Transcription
Hello everyone, welcome to the Vancouver Resource Investment Conference. How you all doing today?
Hello everyone, welcome to VRIC Media, your most trusted voice in metals and mining. I'm your host, Daryl Thomas, and today we have the pleasure of bringing back on a guest, Harry Dent. How you doing today, Harry?
>> Good, Daryl. Good to be back.
>> Yes, indeed. So, uh the market continues to push higher uh with major indices hitting new all-time highs. Uh yet, you know, we many people are still forecasting a significant correction at this point. Does the continued upside actually increase the severity of the eventual downturn? And so, I want to get your perspective on that.
>> Yeah, Darl. I mean, that's the only way I can look at it by looking at history. And I I don't know anybody studied history more than I have all the way back to the agricultural revolution and the advent of modern society and stuff that uh which is actually a miracle if you look at history what's happened and uh so so yeah I mean they what happened here is in 2008 the economy went down. It was the first serious downturn since the early 80s and and governments basically panicked when when when it did not turn around uh with the first round of stimulus of $1 trillion. That's what they thought. 2008, well, we'll just throw a trillion in here early 2009. That should turn this thing around. Well, it didn't really. So, we've been living off a stimulus ever since. And there's a good reason for that. The baby boom, the biggest generation history, peaked in a huge spending wave, which which was entirely predictable. It's just a 46-year lag on the birth index, which I use and adjust for immigrants. And so, the economy, this was not a a temporary overvaluation or a slowdown or recession. This was like going from 1929 roaring 20's bubble boom into the Great Depression. And that lasted how long till 42, you know, 13 14 years. And so my my indicators was always predicting 2008 the 2022 23 would be a long slowdown in between the baby boom's giant spending wave and then the millennial generation to follow them which is a a kind of a longer larger generation but not nearly as big a wave. So, so but but we would still have a boom to follow, but but we never let the economy shake out all the debts and excesses, which you have to do. Um and and and we just keep stimulating, stimulating, stimulating, and we just get more and more higher and higher debt ratios, more and more zombie companies, all the signs of bad signs, which which tells me when we do finally go down here, Darl, it's it's not it's it's going to have to be the markets will hit enough momentum on the downside where they will just kind of fall apart and it will be very hard to stop the downturn because again, if you hold back a dam this long, and we're talking 17 years now that they've prevented the economy from having a good old-fashioned recession. And and and before we go and I'll just leave one thought. Recessions are not bad. People try not sleeping for three nights. Okay? Recessions are like sleep in the economy allows everything to reorganize, restructure, clear out bad debts, all this sort of stuff. Recessions are productive and the ratio of booms to recessions throughout modern history has been 70% to 30%. The same ratio of us being awake and sleeping. So if you think like the Fed and modern economists, oh, we have to fight recessions. They're the enemy. Then you really don't understand the economy and free market capitalism. And you're actually attacking it and killing it right now from my point of view.
>> Yeah. Yeah. I'm kind of thinking about, you know, if we if it's the higher we go, the harder we fall. Um, you know, and having a significant, you know, crash or whatnot, you know, who who are the losers in in that scenario. You know, I think about, you know, the uh 401k holders, you know, and and and such. I mean, it could be just a blood bath. And I I kind of wonder what what would be the ramifications or what the response would be from from the people. Uh what what are your thoughts on that?
>> Well, yeah. and and and who does this hit? This is the best thing that could happen to the young upand cominging millennial generation, okay? Because we've got inflation that won't go away. We've got high asset prices. So, if they do start investing for retirement, their their ability to get normal returns are are almost nil right now. John Husman does the best analysis on this and says if you just regardless of any predictions of the economy, if you just put your money in the S&P 500 at these valuations, you will lose 2% on average in the next 12 years. Okay? You will lose money instead of make money. So, so this will be great for the millennials, but the losers are people like me. The the baby boomers who have now as of 2024 fully on average entered retirement at age 63. They don't retire at 65. 63 is actually the average retirement age now. And they need to live off their investments for the rest of their life. And if we have this sort of mega crash, it's going to destroy their wealth. It means stocks could go down 80 to 90% more like 29 to 32 now that we built up such a big bubble in average financial assets altogether including real estate and bonds and everything could go down 50% plus. Imagine somebody's got a a million dollar portfolio to retire on and suddenly that's worth 400 to 500,000 and all of a sudden their financial advisor tells them, "Sorry Jack and Susie, I think you guys need to go back to work."
