Biggest Crash Since 1929: 90% Collapse Starting, Warns Economist — Harry Dent

[00:00:00] Speaker 1: gold is not your safe haven if we have a major financial crisis here the treasury bonds of the u.s is going to be the safe haven as they were in 2008 real estate will never be the same when we come out of this downturn david that is what's the worst thing for the economy most people don't own a lot of stocks you'll see stocks down the s p up to 50 percent within three months and the nasdaq up to 60 percent and it'll happen so fast then you'll panic and sell and then it'll bounce against that to say you're wrong and then it'll crash 80 to 90 percent in the next few years [00:00:39] Speaker 2: harry dent founder of hs dent is back with us to give us his prediction for what's going to happen in 2026 he's calling this the biggest market bubble of all time now he said this before on my show late last year he called 2026 a year of a major market crash so far things are starting to roll over bitcoin's down from its top late last year gold's down from its top earlier this year three of the mag seven stocks are down year to date so what's going to happen next how will this topping pattern continue harry's going to reveal to us the market indicators he look he's looking at that will indicate to him when the market will top and he's going to tell us how far this correction will extend into next year this video is sponsored by kaoshi it's the largest prediction market in the united states and unlike a sportsbook you're trading peer-to-peer on real world events from economic data to political outcomes and the price moves based on public opinion not a house go to the link in the description down below or scan the qr code here to get started and use my code lin l-i-n people who use my code can get ten dollars when you trade ten dollars for the first time now there's a trade for the s p 500 close by end of 2026 there's a 20 chance 19 chance according to kaoshi traders that it will close between 7 800 points to 8 000 points for reference it's currently at 74.83 harry disagrees harry thinks that this is going to go the opposite direction and it's going to crash significantly it's going to drag down the entire economy with it housing is going to crash it's going to wipe out an entire generation of wealth and the baby boomers wealth tied to housing that's going to suffer first so let's take a listen to what harry has to say welcome back to the show harry good to see you nice to be back david uh the everything bubble you call this the everything bubble you predicted an unprecedented crash you've argued that the 16-year market bubble was artificially inflated by massive government stimulus you've called for several leading indicators to show where the markets are headed including bitcoin which is down more than 50 from its top so this market bubble if you want to still call it a bubble has been rolling over somewhat in the last couple of weeks with tech now leading the charge downward the nasdaq has now side gone sideways and consolidated around its top and just earlier this week uh south koreans uh stock market index dominated by semiconductors fell eight percent in a single day uh there's some news that uh big mag seven stocks including meta are now moving into less i guess chip intensive industries like cloud computing the point is right now the technicals don't look great for markets uh tell us what's going on and how this fits into your [00:03:30] Speaker 1: overall market thesis what we're seeing right now yeah i mean again what's really happening is there's two big things that drive the economy generational cycles of spending which david are very simple 46 year lag on the birth index adjusted for immigrants which i can do accurately as well um and and and that said oh you know the trends are down 2008 to 22 23 this should have been more like the 1930s but the other important trend is innovation and technology cycles and those are on a 45 year clock not the 39 year clock like like the demographic cycle so that cycle finally peaked in 2020 and is now pointing down ever cents and that one keeps going down the most into 2032 so so cycles are adverse for the first time since the early 80s all cycles but the bubble just has its own momentum and the government has created the last part of this bubble since 2008 with 31 trillion dollars of stimulus poured in deficits and money printing combined and kept it going and now i think we're at the point where the whole thing finally starts to crack now we have to see signs of it and and the best sign and i've studied every bubble burst in history now in the last couple hundred years and the first crash out of a bubble tends to be 50 percent in just two to four months so we if this bubble's getting ready to crack now which i think on a great delay it is we should see the markets go down very strongly into october or late this year and and that's what i'm looking for now so whether you believe my thesis or not it is a good time to be conservative until we see what happens because also there's a consistent four-year cycle in stocks in the economy all the way back to 1900 that says into the fall of this year stocks