CW 722 – Harry Dent – How to Profit from The Demographic Cliff

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Welcome to the Creating wealth show. Episode number 722. 722. Thank you so much for joining me today. This is Jason Hartman and I am driving in a Lyft car to Seattle Airport right now, reflecting on a wonderful Venture alliance weekend. All of our members and guests and speakers that came out for the event just did such a great job putting it all together and our members are such contributors and such givers. They just made it a fantastic event. We went sailing, we had a progressive dinner, we had lots of meetings and networking and really did some business and shared some advice and some thinking that can really help people as investors. And we also had a good chance to explore some new opportunities and talk about some new apps and websites and just had a great time. So it was a fantastic weekend. Thank you all who are listening for making it such a great weekend. Today. Our guest will be Harry Dent. He's a returning guest, of course, and he is the economist that I've been following since the late 90s and his work has influenced me quite a bit. When you look at the economy and you look at demographics, it's a very helpful way to look at things. As they say, demographics is destiny. So Harry Dent focuses a lot on that. He's been spectacularly wrong on some of his predictions, but right on the money on some other ones over the years. So listen to him as he talks about everything in the economy and real estate. Of course he does the typical thing that all economists tend to do and all pundits tend to do. He talks about real estate as though it's one solitary entity. Rather than breaking it up into different markets, different types of markets, linear, hybrid, cyclical, different price segments. He doesn't do that until I ask him to do that. And then you'll see where his discussion gets more focused during this interview. So I hope you enjoy it. And if you want to join us in Phoenix this weekend, there are a few seats still left. Just go to jasonhartman.com and click on events and join us for our technology, software and real estate investing event where you can be a better investor through the use of software in your real estate business and really just take advantage of all the great tools out there nowadays through real estate tools. That's actually the name of our company partner on this event, so it should be a great event. Some of our local market specialists are flying out. They'll be talking about their properties, their management styles, their management teams and their marketplaces. So go to Jason hartman.com, get your tickets for that while you still can. And we will see you this weekend in Phoenix, Arizona. Without further ado, let's get to our guest, Harry Dent. Hey, it's my pleasure to welcome Harry Dent back to the show. You've certainly heard his name. He's a very prolific author. I started following his work back in the mid-90s and, you know, he's been right on with a lot of great predictions. You know, missed a few, of course, but he's been on with a lot of them and it's great to have him back. It looks like Harry Dent is on a roll again with the predictions, too, so it's good to have him. Harry, welcome. How are you?

Oh, nice to be back, Jason.

It's good to have you. And where are you located today?

Tampa, Florida.

No income tax state. Good place to be. Yeah, exactly. You, Tony Robbins, Rush Limbaugh, a whole bunch of others. Yeah, absolutely.

Yeah. And I was in California before this and Tony moved because they raised it, I think the 14% and made it retroactive a year. So he said, you know, hasta la vis, baby.

Yeah, well, he, he was right about that. So. So that makes a lot of sense. Socialism doesn't work. We all know that by now. And when we look around the world, you look at Greece's is on the verge of epic disaster again. Spain is a mass. Portugal, you know, when will people get the message, Harry, this doesn't work. You can't have something for nothing.

I know that there's something for nothing. Those cells, I mean, that's what marketers do. I hate to say it, but I mean, something for nothing. People want life to be easy. They want it, you know, no stress, no problem, no pain. And that's not the way life is. The people who do something to make a difference in the world and who are successful do go through pain. And that's how they get gain. And you know, the markets are like this. No, hey, we won't let the markets go down. We'll just print money. We'll just fill up every hold with free money. I mean, how stupid is that? And yet I go on these financial shows and have to argue this as if it's as it shouldn't be obvious.

This should be basic economics, supply and demand. You increase the supply of money, you're going to have problems. But really if we look at that, and I want to make sure we talk about China because the president of your company, Rodney, just released an interesting piece about China. But why don't we have some significant inflation with all this money creation?

Well, it's because we had one of the greatest debt bubbles in history. In fact the greatest. And what happens once we get too much in debt? We're no longer expanding the money supply and that debt starts to deleverage. Now it's deleveraging very slowly because the government is stimulating the economy. But what they're doing is basically, Jason, they're fighting deflation with inflation. Every major debt bubble in history, like the roaring twenties and then the 1870s, railroad bubble before that, and then the canal bubble before that in the 1830s, they're always followed by deleveraging of debt. Financial bubbles bursting and money disappears. Money is created by the banking system too fast and then when it deleverages wealth, I mean stock market goes down 89% in 1932. Wealth disappeared and didn't come back. Bank loans. We wrote off about half the private bank debt and mortgages and stuff in the early 30s. So that is money created like magic by the banking system and then disappears. Now you see it, now you don't. And we had debt grow at 2.7 times the rate of GDP growth from 1983 to 2008 for the entire boom. Any economist that does not see that as a problem shouldn't be an economist. And nobody saw it.