>> Yeah. Uh it's been concerning, you know, when um you know, everybody's situation's different, but I have been seeing like an increasing, it seems like in my community, I've been seeing an increasing amount of um older people who appear to be older individuals working at fast food restaurants, grocery stores, and such. And so, you know, that that's that seems like um antidote to to like what's happening here where where folks have to return to work. Well, you know, they're doing this now and the economy is still good. Imagine the economy sees the biggest stock crash and and downturn and unemployment. Well, I don't think we're going to go back to 25% unemployment in the in the great in 1930s Great Depression. I mean, they just had no government supportive economy and no social systems back then. But, I mean, you get a major downturn here. Um, first of all, somebody older who decides to go back to work may have a hard time finding a job. Who wants to to bring in a new worker and retrain them for your company when they're 68 or 70 or 72 and you think you're not going to have them that long and all? So, so it it's just not so easy to adjust to this this but but it it is going to it is going to absolutely hit the aging baby boomers the worst because their entire net there people say well diversify how do you diversify when all financial assets go down even now gold which is a classic um thing a great diversifier and something that does where better gold finally joined the bubble along with silver here in the last three years, you know. I mean, so so and and and bonds, everything except the only the only thing that's that's gone down in value in this bubble is the the the uh the 30 10 and 30-year Treasury bonds. They're the lowest yield safest and nobody cares about nobody wants their low yields or cares about their safety when everything's going up and we don't have recessions anymore sort of thing. So, so that's actually where you protect yourself. You get the the treasury bonds in 2008 were the one thing that went down when even in the late end. Gold held up also in the early stages of the 2008 recession crack, but then went down in the end. It didn't go down for long, but but the treasury bonds were the only thing that went up when everything else was down in the second half of 2008. So that's my safe haven. And then you come out of it to me and again, you can't do anything about this is going to hurt. is that nobody can prevent this at the point. This bubble's gone so far, it will burst. It will be bad when it bursts. They will be too late to react because they've gone so far, you know, the other way now. I mean, they're looking at now at possibly having to tighten when they haven't even brought rates back to the risk-free level yet. You know, the
>> and and and so they're going to be too late to react to this. In my research, Daryl also shows, I looked at every stock bubble back to, you know, the beginning of the stock markets. The first crash coming out of a bubble as opposed to a normal boom like the 50s and 60s, a bubble boom like the roaring 20s, it's 50% in two to three months. When bubbles finally crash, they hit hard and fast. That's why I think the government won't be ahead of this. People going to lose confidence in the bubble. They're going to see yes government and and and this bubble was not natural. The 90s bubble was natural. The roaring 20s bubble was natural. Governments didn't stimulate the economy to pour money in and cause that. This bubble 120% from government stimulus fiscal and said $30 trillion in the US alone has been poured into the economy in the last 16 17 years. So the government people will see the government created this bubble. they will see they weren't able to prevent it on the other end and and people will lose faith in a lot of things and what I'll be doing is buying India the next great China I'll be buying gold which will do will dominate the the metals complex for the same reason India is going to dominate the growth they're going to be the next China Indians buy and own gold three times the rate of the Chinese which has been the biggest driver of our last boom in the emerging world so so Old India and tech stocks are what will benefit from this crash. And and if you can be safe here and get back in, you're going to be able to buy all these great growth sectors long term at the lowest prices you'll ever see in your lifetime.
>> So, are you fully out of the markets currently or?
>> Yes. And I I don't even I'm telling and I had a subscriber write in today say like well you know you know I' I've been um in Xer and TLT you know to play the Treasury bonds for the crash. I said no those stocks cr if you want to play the crash be simply short stocks just for the first crash because that's what hits the hardest and then the economy starts to weaken and then the Treasury bonds will go up and they'll do the best at the worst of the crash. So, it's too early to be in in these Treasury bonds. It's either better to be neutral in T bills and just let this crash happen and then start buying things as as they bottom or the best way to play it is to be short stocks. PSQ is just a one time short the NASDAQ 100. So, that'd be the best simple short to just benefit from this first crash. When that happens, you get out of that and then I would buy TLT, Zerz, the Treasury bond ETFs, or just buy 10 and 30-year Treasury bonds. And the 30-year the best and those will be the best deflation play and less volatile and crazy than stocks. So, there's huge money-making opportunities here, but you have to be the opposite of everybody else here because I'm telling you, the best financial advisors do what they always do, which is great 80, 90% of the time. just sit through corrections, rebalance. You do not sit through a correction like 1929 to 32. It took 25 years for stocks to get back to where they topped just to break even. 25 years. Most retiring baby boomers will be what by then? Dead.