should be down and the economy should slow a bit anyway i'm just saying all it takes is a minor slowdown to trigger a major bubble burst and i cannot compare this bubble in length or size since 2009 to any bubble in history so it's not going to be a good [00:06:03] Speaker 2: outcome when it does crash what triggered the bubble pop in 2000 and 2001 for the tech bubble and what triggered it in 2008 uh just give us similarities there we know what happened exactly but just draw [00:06:15] Speaker 1: similarities from now to prior bubbles yeah that's a great question because there's two different things in in in in uh early 2000 when the peak in the 78 nasdaq crash into 2002 that was simply overvaluation that the tech just like today the tech stocks went up so much that they just crashed of their own bubble in momentum so we now have that second tech bubble now even more extreme longer but this time uh well in 2007 the the trigger of the downturn was the the generational spending wave of the largest generation in the history baby boomers peaking and turning down on a simple 46 year lag to their birth index so so that was 2008 crisis 2000 2002 was a tech bubble bursting now we have a second tech bubble bursting even more dramatic um on top of all this and so a bigger bubble that should crash harder and now that any bubble crash of this magnitude i can tell you david from history takes two and a half to three years that's the the least it's ever happened just like 29 to 32 that was 34 months from top to bottom and 89 percent down for the dow back then which is more like the nasdaq now but harry valuations for [00:07:44] Speaker 2: tech have been stretched for quite some time it's the most richly valued sector that's just the way it is and people have pointed out that just because something looks expensive it doesn't mean the price [00:07:54] Speaker 1: can continue to go up right right well again bubbles go up longer than people think but but i'm what people don't get is when they do crash they are murder i'm just telling you and and this this is the longest biggest bubble in history and now what i see is we have a four-year cycle that has been very consistent then stocks just take a break stocks are typically down 10 to 20 percent every four years just like back into in 2022 was the last simple four-year correction to me with this bubble so hard pushed and now the government pulling back to 2.7 trillion in their stimulus in the last year just enough to to stop the endless momentum of the bubble i think this is when you could get the first crash of a bubble and the first crash is always at least 50 percent for like the s p 500 and 60 percent for like the nasdaq the leading edge talks and once we get that i think it'll change everybody's perceptions and we'll go from there but once you get that i think we'll be down 90 to 95 percent as much as that in the next few years if this thing falls apart and the government cannot react as fast and you got to admit the government's been stimulating non-stop 31 trillion dollars poured into an average 20 trillion economy one and a half times gdp they've thrown in over the last you know 16 years or so to keep the economy david should have grown seven eight percent on that alone and it's been two to three percent and feeble so so to me all you have to do be is be careful into this down four-year cycle the most likely time for stocks to crash is always like july to october see what happens here if nothing happens here then you know maybe we just kind of coast sideways but there's little upside for markets this overvalued and history is crystal clear on that john husman and every other great indicator on this you know um so so at best we can't go up much more but at worst we see the biggest crash since 29 to 32 in the next two to three years so it just pays to be more conservative here more out of stocks and be into the highest quality bonds which are the us 10 and 30 year treasury bonds those are the bonds that were the safe haven in 2008 and in the early 30s those are the bonds that will not default no matter what because they can print money if they have to but the let's talk about that the 30-year yields [00:10:40] Speaker 2: already been rising ever since uh uh warships taking the helm of the fomc actually even before that inflation and that's not a good sign war that's a headline for stocks inflation expectations have been going up ever since the iran war started a lot of people have been shorting shorting bonds right now are you concerned that the bond yields will continue rising because of higher inflation [00:11:00] Speaker 1: expectations no no i'm not that the the rising bond is all of that is exactly what triggers the the stock market off stocks do better when bond yields are going down and are low it's a leverage to stock stocks are david i've studied the entire history of the stock market since the late 1700s okay stocks have never been this overvalued this broadly okay uh in 2000 and now are the highest valuations ever makes 1929 looked like nothing okay that's where we're at all we need is a trigger here and then things start going slowing enough to unravel the unprecedented debts