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Wall Street legend Robert Prechter argues the biggest risk to the economy is deflation, not inflation.
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Hello might have a hard years back got -- it's -- mortgages -- -- first time cracking up 4% mark not under it over 4%.
Robert -- back with -- but I can remember my wife and I got our first house that was what -- -- prisoners was per day.
But -- -- -- nonetheless -- what people are shocked and and and you know wake up when they hear that I'm beginning to wonder though.
Whether we've been blithely.
Taking these low interest rates for -- whether a bubble is building.
Right in front of us on these interest rates and -- whether the Fed and and the treasury and they're all complicit in this in this the side.
Well definitely bonds have been going up for so many years -- bottom in 1981 and so we're talking about thirty years plus so.
These didn't extremely extended market I think we're in a deflationary risk environment though and that's why rates very very low do you really I mean even -- all this other stuff going -- might be temporary noise but it sure noisy.
Yeah no I definitely think the big if the big risk going forward is deflation are not hyper inflation -- runaway inflation well because.
Well let's take a look at the housing market for example which you just alluded to.
House prices were very very high and they were pulled up by all kinds of credit every credit pushing agency of the government created -- whole bunch of private ones and banks as well.
We're supporting that market well.
Real estate prices are finally finally collapse are down 50% they're still too much debt -- are many more foreclosures to come.
The entire world is in that kind of overly indebted situation.
That's -- we're coming out of that I thought the trend in dollar -- Is getting better you're not buying that.
Now that's what you they told us the opposite -- the bottom in the market is another -- thing you know we're up so much in in the market telling everything's fine we solve all the problems.
We haven't solved the problems were just in and -- bullion social mood right now under -- feeling good even when we get bad news such as a Central Bank failure.
To keep the Greek debt alive a hundred billion was defaulted upon -- that's after three recoveries so.
I think what exactly not steroids and a plunges counted upon -- -- -- I'm sorry say again well not it is not a formal default just punted on the wrote the yeah there's -- -- that still have 260 billion dollars worth of debt and and I wouldn't wanna be an investor in that either.
Okay I'm so play it out for -- what do you see happening because if you're buying it.
Then this is this stuff -- -- worldwide crests.
Well it's a big deal I think we are experiencing in the last two years we're getting into a peaking area for the third grade mania.
The first one topped out in 19992000.
The sweetheart of that was the NASDAQ index.
Have dropped 78% afterwards than we had that middle mania where we had a 2006 -- real estate 2007 in the down 2008 and commodities.
And that's over with and then we have the final one which is mostly concentrated in precious metals and had a few things like.
Canadian real estate really go up and all these other markets having a rebound.
But I think that was in this double top in 20112012.
That I think we're creating this probably the last of the of the big.
Big mania is and they've all been through the last who have been fueled by central banking.
Lowering interest rates and then printing money so so bonus pay out on -- sound familiar winds down then what happens.
Well I think the first thing it's gonna start happening is is you're -- -- see defaults.
And it's going to be very very difficult for people would.
In bonds and I think people are over invested in junk bonds are invested Muni bonds -- -- -- opening -- bonds and riding this wave.
They're gonna get -- Yes I think there -- -- lose a lot of things not thinking that concludes -- -- about the return of their money you know the thinking about the return that they need to live on but.
It's the principle I'm worried about.
Okay the by the way that it was more than individuals those -- sank.
Lot of companies a lot of banks so really messy enough -- more and I'm on the brink if they bump preparers right yeah I'm not saying this at a time when everybody's feeling good and I and you know it's easy to say that one when everybody's worried not people were saying it no -- no nine.
But this is a time when I think people would Begin this decision should really look -- at their portfolios and say hey.
Did I get lucky and get a Big Three year recovery in my stocks because if I did.
You know if you didn't get out 99 arrow says this is probably if you're the third last chance at least sites it's.