>> Yeah. Yeah. Yeah. I was kind of thinking about the uh there was a lot of talk about the wealth transfer uh and such and uh people still mention it. don't me it's not me mentioned as much as it was like a few years ago but uh that was always an interesting uh topic. Uh so could you walk us through the mechanics uh behind why would uh someone like why why would bonds outperform? I mean um you know some folks look at the US debt. They're saying okay the US is at 40 trillion. Uh they can't afford uh interest rates being this high. Uh inflation. Some people question inflation as far as um are we getting the true numbers when we just look at the CPI and such and is inflation going to run higher than than uh what the yields you can get on bonds and then you also have uh countries like China that have been selling treasuries and such and so uh why would someone want to go into TLT or some of these bond kind of ETFs?
>> Yeah. Yeah. Simply because Darl and in 2008 the the largest crash of our lifetime for since the Great Depression and even a little more worse recession than 8082. Um that's what did well. In other words, it's the safe haven and you got people preaching Peter Schiff's down here in Puerto Rico me. He's preaching gold is a safe haven because it's the only real money. Well, that might have been a case until gold just tripled in in three years. And now gold gold just bubbled more than anything now cumulatively not quite as much as stock but gold is now overvalued. So basically the way the the way the government has kept this economy going is by stoking financial assets and and and guess what Darl that just makes the rich get richer and the everyday person fall behind more because the average person doesn't own much stocks and risk assets and so the reason high quality bonds will go up is that the US government and a few other major governments in the world are the only ones in the world that can print money to pay off their bonds. Even AAA corporations can't print money. If their corporation gets in trouble and their profits are suffering, then their bonds will look more risky and then their rates will go up. Their market rates or their new issue rates will go up. Uh but that doesn't happen to Treasury bonds because Treasury bonds the opposite. The Treasury bonds will not be defaulted on because money can be even if that looks irresponsible at the time, it will still happen and those bonds will not default. So, so just when you get in a crisis, money moves towards the the biggest country in the world, US. Yes. Will we be in a big downturn? Yes. Did we have a bubble? But I'm telling you, Japan's bubble was bigger and burst a long time ago. Europe, everything Europe's demographics, everything I measured, bubbles demographic. The US is the best house in the developed world. Bad neighborhood. And so, we'll come out of this the best and and weather the best. But all financial assets have to have a reset. Everything is is two to three I mean stocks are literally they're two to three times higher than they would have been in a natural boom like the 1950s and60s. Uh and this boom would have ended in 2007 kind of plateaued into 2020 and then been heading down for a decade and a half. So so governments have totally distorted the economy. I'm just betting that in the end, and I think that's soon now. They've stretched it so far, the free markets will win, the the way you tell that the bigger crash we have, the more it's saying, "No, the free markets are taken back over, folks." And so, I just tell people, get out of the way of that or be in the high quality bonds or short stocks if you can do that with risk, but just let this happen. And then you get the buy opportunity of a lifetime that'll make you money hand over fist for the rest of your life. You don't get you get this in 1982 and 1932. That's how rare it is to see a buy opportunity like this. But you have to earn it and wait on it here. You if you just sit in all these assets and they all and they all go down and there is no safe haven except the Treasury bonds, then you lose most your assets and all you do is slowly get your money back and you baby boomers will not see stock markets at new high before they die. They just won't see it ever again. Millennials may not even see it >> because the demographics long term for the developed world are maturing and more flat and even down. Southern Europe is down. East Asia is down for for as far as the eye can see. These countries have peaked. Um you know Japan's already never the same. And now China will never come back from this. Mark my words on this. And if you're going to reinvest after this crash, you buy India because India is looking just like China in the early 80s. You know, just starting to grow faster, just starting to urbanize faster, realize their strength. India is unquestionably the next big thing cuz they have the same population as China. It's going to grow to 1.7 billion in the next 50 years. While China goes from 1.4 4 billion to 780 million shrinks.
>> Wow. Yeah, that's that's a that's a half half the population. Uh that's that's a big number.
>> It's the second largest country in the world. But more important, China has been responsible for more of the growth. We've been the best uh developed countries, but China has really dominated growth in the emerging world. Only India can. China can never do that again because they're aging more rapidly as rapidly as Japan and nobody would invest in Japan long term today. They already know it's an aging. People don't realize China's aging as fast as Japan. India is a giant country that all they have to do is keep urbanizing and even increase that invest more in infrastructures and they will grow for decades like China did from the 80s till 2021.