debts debts default even in good times once things get tough they default like crazy there has never been a debt bubble to even compare to this so so all it takes is a trigger here because because the only thing different david this time than the roaring 20s or the 50s and 60s or past major long-term top is governments finally realized they had the power to stop a a bubble from crashing they kept this bubble going 16 more years it should have peaked you know back in 2007 and again more so in 2020 and here it's still going up so i'm just telling people if you want to stick with this market fine but you better have a quick trigger because when this thing bursts my prediction is you'll see stocks down the s p up to 50 percent within three months and the nasdaq up to 60 percent and it'll happen so fast then you'll panic and sell and then it'll bounce against that to say you're wrong and then it'll crash 80 to 90 percent in the next few years if history has anything to say about this bubbles always burst and they always burst harder than any other upturns in history i'm curious to understand more about your [00:13:04] Speaker 2: demographics research you've spent a lot of time researching how demographics affect market cycles and bubbles here in canada where i'm based i'll give you an example the population declined uh for the first time ever in the country's history i think second year in a row so the population is stalling due to higher deaths than births and lower immigration and now we have a recession a technical recession the government doesn't want to admit it but we have two quarters of negative gdp and the whole world the whole developed world is heading towards the same trend fewer birds more deaths and uh fertility rates declining what does that mean for the next 20 years yeah david i mean that that is [00:13:44] Speaker 1: the huge long-term trend this has not ever happened before okay the leading countries in the world the developed world which is five times richer than the emerging world okay and all the population growth is in the emerging world but the developed world is plateauing and actually starting to shrink starting with japan and south korea it's going to follow all throughout the developed world this is the big trend we are peaking long term but at the top of this peak we're seeing high inflows the the baby boomers caused the major peak in growth in 2007 to peak but their investment flows as they're getting saving for investment are only peaking recently in 2024. so so valuations and stocks keep going higher while the fundamental demographics in the developed world are have been fading since 2007 and will more so uh in the in the next decade so so that's the dynamic markets are and when you look at that markets are even more overvalued than they've ever been versus the fundamentals and so it just means we have to have a bigger crash to get down to reality so i know this doesn't sound you know people say yeah yeah but the markets keep going up no matter what the government keeps supporting them that the problem is the governments have supported markets too much 31 trillion dollars okay and in stimulus since 2008 that's the only thing that's kept stocks going to new highs and the markets going up and when they finally crash and then people start to lose confidence or the government's not fast enough to catch up because they created this monster i call it this the frankenstein bubble of all time this is not mr high this is frankenstein they this is a totally artificial bubble most bubbles like in the roaring 20s or the 1990s are are natural bubbles when the economy is so good investors just get over excited and overvalued this is the opposite the economy should have been a lot worse and they blew it up artificially totally with artificial stimulus so that's a much more [00:16:01] Speaker 2: dangerous bubble from my point of view just on the demographics for the u.s there's a trade on this on prediction markets this is from kaoshi the largest one in the u.s will any u.s state experience a population decrease of at least 10 percent between 2025 and 2035 24 chance currently assigned what does your research say about population growth in the u.s i guess a lot of it will come from immigration if [00:16:22] Speaker 1: that's good that's going to be yes yes we and the entire developed world would have no population growth without immigration for most countries especially and the u.s has the greatest advantage including longer term because we attract the not only immigrants but the best immigrants from around the world so that is our advantage okay and and and japan has shown japan peak in their overall demographic trends what i could my demographics are taking the internal aging of the population plus the new immigrants coming in and the peak in spending for the domestic population is 46 47 for most countries and the immigrants come in at 23 and come in late but then just accelerate that okay but but it's all predictable and it's all saying the entire developed world is peaking here you know with just a few exceptions like australia because of huge immigration from from east from asia and and scandinavia but those are small