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Author Harry Dent predicts the Fed will approve QE3 and it will cause another economic crash after that stimulus eventually wears off.
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-- he predicted the 2008 stock market crash precisely.
-- now he says that shifting demographic trends show another crash.
May hit as early -- the end of this year joining me now the founder of economic forecasting -- -- debt and author of the great crash ahead.
Hello Harry Dent.
You got it what what your latest update you're saying -- Bad vibes coming in just the next few months seven were here we are words August.
-- our biggest concern I mean things are slowing down a bit in the US except for things like home sales which are doing a little better but -- QE2 is wearing off -- we've been predicting for long time so we're gonna get QE3 as usual.
But between now and then there's kind of a danger period especially in Europe.
Europe is getting fast in trouble lots white Draghi made such a bold statement.
People should look at that is why did he have to be that desperate rather than oh great more stimulus so we're gonna see more stimulus but between now and then.
Stimulus takes a while they hit and then it wears off just like a cup of coffee so.
This second half this year I think of the danger of having another at least mini crash and meltdown -- we'll get a big stimulus program and I think the bigger crash.
Probably comes when Q -- three wears off around late 2013 and a fourteen -- that you could see something even more serious.
Well does your right I mean this is that old question about priming the pump and a lot of people and I've been right there at the forefront -- if you tried it once it did not work you tried it twice it did not work why would you try to third time other than.
We've all tried to star card sometimes in the in the end you try it -- to try until the battery wears down so is is that what they're doing is just.
They're just keep -- trying to prime the pump -- it takes.
Yeah I -- like a doctor keep trying to resuscitate a patient you know with a -- -- later.
How many times you do if we say look the patients that we've been saying for a long time greatest debt bubble in history 42 trillion and private debt.
Even way more than our government debt this debt needs to.
And the baby boom generation not a normal size generation largest in history.
Is done spending -- buying homes that's why home prices are barely coming back and -- even with the lowest mortgage rates and history so.
Our economy is gonna slow in the next decade and governments are just adding debt and stimulus desperately trying to keep the slowdown from happening we actually need.
To.
-- in basically prepare for the next boom and governments are preventing that this is this is stopping the free markets and our natural economic systems from doing what they note need to do.
In and it's very bad.
Heard your argument before but you have said in the past.
This economy is not Republican or Democrat or anything else it's just not stimulate a -- why.
Again you can't get aging people to spend people spend from when they into the workforce about 81 -- on average.
In -- age 46 to fifty as their kids are getting out of school so they average person hit their peak and spending.
In 2007 as we predicted a long time ago.
The above average -- wealthier people -- about five years later more around age fifty is their kids get out of college.
Com they're going to drop off after this year so demographic trends started to slow from 2008 -- and will slow even more from 2013 -- so.
It's gonna get harder and harder for the government to stimulate our economy -- these old people wanna save for retirement.
And now they get no returns -- these low interest rates and stuff so they're gonna have to save even more to meet their goals and they have to work longer so so again this stimulus is going to be saved.
More than spent and consumer spending keeps dropping off after every stimulus program because people don't -- -- spend and don't need to spend.
All right so you said big spending period hit in 2007 and you were right and -- -- -- that said that on this show a long time ago.
Source not like after the fact all of a sudden you're taking -- you and I've been tighten about this for.
Fifteen years I think something like that.
So where does it pick back up again what -- do we have to wait for the.
Pictures are what.
Yeah we do most of generation why actually the echo boomers most of them are still in in school.
They're they're entering the workforce but they don't become a big enough force to drive demographic trends up until about 2123.
So this decade you we always have a slowing in between generations we had -- in the 1930.
We had in the 1970s.
So this decade we're gonna naturally slow until the next generation comes along but that generation is not have large.
So and -- America will never quite see a boom like 1983 to 2007.
Which by the way is simply up 46 your lack on the birth index for Pickens spending and that simple you can -- economy.
Boom and bust decades in advance.
All right so we talk about the economy boom and bust.
Does the market follow that -- companies going to be I mean really the stock market is is about corporate earnings not about the economy.
And that they can make money around the world but but the world right now is.
Not to -- -- all that well.
-- this baby boom happened around the world in developed countries Europe North America Australia New Zealand.
If -- Japan was the only exception that peaked early we've been telling people for a long -- everything Japan's going through.
Big stock bubble big real estate bubble bursting economy slowing stimulus not being able to bring them out of it -- Everything's happening just like Japan in Europe the united states of the world is slowing -- and we are dragging down the emerging world where there is strong demographics.
And and countries like China are finally slowing down and when China slows down emerging countries that export -- -- slowed -- so we see.
Europe blowing up in the next year or so.
That hits America increasingly an -- when both of us slow that hits Japan -- China increasingly.
Until their whole government driven bubble in their real estate bubble burst and then that hits the emerging world.
And resource exporters like -- Australia so we see a global.
Downturn coming out this and then the emerging countries to do have the demographics in the future.
They lead us out they're gonna have a bigger boom in the two thousand twenties and we're gonna happen -- west but we we still have much better demographics -- Europe.
And most arrest the developed world and way better than Japan our and a dying.
In thirty seconds all these people that are read read it -- saving for their retirement.
Where they gonna put their money that.
Yeah you you get no yield -- government's pushed down yields on savings bond don't chase bond bonds have -- -- -- one point 4% yields on ten year treasuries lately.
We've got a channel that says debate at one point 2% that's about as low as they go -- they're likely to go up.
You've just gotta be safe you gotta get out of stocks on rallies even bonds in the future and you just got to preserve your cash and let things fall the secret.
To a period like this a bubble burst is that you wait for markets -- crash like in late 2008 early 2009.
Then you -- buy stocks you wait for real estate to get back.
To Wear what before the bubble that you by probably two to three years from now cash is king wait for -- wait for the for the dip Harry Dent always majority of.