>> Yeah. Yeah. Definitely. I'm curious your thoughts on China. Um so you know there's there's one school of thought that thinks that um you know the that China is uh in a horrible situation as far as uh you know their debt their their housing market uh things of that nature. And then you have another school of thought that that really focuses on the power generation uh their refining capabilities. Um I mean how much gold at least uh I mean you have the official reported numbers but then you there's speculation on how much gold they actually have. Many people think they have more and such. So, you know, I've been trying to just kind of think through like, okay, is this bullish for China, you know, that they can generate this amount of power that they have this this type of refining capabilities or is it or should I should I be bearish on China because of the the uh housing dynamic, the aging demographics, things of that nature. So, just curious your thoughts on that.
>> Yeah, there there's there's no worse industry in a crash than real estate. Why? Real estate is leverage. Most people don't buy stocks on leverage. traders do but people don't. Okay, pension plans don't etc. Okay, real estate is naturally bought on leverage and so when it really the typical you buy something you know 20% down 20% correction in real estate and you've lost 100% of your equity, okay? Cuz the rest of it debt and then and if it defaults, well, you're in trouble and you lose your credit rating for seven years. But who loses? the banks or the mortgage companies that lent you money on that. So, so China has something that is impossible to fight with any amount of stimulus at some point. They have the biggest real estate bubble in the world compared to incomes, which is real. Their incomes are a fifth of ours. Okay? And even adjusted for purchasing power, they're less than half. Okay? And and some people in China have an extra home or two sitting down the street empty pure speculation because they think you can't lose money in real estate and they've only seen real estate go up in China their lifetime. So real estate China has the biggest real estate bubble in the world and they can stimulate all they want once housing prices start going down. There is no way to stop this cuz it deleverages their entire economy faster than you could possibly print money. And again, their strategy has been to build houses and offices for nobody. 22% of the houses today, and it's probably more than that now, if I got an up could find an update as last update 3 years ago, 22% of homes are empty. Similar for offices. So, China's already built enough real estate, not only for the past boom, but whatever boom they have left in urbanization, the last people to go from 67% urban to 80 before they mature on that. That's been their growth cuz I mean, their demographics are horrible. But they still have 13% of people that can urbanize and triple their incomes through that. Well, they've already built enough houses and and and and office buildings for that. So how how are they going to boom when real estate is the most is the biggest expenditure and the most leveraged part of any boom. So China is dead. They they cheated. And then why do they cheat? They're not elected. How do they keep their people happy? Have an economy so good nobody complains and thinks the government's God. That's what they've done on the other side. They're going to look like the worst government in history that they caused the greatest real estate b. They encouraged this. They told builders to build and don't worry about the empty house. They told them that >> they're going to look terrible. The Communist Party in China should be annihilated after that. And that's the one good thing to come out of this cuz they're the only large growing increasingly wealthy country that still has a a communist, you know, socialistic governments. Nobody in the world works well with that model. It's it's already been proven not to do well.
>> Yeah. What do you think about the leverage they they have with their um rare earth capacities and and when it comes to natural resources?
>> I mean, that's great. They they have that. I mean, we have a lot of resources, too. And Russia's got that. Russia's one of the poorest country, major countries in the world still, and they got resources up the wazoo. Why? They have a bad government. They have a communistic government that does not free market capitalist and owned it and and they have smart, highly educated people and they make a fifth of what we make in the United States. A fifth. And I've never met a Russian person that wasn't in all I mean traveling is is and we're meeting the rich Russian, but Russians Russians are highly educated. They have a horrible government. and and China decides to do the same thing except that the government steps in and purposely stimulates overstimulates the economy. Well, that's why they have the biggest bubble in the world. Any other country, Darl, I mean, long ago with 22% empty homes and offices would have been in a depression. That's the only cure for that. You have to let prices drop and everything and stop building everything and let everything clear until you get back and fill up that real estate. You can't keep billing real estate when there's already tons of empty houses. China's insane. What China's done is insane. Only a top-down government that was not connected to accountability in elections and a free market system could could do that and get away with it. They're going to look terrible. So that's the good thing to come out of this. I the Chinese don't overthrow their government after this, then they deserve it. So what what do you think about so obviously you know the you know they have a a communist system they don't have elections and such but some people would argue that uh the US government gets bought off by lobbyist and absolutely so and so like there's there's not a I guess a democratic process or whatever in the US and so how is that any different?
