you soon.