the entire developed world is peaking here and slowing down as far as we can see right so so there's there's nothing to keep us going no secret you know okay we can get over the next downturn things will jump up to new highs no we're already at highs probably twice what it have been without all this stimulus in the last 16 years does [00:17:50] Speaker 2: that does that change the wealth transfer thesis at all if immigration will continue to drive new wealth into the country and uh you know the boomers are going to pass eventually um and their wealth is going to go to i guess their offspring uh but then who's going to be spending that money is it is it going to be the current generation or new generations of immigrants you think yeah no no it young people [00:18:12] Speaker 1: spend and then i know the exact numbers on this davis from the end of the workforce at 20 on average between 18 and 22 high school and college and they spend more into 46 47 depending on the country and but the more fluent people to go to college spend more into age 51 to 54 so so we can tell when people are going to spend what i've been saying david the entire developed world is peaking and that that happens it happened to rome it happens to anybody in history the more affluent you get the less babies people have the more they get focused on their own standard of living and having kids is a detriment to that affluent people have less kids than less affluent the developed worlds having way fewer kids than the emerging world and on and on and on but but regardless of that i since i studied demographics i can predict all of that when the developed country is going to peak when the emerging country is going to peak india is not going to peak until 2050 55 that's the next china they're going to urbanize like china more rapidly and drive the next global boom along with a lot of other emerging countries but china's david is already done they're the only emerging country because of their one child policy for decades that does not have young people coming up to follow their peak and will keep declining and they also have the highest debt levels compared to income of any country in the history because of their over stimulus of their economy they have 22 empty houses and and offices in china they for the next boom if it ever happens at all they don't need to build anything so how can you have a boom when real estate and investments and infrastructures are the biggest part of gdp growth so this is this is a different world coming and nobody's going to see it until we have this crash and as warren buffett [00:20:11] Speaker 2: sees we see who's swimming naked india's gdp per capita is still around two thousand eight hundred dollars [00:20:17] Speaker 1: it's it's still low relative to uh adjusted for purchasing power it's it's much higher but yes [00:20:23] Speaker 2: much lower than china why why did india develop so late and people would argue well if it hasn't done so already if it hasn't industrialized it probably never will at least not for the foreseeable future [00:20:35] Speaker 1: what do you say to that yeah yeah i say baloney you know what china looked like in the early 80s i had i had a friend visit there and go into the interior and see the real people in rural china he his his description was growling spitting pigs he's been all around the world sub-saharan africa everywhere and he was saying he's never seen lower life than that that was china in the early 80s before they invested in infrastructures and before their demographics turned very positive and all these things they basically urbanized you know went from 20 to to 70 percent urbanization that time urbanization is the biggest single driver globally around the world as countries urbanize and get into more specialized labor in larger markets the the gdp per capita triples okay the growth in that so so urbanization is huge and since 1920 the entire world's been urbanization urbanizing and in india simply followed china okay and after india it's going to be sub-saharan africa into 2120 to 2140 i can predict all of this today david abroad okay so so this is no surprise to me it's just that that china has bubbled so much that's what's going on in india will be the huge beneficiary when the china bubbles burst and the world stops investing in china and says oh what's the next big thing david there's only one other [00:22:14] Speaker 2: play india and pakistan going back to us markets well i guess global markets bitcoin um this is popular in india as well and this is popular all around the world but right now the price has not shown popularity like i mentioned in the introduction it's down 50 percent now you've used bitcoin as leading indicator this is the trade of the couch when will bitcoin hit 150k nobody thinks it's going to hit 150k before january 2027 four percent chance okay any other market and i agree with that but but i think it's going [00:22:46] Speaker 1: going to be in the 600 to a million range um 10 to 15 years from now bitcoin is the next big thing it's not just a stupid ass coin it is the way to digitize the entire financial services and money part of the economy and that is five times