>> Well, yeah. No question. Special interest is what perverts our economy. Um, and government intervention in the economy uh perverts the other side. So, so, so we're not we're not practicing free market capitalism basically because of that. I I would outlaw lobbyists. There is no lobbying. You know government can commission studies and hire firms objectively to study this and that n that lobbyist lobbying is a bad thing. Okay. Government intervening in the economy and stopping the natural promises. Free market capitalism is boom and bust. It is inflation and disinflation and deflation. Inflation is the way the economy raises massive capital as in the 1970s to fund the infrastructures for a new generation and new technologies emerging in the early stages. The the economy free market capitalism is self-managing, self-regulating, that's its genius. As soon as you get a dictator or government official that wants to look good today managing, they're going to make the wrong decisions naturally. So that's the genius. So we're the Chinese never practice free market capitalism and that's going to show to be their government. That's why they're going to have the biggest downturn. Their government overdid it more than any other economy. And and the US is basically slowly abandoning it. More and more government intervention, more and more special interests. Lobbying should be damn near outlawed from my point of view. Lobbying is our Achilles heel, but it's not as bad as a centrally cold call. driven economy by a small group of super wealthy oligarchs in Russia and China.
>> Yeah,
>> That's the worst.
>> Yeah, both.
>> That's why those economies are so bad and never going to catch up with us.
>> Yeah. Yeah. Both both are definitely uh terrible. Um I was actually thinking about I was reading one of uh Levig Van's uh essays on uh liberty and property. And so um yeah, that was that was something that really stuck to me. It's just like, okay, I I, you know, I'm a free market capitalist. I I love liberty and I love property. So, anything that's that's going to uh limit that, you know, I have a problem with. And so, I appreciate you sharing.
>> I'll give you one more thing. My my statement is free market capitalism was the single biggest innovation in modern history. Democracy perhaps the second, but democracy is only a balance to free market. That's its value. Democracy isn't always the most intelligent thing. It's almost like, you know, the the common denominator thing, okay? But it is the perfect balance to the extremes of capitalism where some people can get extreme wealth and then dominate industries and monopolies and all types of stuff. So this this balance and and the US is the number one country in the world today cuz we led both. We were the first country to incorporate free market capitalism and democracy in the same system. Everybody around the world is slowly copying us.
>> That was the biggest breakthrough in history, the marriage of free market capitalism and democracy. And it's the free market capitalism that has the horsepower.
>> Yeah. On a side note, I I was doing some um doing some, you know, I I researched a little bit of history and I was researching about uh Teddy Roosevelt and Franklin Roosevelt. Um, well, one, um, Teddy Roosevelt broke up a lot of monopolies and such, uh, in in his era. And then, uh, Franklin Roosevelt. Um,
>> I was researching that about the I was reading a book about 1929 and and the crash. Uh, the book was 1929, but I didn't know how much like of a monopoly uh, JP Morgan had on like the investment banking and the and the commercial banking and such. And uh it was pretty interesting and how all that ended up uh getting regulated and and broken up. And so that that was kind of interesting learning that.
>> But ser real quick again, I mean the role of government and it is necessary because capitalism does have its extremes and stuff and then tendency towards monopolies and that sort of stuff. They have to set the rules and regulations that most fosters the competition that makes the free market capital. That's the government's role. not not bailing us out of debt. Downturns just force the market share to be shifted to the strongest companies who can bring the cost even lower with scale to more and more consumers. That's how free market there's there's a a race for leadership in the early stages of any new industry or technology that like there was a 100 car companies and by the early 30s after the roaring 20s boom three and those three got bigger than ever and made cars not just one per urban family two affordable per suburban and rural family everywhere in the country. So that's how it works. government's role is to set rules that make sure that that the competition is not lost to monopolies or unfair practices or whatever or deceptive advertising. That's where government has a productive role. Trouble is, government feels like no, we have to protect people against downturns and recessions. So, we have to have a Federal Reserve that prints money every time the economy goes down. That is anti couldn't be more anti-free market capitalism. That's an attack on the most successful system in history.