Okay, Harry, I want you to, I want to make sure we just really comprehend what you just said, because I think it was very important. Say that again. Give the years and the amount of debt versus gdp. And you're only talking about us I assume, right?

Yes, in the U.S. of course this happened around the world. But the U.S. from 1983 to 2008, where private debt peaked at 42 trillion and the government deficit about debt back then was 10 trillion at federal level. Debt had grown for 25 years, 2.7 times faster than GDP. So, you know, you can't have debt grow that fast and not have a debt bubble, not have a debt crisis. And when there's too much debt in the economy, people speculate more. They buy bigger houses than they can afford, cars, all this sort of stuff. And then when the economy goes bad, they're underwater and they're in trouble. And that's what happened in 2008. And again, the government solution is we'll just pretend like it never happened and just keep printing money. And I'm like, hey, if you're going to print money, don't give it to the banks. And Goldman Sachs and all these people send people a $10,000 check. If you're going to create something for at least send it to the people. All it's doing is going into financial institutions who are borrowing money at zero rates, leveraging up 20 to 30 times and speculating. Banks don't lend money anymore. They speculate in the stock markets and commodity markets.

Yeah, well, Glass, Steagall, you know, yeah, it's something else. But see their argument, the powers that be. Unfortunately, their argument is that if we give it to the banks, of course the banks have lobbyists and there's all kinds of crony capitalism going on. But if we give it to the banks, their rationale is there's a multiplier effect. If we give it to people. It's not.

No, not when you speculate. When you lend it, there's a multiplier effect. But first of all, we don't need the banks to lend more money. Consumers and businesses borrowed the most in history. Private debt is twice as a ratio to GDP what it was at the top of the 1929 bubble. And we've got on top of that the government debt. And on top of that, we've got unfunded liabilities for Social Security and Medicare, Medicaid that are alone four times our gdp. So we've got eight times our GDP in total debt obligations. We don't need more debt. What we need to do is deleverage, especially the private debt that got so far out of control. That's $42 trillion we got to work with here.

That's trillion with a T. That's a T. Trillion.

Yeah, with a T. 42 trillion in private and 18 trillion in government and $67 trillion in UN liabilities for Social Security and Medicare. That's how in debt we are. We've got like $130 trillion in debt and all people hear about is the 18 trillion from the government. So we have to do a big, what I call a debt detox, a debt deleveraging. That's what happened in the 30s was very painful. But note that after that bottom in 32 in the stock market and the bottom in the economy, unemployment, housing, everything else in 33, we turned around and grew like crazy and didn't stop until 2008 pretty much. So debt deleveraging is a good thing. It takes burdens off of business and consumers. But what they're really doing, Jason, is the reason they're funneling the money to the banks. They don't want the banks to go under because that's what happened in the 30s. You had a run on the banks. Banks failed, loans failed. By giving this free money so banks and financial institutions can speculate and with a slam dunk, with free money, it's free long term, adjusted for inflation, a 10 year treasury bond and it's free short term, it's at zero rates. They basically are getting a free gift and they're able to keep alive through speculation. But all that is doing is creating more and bigger bubbles than we had before. The stock market is at substantial new highs now. Real estate in a lot of cities is substantial new highs. It means now we're going to have to deleverage these bubbles again. And it's just, it's the sickest thing I've ever seen that anybody would tell the public that the way to cure a debt crisis is through more debt or by creating more money out of thin air. Banks created most of the debt, not the government. In that boom I talked about 2.7 times debt growth. But now the government's creating money. 4 trillion in the U.S. about 14 trillion around the world. Central banks are just creating money, throwing it into the economy and it's not being lent, it's not creating jobs, it is creating speculation.

Okay, so, so couple comments on that. Number one, I have long said that the prosperity of the United States over the last few decades is an illusion. It's, it's, it's a game of smoke and mirrors. We're not really as prosperous as we think we are. You know, from, from Nixon on closing the gold window. You know, this is just like we get to, we get to sort of bully our way around the world and be irresponsible because we got the reserve currency and we got the military to keep it that way. You know, I mean this, this is not a sustainable thing. I mean Are we in a legitimate recovery?

No, no, no. This is. We would have had a depression. We were going into a depression, which is just a big debt deleveraging and financial bubble deleveraging. We were. This was exactly like the early 30s, except this time the government's b. Everybody but Lehman Brothers and the government's pump money. I mean, in the early 30s, they took interest rates down to near zero short term, but they didn't do this QE thing. They didn't just create money and throw it in the economy. So they've had to, just to keep GDP growing at 2% on average since that crisis, they've had to pump $4 trillion, you know. You know, almost, you know, 20, 25% of GDP. That's the only reason we're growing. We would have been in a depress, actually. We would have been over it by now, largely, and we would have been in better shape. And now we're still going to have to. Now we're going to have to deleverage an even bigger bubble. More debt's been added around the world. $57 trillion globally has been added to the debt pile since the crisis in 2008. And the majority of that's come in emerging countries. And they're suffering from falling commodity prices, which is something we predicted very strongly. In my last book, the Demographic Clip, we said, hey, the countries that have the good demographics, emerging ones are going to get hit by plummeting commodity prices. And that's exactly what happens. And now they've got more debt than ever. So it's a, It's a global debt bubble.