the gdp okay gdp globally is 105 to 110 trillion financial assets are 630 to 650 trillion dollars so so so that's what crypto is about people don't understand it bitcoin doesn't make any sense it has no value you know bitcoin is something that if it grows large enough and gets accepted which is rapidly doing and will continue for the next decade or two will be the basis that the us dollar used to be for the entire global monetary system and it needs that it needs an objective non-country um system so so bitcoin is an important thing that doesn't make sense until you see that it could be the and it is called that the digital gold of the future and the global economy needs that um so so bitcoin is going to crash i've been predicting it's going to go down to at least 30 000 by the end of this year maybe lower and then the next stop will probably be 250 then 500 i mean it's it's going to be closer to a million dollars 10 to 15 years from now and then it will be big enough to be bigger than gold and and and to continue to grow with a digital economy instead of a material economy gold was the monetary standard for a a physical economy material economy uh bitcoin's [00:24:39] Speaker 2: that for the digital economy is this cycle that you're predicting for bitcoin applicable to gold as well will crash and then it's going to go up much higher so here we have gold price at the end of [00:24:47] Speaker 1: the year oh gold gold has gone up uh with gold and silver have joined this bubble okay so have a few other things okay recently and so that that just shows what i'm saying it's an everything bubble this this bubble has so much strong momentum it's going to pull everything into it before it peaks so the fact that gold and silver finally joined they were going up but they weren't bubbling gold and silver joined okay now other things are joining in the last little stages here this bubble is telling me it is ready to blow right about now and when it does it devalues all of this financial asset bubble and then forces us to get back to investing in innovation instead of speculation and and and monetary velocity is the key indicator that tells you when bubbles are forming and when they're about to end and money velocity has been dropping since 1997 right in the middle of the first tech bubble and is now just turning up saying okay finally we can come out of this in the future but but but but we have to have a crash to clear out this bubble because bubbles and assets are not productive investments going into things just because they're going up not because they're productive so that's the opposite of what markets are [00:26:14] Speaker 2: supposed to do gold price at end of year uh traders particularly 52 chance above 4300 so 50 50 it goes above where it's at now let's just take a look at what gold's done in prior uh gold cycle so let's take the gld as a proxy okay and we have here uh let me just remove all these other other other things here um in 2011 right in 2011 it's uh you know what i'll use spot gold in 2011 it's gone down about 50 percent since it's top all the way all the way down to 2012 right 50 43 percent um in 20 from 2011 to 2013 uh multi-year bottoming period in 1980 that was an even bigger drop uh down about 70 percent depending on the peak uh where you start the peak and now it's already come down about 30 percent from its 5500 level earlier this year i think you remember that day quite well i i i i want to ask you how this but how this current market looks similar if different if not different than 2011 versus 1980. first of all if i looked at this [00:27:19] Speaker 1: chart and had no idea what it was i'd say this was five perfect waves up and now the next low would be around 800 to 1100 for gold right back at that 2015-16 bottom on your chart in other words see the three spikes okay 1980 2011 here this is a perfect long term and and gold goes up on 30 and 60 year cycles along with the commodity complex says the next low would be back to the last low at 1074 on your chart right here give or take that's i used to be saying gold's going to go down 40 50 percent and it'll look a lot better than stocks no that now that says gold's going to be down 60 to 70 percent so gold is and i will stand on this prediction folks gold is not your safe haven if we have a major financial crisis here because now and this stuff this chart i'm glad you brought it up if that's not a bubble this last wave from 2023 to 26 i don't know what is this bubble's going to burst gold is not going to be the safe haven uh the treasury bonds of the us is going to be the safe haven as they were in 2008. so treasury [00:28:33] Speaker 2: bonds are going to be a safe haven but what happens when the fed raises interest rates will bonds still [00:28:37] Speaker 1: be the safe haven it doesn't matter what the fed does when the economy collapses growth is going to go down so much in future projections that they're going to be projecting deflation or lower interest rates and lower inflation not higher so the inflation bubble burst and that takes the burst out of the bond yield so bond yields i'm telling you i'm expecting a treasury bond yield and we've already seen 0.4 