>> Yeah. Yeah. So, uh earlier you mentioned gold uh gold tripling uh since uh its last um you know
>> Yeah. since about 23
>> 2023 that
>> in other words gold and silver were seen as more the the not bubbly and then they caught people when a bubble gets going you have to keep it going and everything gets overvalued at one thing after another. Gold and silver were undervalued and the markets quickly brought them into the bubble in three years. That was my sign, Darl, after knowing that the that this thing, you know, governments can keep stimulating, keeping this bubble going. I'm like, no, I'm sorry. Those are the last two major financial asset sectors that matter, gold and silver, to bubble and therefore you can't bubble them anymore. They're already bubbled. Okay. So, so that was a sign to me that this bubble finally almost has to crash cuz there's nothing left to bubble.
>> Do you think do you think this could have been um a repricing? So, when we look at when gold fell and after 2011 when we had that significant uh downturn and the Fed started QE and belling out the markets and such, gold didn't catch a bid for a number of years. And so, um, do you think that with all of that QE, all of that money supply that that was created during that time that this could have been a repricing or what what do you think would be the fair value of gold and silver? You know, what should be the fair value of it?
>> Well, I tell you right now, my gauge is very simple and and this is what's scary about it. for stocks to go back to fair value on the downside. Okay. But but anytime you have a down, you know, in a down, they would have to go back to the 2009 lows. Well, people, okay, well, that's only so many years ago. No, that's 90% for the S&P 500 and 95% for the NASDAQ. Gold would have to go back to its 2015 low. That's even less far back. But that is now 80% drop for gold. That would get to me gold back to fair value on the low side so it could grow in a boom again. Okay. And appreciate and and do what it does. And again, gold is going to benefit not from being a safe haven in financial crisis as it's been in the past. It's going to benefit from being the preferred not only investment but commodity to buy for Indians. You know what for Indians is? Poor people. a a a show a small show of wealth. Indians wear jewelry in places we don't even imagine.
>> Yeah. Yeah.
>> Toes, belly buttons, and I could go on. Okay.
>> Yeah, definitely.
>> Indians will be the best thing to ever happen to gold long term. And again, gold is seen, oh, you know, you buy gold to protect yourself in a financial crisis or something or to diversify your portfolio. Gold's going to be a a kick-ass risk asset, I think, because of India.
>> Mhm. And the whole emerging world is kind of is more like India. Gold is this small uh easy port without a bank account easy portable way to hide and store wealth in a in a in a simple show of of wealth uh materially as a consumption matter too. So consumption investment the emerging world especially India is going to favor gold as a long-term risk asset and no longer a diversification only sort of thing.
>> Yeah. Yeah. Yeah. So the so how are you factoring in like the massive amount of money creation because whenever so much money is created to my understanding uh this uh devalues the currency and so uh it devalues the currency against a hard asset like gold and so there's been so much money creation over the last uh however many years. Uh so that's why I was kind of wondering like where should gold be at? You know, especially if it's tripled, if it's uh you know, if in your view it's overvalued. Um because we've created a lot of a lot of money since gold was at 1,500. So that's why I was kind of wondering like, okay, where should it be at? Like if if right now it's in a bubble.
>> Well, again, now gold has gotten to follow everything else and do its bubble. So again, all I look at and again since the bubbles mostly happened in just the last, you know, since 2009 in stocks, since 2015 in and in in gold and all, all we have to do is go back to the last major low before things were bubbly. That's that's that's when we know we're back in reality. And again, people would think, okay, how much is that? It's way more than people think. and and it shows how big the bubble's been. Just for gold to go back to its any any stock chartist would look at these charts if they were naked and I didn't tell them what they were. They say, "Oh yeah, this is a fifth wave blowoff peak we're in. Oh, and it goes back to the fourth wave bottom." Well, that's 80% down in gold. That's 90% in the S&P 500. That's 95% in the NASDAQ. If people thought knew that just a normal correction back to the last low was that bad, they'd be scared to death. They don't know that. They just keep seeing it going up and thinking you can't lose in this game.
>> Okay, got it.
>> This this can happen in a matter of two, three, four years. This big a reset and it did happen from 29 to 32 in stocks and it's happened several times throughout stock history.
>> Mhm.
>> And and another thing that's why bubble booms are followed by depressions and normal booms like the 50s and 60s are followed by lengthy recessions. when the when the spending is down. Yes. But but but bubbles make financial assets way overvalued. And so you're not just getting a lower consumer price index from lower demand on consumers versus supply. Financial assets are pulling massive amounts of money. You know right now today glo global GDPs 105 trillion. You know what global financial assets are?
>> 630 trillion. 6x Wow.
