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And here's a scary number five point 29 trillion dollars -- -- CUS government -- to foreign entities.
That's a record high for US foreign debt.
Plus -- -- -- -- hit a total debt level and -- whopping sixteen sure trillion dollars the only the few days.
Harry -- is an economic -- The -- the great crash ahead.
-- thanks for joining us snag you recently said that the Dow could drop to 3000 in the is likely to happen years from now.
But how big a role -- -- debt play in your prediction or is this just economic and Malays.
-- is three things it's the Fed stimulus we've had over and over again in the last couple decades driving big bubbles and greater debt accumulation.
And then these bubbles in debt and assets in stocks and -- thing eventually burst so we've already seen as we saw all the tech bubble burst nearly 2000.
We saw an 8000 point drop in the in the Dow.
-- just in 2008 early 2009 and there was massive stimulus -- -- -- -- we're -- we're gonna see another crash like that anywhere between.
Three and 6000 so we're just -- That's the low end of where things can go but we're most importantly saying the baby boom generation has peaked in their spending.
Back in 2007.
For over a decade to come.
Debt has gone to unprecedented levels government private even more so.
And when you get in periods like this the markets go up and down -- bubbles and -- over a decade or so until you work out these accesses.
In the next generation comes along -- so we have to expect a very different market in the future.
We talked about this notion that the baby boomers are done spending that also done basically investing in this market because I think they'd been burned so many -- right and now they just look and for preservation vs appreciation.
They want to just retire whenever whenever they have left.
People coming up the ranks like my generation.
We can't just sit on the sidelines we have to get in -- -- to pay for over the course of the next couple years that it.
-- it is trimming there's two things the echo boom that's coming along for fall most of them are still in school.
And the ones that are in the workforce -- -- -- scared to buy a house in the other ones that are -- are gonna drive the economy in the future buying -- spending raising kids.
And eventually they'll become major investors but they don't have much money to invest.
And they are too scared to buy a house right now so when we get.
This kind of crash and when housing prices come down more in mortgage rates stay low.
This generation -- how.
Have a higher standard of living simply because the cost of living goes down we have to wash out all leased access is that the baby boom generation.
And the Fed and all this debt causes we have not.
Taken this debt out of our economy yet little countries like Iceland Estonia have done that let their debt levels are down let banks fail they're doing better now already.
-- -- -- That's -- to -- argument that we should allow ourselves a follow up this fiscal cliff Ivan comment similar least -- all day she we just go that the spending automatic spending cuts kick in.
Taxes -- -- what may.
Take our medicine.
I think in general we do now the government can help he assisted the government only gave -- aid.
To banks that actually broke down mortgage loans and business loans.
That would reduce the debt load on the private sector and help this debt deleveraging happened but but yes just keeping stimulating pretending like you can put off this debt crisis.
You have to go to this crisis you don't get -- -- drug or addiction without detox in first and getting the drug out of your system we've got to get this debt down.
And we can't keep piling up saying oh my gosh will deal -- that later there is no later Japan still piling up debt after two decades.
In their economy has stalled for two decades -- they never dealt with the debt but.
In the crisis that we're on the same direction and we don't do something different.
But the problem is our election cycle.
And you cannot get reelected if you have a -- in congress and you say oh by the way it's time to take your medicine -- as a result this will continue won't it.
Yes it will where we've been saying this.
That the trend is the economy you know we get stimulus after a down turn it works like a cup of coffee -- -- drug for nine to twelve months and Michael QE2 is now wearing off.
And then they have to stimulate again at some point.
The stimulus get so bad and the debt keeps growing so bad that it weighs down your economy and it fails.
This is already happening in Europe Europe's already passed the point especially in Greece and Spain and countries in Southern Europe.
Where the stimulus doesn't do any governing -- piles on more debt than they keep sinking down.
The US is not there yet but we think the US has -- hit that same point in the next year or so and we're gonna have another major crash.
When -- stimulus no longer works.
Is this -- quickly you think the -- -- topped were done for the year.
I think we're done for this year I think there's two scenarios that we've seen a major top period of this rally since march of 2009.
And we start a process down of the next two and a half years.
I think the second scenario is we get a really strong QE3 in the United States and in Europe.
That we may go to new highs early next year and then by early to mid next year we see a bigger crash either way.
We think the next two and a half years we're going to see a major crash and investors just gotta be cautious.
I just be thankful that we had three years of of of the economy coming back in stock coming back but don't.
Look a gift horse in the math here.
Bunkered down its common Harry Dent under the great -- ahead things -- beyond us.
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