percent so many years ago in the last downturn 2009 we're going to see treasury bond yields go down to zero or lower because of the down of a major downturn and no growth and no inflation is finally going to be knocked out for good this inflation it was natural into the 1970s and early 80s this inflation has only been caused by excess money stimulus and when that gets washed out we're going to see zero inflation for the rest of our lives in the developed worlds what happens to the housing market this year when mortgage rates continue to go up well that's only housing housing has bubbled now way worse than it did coming into early 2006. nobody ever thought housing could go down much because it goes up forever and i was telling people no this is a bubble in housing we didn't have that in the roaring 20s or the 50s or any other boom in history this time housing is bubbled because of easy lending and housing crashed 34 percent just in general and more in the high-end sectors housing's going to go down not as much as the stock market but 50 60 70 percent david that is what's the worst thing for the economy most people don't own a lot of stocks most a lot of people the great majority own real estate and when their house goes down or their real estate investments on top of that go down that's going to be something and and really i have a quote and look at all my past books in the last so many years real estate will never be the same when we come out of this downturn okay because real estate lasts forever unlike stocks and other investments and and basically is the baby boom dies out there's going to be not enough investment to keep real estate will actually have negative net demand trends because baby boomers will start selling faster than millennials are buying and that's never happened before in history day never ever real estate is not going to be your best long-term investment for the rest of most of our lifetimes and i could get shocked for that but i'm telling you that's clear if you look at demographics most of the baby boomers wealth is tied to real estate though harry yeah and of course and then so they get smashed they got benefited by their own boom in this whole in their whole cycle but as they retire which they've already done by 2024 100 of baby boomers on average have retired and then they start spending down their retirement you know and then and then they die and you know i can tell you exactly when the last baby boomer is going to die 2040 into 2040 they're going the selling is going to drag real estate down more than any time in history even though the millennials are still buying but it's slower levels so the the millennials are there's more millennials than baby boomers but the magnitude of the generation is less and the dying of the baby boomers is going to start offsetting the stimulus from the the the the the increased spinning of millennials and and we've never again something we've never seen before and if you don't if you don't study demographics you would never see this coming so finally we've talked about [00:32:31] Speaker 2: the markets rolling over and they already started to roll over a bit what other market topping signals are you seeing that will validate your crash thesis for into 20 the end of 2026 yeah yeah that great [00:32:44] Speaker 1: question and it's crystal clear the first crash of most bubbles is 40 to 50 percent within two to four months by if this thing is peaking now which i think probably is happening and again this thing keeps stretching out so i've been a lot less definitive than i've been in the past but if this thing's peaking now which my best bet would be it is we should see a sharp 40 50 crash in stock by the end of this year that would be the sign that this bubbles over and that even if the governments turn around and stimulate more it'll be too little too late because people start finally get fear people feel like you can't lose by buying stocks or real estate it's been like that in real estate forever now it's like that in stocks once you shake that then it's hard to unshake it so so that's what i'm looking for that's the biggest sign if that doesn't happen by the end of the year then we'll probably move more sideways until something like that happens but i think that's the best scenario that we do see an unexpected sharp crash into the [00:33:50] Speaker 2: end of this year especially into october thank you very much appreciate that harry where can we follow [00:33:55] Speaker 1: your work harrydent.com i've got a i've got a paid newsletter but i got a free newsletter i send a weekly article to everybody for free harrydent.com we'll put the links down below and uh we'll make sure that [00:34:07] Speaker 2: people follow harry dent in the links there if they want to read more of your newsletter and written work thank you so much harry for coming back on the show we appreciate your updates as always thank you david and thanks for watching don't forget to like and subscribe and don't forget to use my code lin l-i-n when you sign up to kaoshi remember new users who use my code can get ten dollars when you trade ten dollars for the first time link down below or scan the qr code here