>> So, just for those to drop 50% worldwide, $300 trillion of spendable money. These assets are not fake. They're going to look fake pretty soon, but right now that's real money anybody could take out and spend. 300 trillion, leaves the global economy, and doesn't come back except for very slowly over time. That's a shock and nobody is going to see that shock until it happens. And and it's going to be devastating because it's going to affect not just financial assets, but it's going to affect the ability of baby boomers to retire and and it's going to affect uh consumer spending because people are going to feel less wealthy.
>> Yeah, for sure. Uh so uh thinking about the Federal Reserve, so global M2 has been increasing. Uh the Fed's balance sheet has been expanding. Uh Kevin Worsh recently argued that the Fed is uh on an unsustainable path and suggested that shrinking the Fed's balance sheet um is is important and they would eventually lower rates naturally and so do you think that's pie in the sky uh thinking or is that pipe dreams for him or how are you processing that? So, I mean, he's coming in saying the opposite of what's currently happening with with the the Fed balance sheet
>> exchange. It's wonderful. You do that instant depression. In other words, this bubble's only been going We should have had a depression back in 2008 to 2020ish. Okay, we've devoided that downturn, that whole demographic downturn and deflation of financial assets and all this stuff um by just printing money and running endless deficits. And the deficits have been twice as much as the printed money. So if the government stops running deficits, which they can't even do if they wanted to right now, they're running two trillion a year in a good year. Imagine, I'm telling you, we go in recession, that 2 trillion immediately turns to 4 trillion plus. Okay? So deficits are only going to go up. Money printing, if they pull back, they pulled back 2.7 trillion in the balance sheet. So that's taking out of out money that was printed. that is enough to possibly trigger a recession here in 2026 on a lag about a year lag. So we'll see by the end of this year I think that's enough if he if he were to keep doing that guaranteed the economy is going to go down because it's over inflated over stimulated and you're removing the stimulus. You know what happens when you when you stop drinking or stop taking heroin? You get a huge hangover. What's the cure for that? Drink more. Take more heroin short term. Well, that's what we've been doing. Our cure has been to take more of the deck and the money printing, the deficits and money printing keep stimulating so we don't get that hangover that we've already created. I mean we would have had the biggest downturn the 2008 downturn was stopped a year and a half earlier that we we could have that could have been 29 to 32 and twice the the the uh unemployment and everything else and hit to the economy. So, we've avoided that. If we do the right thing, and yes, we got it. The balance sheet went from from um uh less than 1 trillion up to 9 trillion. So, they expanded that. That was 8 trillion of the 30 trillion stimulus. Well, the other 22 def government spending money they don't have. And how do they fund that? Bonds that the millennials will have to pay off the rest of their life. The millennials are going to have to pay off these Treasury bonds. Our government's going to be spending a lot of their budget paying off the interest and principal for Treasury bonds for as far as can see. So there's a cost to this and again I can't change that. All I can tell people be on the right side of this and you will make so much money avoiding the crash and reinvesting at in in valuations that'll double triple your returns long term that you will come out a winner regardless of how bad the economy does for a while. You you can't stop this. This is already done. And the sooner they reduce the balance sheet, the sooner we have this crisis, the less worse it'll be. It's going to be worse now than if we' have had it in 2020 to 22 when my indic when my all of my cycles came to a bottom in late 2022. The biggest convergence ever. That would have been a time to have a second crash bigger than 2008, finish this whole deleveraging of the economy, wash out all the bad debt and zombie companies, and be ready to grow strongly with the millennial spending wave. Well, we we already blew that. This millennial spending wave is going to be compromised uh already, but the longer we wait to let the economy shake this out, the worse it's going to be. The millennials may never see a real boom in their lifetimes if we keep doing this.
>> Yeah. Yeah. That's that's very concerning, especially for me being a millennial.
>> And they're going to hate baby boomers even more. They already hate baby boomers. Okay. They're going to really hate them when they realize the baby boom boom stole all of their future with all of the stimulus to amplify it unfairly.
>> Okay. So, so how realistic do you think so Kevin Walsh has this this perspective, but he's only one in 12 votes, right?
>> Right. for on on uh the Federal Reserve's monetary policy and such. And so I'm kind of wondering like and then also like how does this defer from Trump's administration? I mean I mean right now we got a lot of money going towards the interest. I mean it's what over a trillion.
