Top economist predicts ‘crash of a lifetime’ worse than 2008 recession
An outspoken financial author and leading economist is standing by a bold prediction of global financial ruin.
Harry Dent, the outspoken financial author and economist, isn’t reversing course from his bold “crash of a lifetime” declaration this past December.
Speaking in an updated interview with Fox Business, Dent cautioned that the “everything” bubble still has not burst, and it may be a bigger crash than the Great Recession.
“In 1925 to ‘29, it was a natural bubble. There was no stimulus behind that, artificial stimulus per se. So this is new. This has never happened,” Dent said on Tuesday.
“What do you do if you want to cure a hangover? You drink more. And that’s what they’ve been doing.”
“Flooding the economy with extra money forever might actually enhance the overall economy long-term. But we’ll only see when we see this bubble burst,” he added.
“And again, this bubble has been going 14 years. Instead of most bubbles [going] five to six, it’s been stretched higher, longer. So you’d have to expect a bigger crash than we got in 2008 to ’09.”
As markets inch closer to the halfway mark of the year, US stocks ended the month of May with gains as the tech-heavy Nasdaq stole the show, finishing up 6.9 per cent. The S&P 500 was up 4.8 per cent and the Dow Jones was up 2.3 per cent.
Nearly two weeks ago, tech- and AI-heavy Nvidia announced a 10-for-1 stock split, propelling shares past $1,000 (AUD $1,515) three days later, marking an highest.
“I think we’re going to see the S&P go down 86 per cent from the top, and the Nasdaq 92 per cent. A hero stock like Nvidia, as good as it is, and it is a great company, [goes] down 98 per cent. Boy, this is over,” Dent stressed.
“We have never seen [the] government sustain a totally artificial bubble for a decade and a half, and see what happens after that,” he continued. “But I can tell you, there has not been one bubble, and this is far larger and longer, one major bubble in history that has not ended badly, period.”
The only edit to Dent’s prediction is the timing, noting market bottoms are likely to show sometime between early and mid-2025.
At the centre of the bubble stands the real estate market. Dent previously predicted that housing would see 2012 lows this year, and claimed on Tuesday that US homes have already increased by double or more what they’ll soon be worth.
“No time in history has housing been so widely owned and so many people having second and sometimes third homes just for speculation,” Dent said, while pointing out that countries like China and Japan are seeing a rising number of residents buy empty properties as collateral to a potential market crash.
“If you understand what the real cycles are, you don’t have to buy the most expensive home in history right at the top of the market and then moan for 14 years while it goes through the next downturn, like ’29 to ’42 or ’68 to ’82,” the author expanded, “or what would have been, without all this $27 trillion (AUD $40.91 trillion) stimulus, 2008 to 2022.”
Dent also responded to critics who have called his hypotheses “crazy” and accused him of fearmongering.
“I just say what I see and, frankly, don’t give a damn if people don’t like it, because you [have] got to choose: Are you going to tell the truth, or are you going to make people happy?” he reacted. “They call me a ‘perma-bear.’ This is absolutely, uncategorically BS.”
“Looking at it from history and standing back, nothing’s more obvious,” Dent continued. “A lot of other bubbles in history just do not have the steepness or the magnitude. Why? We’ve never realised the power that central banks can have to just print money out of thin air.”
People find him “radical” for thinking that mapping long-term trends is “easier” than in the short term, according to the financial author.
“There really is nowhere to hide except the safest bonds in the world,” Dent said. “We’re the largest economy in the world. We will endure this downturn. And if they can print money to create a bubble, they can print money to pay off their bonds.”
“In the Great Depression, the big crash came [from] 1929 to ’32, and then the follow-up [was] ’38 to ’42. It’s reversed [now], because all the stimulus we had [made] the 2009 crash more minor. The big crash is going to come on the back end,” Dent emphasised. “This is going to wash all this excess out of the markets, bring the markets down to where they should be so that the millennial generation can have a boom that is healthier and that they can invest their savings into for retirement.”
Anticipating the “bubble of all bubbles,” Dent previously advised in December for investors to move their capital out of the stock market. If he had to own a new name, he’d pick bitcoin.
“Because it’s in a leading sector now in this early stage that has bubbled the most. That’s how you know a leading sector: It crashes. Bitcoin’s already been down over 70 per cent. We haven’t had a recession yet, so that’s how volatile it is,” he explained. “It crashes the most, that’s what I would buy if I could buy one thing two or three years from now near a bottom.”
But Dent wants investors to remember: “The government created this bubble 100 per cent … totally artificial, injecting a drug to artificially perform stronger. And again, everything from human life to history shows, you don’t get something for nothing, and bubbles always burst … it’s a much, much higher possibility than anybody gives it.”
This article originally appeared in Fox Business and was reproduced with permission.
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