>> Yeah. And it's only going to grow um you know, in in the future because because we're on a non-stop there's no there's no plan to cut the deficits. no plan. And and and again, as I said, I mean, people are going to really get shocked. This two tr 2.2 trillion typical de deficit today, soon as we go into even a mild recession, will double. It'll be 4 trillion. What do you do? And now we're marching now. We're going to hit 50 trillion in 3 years instead of 10 years by projection. That's what it's going to be. We're going to hit 50 trillion soon. And that's already in the cards because any recession will give us 10 to 12 trillion dollars in deficits in just two to three years
>> to add to this now near 40 million. We'll be at 50 trillion in no time.
>> Mhm. Okay.
>> Okay. And here's what I'm looking for, Darl.
>> I'm looking for the markets to wake up and say, you know what, Treasury bonds are no longer risk- free. They're still pricing risk-free compared to corporate bonds, even AAA and stuff. Okay? When Treasury bonds start pricing above the risk-free rate, that's a sign that the government and that's a sign the government's going to be paying more for their massive debt for as long as we live. That's that's the danger signal I'm looking for that Treasury bonds start trading at at a higher at a at a some risk premium.
>> Okay. Okay.
>> And a $4 trillion deficit could do that.
>> Yeah. Yeah. Okay. So, inflation, what's your what's your outlook on inflation? I mean, right now it's been recession inflation gone. If if if it hadn't been for this $30 trillion in stimulus since 2008, you know, our inflation rate, I've had I've got an inflation indicator been right for as long as my spending wave. Okay. It says we should have 0 to 1% inflation in this time. What do we have? 3%. We got up to 9.7 briefly because of the stimulus. Well, they back that down enough, but we're at 3% instead of 1% inflation. So inflation, if we get if we have a a a shake out in the economy, infl we're going to have deflation before we know it and we come out on the other side, we're never Mark my words, never going to worry about inflation in the developed world, the US in our lifetimes. Inflation will be 0 to 2% max and closer to zero.
>> Mhm.
>> Cuz it's workforce growth. It's the cost of incorporating new workers in the economy that actually causes inflation. It's not oil prices. Those are temporary and only affects, you know, so some percent of the economy. Okay? My only correlation, my inflation indicator is 100% workforce growth on a 2 and 1/2 year lag. That's my inflation indicator. and it would have predicted the the 16% inflation in the in the 70s without oil prices or any or government deficits or anything else. People are costly to raise and then they're productive into their midlife. That that that cost to raise is the big cause of inflation when there's a lot of young people in economy. That's why third world countries always tend to have higher inflation. And that inflation gets erased by the productivity of those people entering the workforce and becoming better, more productive workers and higher spending at the same time. That's why you get booms like the 80s and 90s with falling inflation despite high growth. High growth doesn't cause inflation. Economists haven't figured this out after 50 years
>> because they don't look at people.
>> Yeah. Yeah. Yeah. That's uh that's uh very uh interesting that you bring that up and I appreciate you saying that. Uh so uh Harry, as we wrap up um so you mentioned India being a place where people should look.
>> India will boom when we come out of this India will be the leading emerging country like China was from the 80s till 2021. India will be that from let's say 2028 or 9 into 2055 to 60 or something like that. India will be the ne all they have to do is is up urbanization rates a little bit and and they they're they'll go from 35% urban to 70 80% urban over the next four decades and that with 1.7 billion people just going from maybe 10,000 GDP per capita up to even substandard for the US 30 40,000 would be a massive boom again as we just saw in China for the last four nobody saw saw China coming and booming like they did.
>> Yeah. Yeah.
>> And it was inevitable.
>> Okay. So you you mentioned India. Well, you mentioned first, you know, staying out of out of the way uh so you don't get wiped out.
>> You got to let the bubble burst so you don't lose all your finan and there's nowhere to hide except the treasury bonds.
>> Yeah. Okay. Well, yeah. Thank thanks for sharing that. Um so Harry, where can people find more information about some of your publications? I know you're producing on your YouTube channel and such. Um I mean you have a growing audience there and so where can people connect with you?
>> Yeah. Yeah. Just go to harrydent.com. That's what you can just that's the site where you can just get on our free newsletter. So I put out a free one-page article and chart every week and then I do a rant uh once a month. Okay, a video rant, you know, for 7 to 10 minutes. So that's the way to keep up with me for free. And then we just get people on that and we just like any other newsletter model, we just hope that that a small percent end up paying for our our our paid newsletter over time and and we're happy to give free advice to free people as long as they want.
>> Okay. Okay. Well, you all got the information. Be sure to go check that out. Harry, appreciate you spending your time with us today and sharing your insights. You all be sure to hit the subscribe button if you haven't subscribed yet. Love to have your support. And thank you all for watching.