Well, well, I, I really, I totally enjoyed the Demographic cliff, by the way. I thought that was an excellent book. I mean, I've read so many of your books over the years. But how many books do you have, by the way? I'm curious.

Oh, I don't know, probably seven or something. I think you got more than seven of them ahead. The great boom ahead in late 92, that was prophetic. And then the roaring 2000s was the book I sold most of in early 1998. And then the Great Depression ahead, and now the demographic Clip. Those are the four books I would tell people to go back and look at.

Okay, so I gotta ask you this, and I want you to answer this honestly. Please don't feel like, you know, you're playing to the host here. Not as if you would, but I just want to make that disclaimer. So in the Great Depression ahead or the demographic cliff? I mean, in the demographic cliff book, you Talked about real estate. And of course, you know, I'm in real estate estate in the investment side. And I agree with you on the McMansions and the high end real estate that, you know, I mean you, you predicted that many years ago, I want to say a good 15, 18 years ago. You predicted around 2012 the McMansions would start to soften. I, if I'm getting that right, I, I think I am. And, and you're predicting that still, that, that, that's, that's not a good place to put your money. My mom owns a big 9,600 square foot McMansion herself. I've been trying to con, sell. You know, you're not bullish on real estate, but you don't make the distinction as I would on, you know, low end real estate sort of necessity housing versus high end real estate or you know, different localities, like, you know, high end markets. I mean, I don't like any market with high land value. So I throw out California, the Northeast, South Florida. You know, we only like these sort of cheap middle markets, like you know, Memphis, Dallas, Houston, you know, Indianapolis, boring places you never hear about. You know, they're just like really, really milk toast kind of investments. You know, $100,000 properties. What do you think?

Well, yeah, actually there's a huge difference for a couple reasons. The affluent, the top 10 to 20% and really the top 0.1 to 1%, even more so, have done incredibly well in bubble land. And especially since 2008, everybody else has seen their wages go down, their buying power, all this sort of stuff. And yeah, yeah, they're the ones making this, this McMansion bubble and high end bubble, you know, houses selling for a 150 million 8,000 square foot condo in New York sold for 135 million. I mean, this is nuts. And I, the thing that I get that the rich people are the dumbest. They don't think their real estate can go down because they think they're always going to be rich and rich people like them will always want to buy this. It is the high end real estate that bubbles the most and goes down the most. And as baby boomers are done buying housing and what they're going to do is trade down into smaller places while the millennials come with much fear and difficult to get cred. And they want small places so that everyday house is the best place to be. And the very, very worst are these super expensive, I live in an expensive neighborhood and people don't think this is going to go down. This is going to go down. Palm beach is going to get plastered. Manhattan, San Francisco, Vancouver, on and on and on. Our number one rule is bubbles always burst. And the bigger the bubble, the bigger the burst. So it is the high end that has got the most risk in it by far.

The thing that makes me want to say that maybe that's not true is because the rich do get richer. And when you have economic policies like we've had, you know, the wealthy benefit from inflation. I mean, it's just amazing to me. You have, I'll say it, idiot. Bernie Sanders yesterday commenting, or maybe the day before commenting on Greece and how, you know, they, they shouldn't be willing to have austerity, is that if, you know, like what is he, a child? I mean, you know, do you think someone else is just going to bail you out all the time and you can be irresponsible?

Well, in the flip side's words, banks and governments made loans to those people that they couldn't afford to pay. They made bad loans. And when you make bad loans in the free market capitalist system, you're supposed to lose money. So people ought to write off these loans and Greece should default. But if Greece defaults, they're going to lose their ability to borrow money and they're going to be forced to live within their means for the first time in decades. That's the only way it would happen. If they're forced. Greeks would never choose austerity. They're going to get it. They're going to get it big time.

Right, right. But, but so, so these kind of policies that we have really pretty much around the world, they always benefit the wealthy class.

So you know what, Jason, this is not true. This is true at times when you have a bubble boom and when you have high credit creation, yes, the wealthy get wealthy faster. And that's been happening for the last couple decades. But what people don't understand, and when these bubbles burst, guess who owns most the bubble financial assets. Guess who owns these hundred million dollar dumbass condos in New York and San Francisco and Shanghai and stuff. It is the uber rich. They get slaughtered. The rich went from 20% of the income in 1929. The top 1% went from 20% share of the total income, which is huge, down to 8% in the early 70s. They did not get rich faster after that. They got the everyday purse in advance. We had the first middle class society to emerge in all of history from the Great Depression and after World War II. So I'm telling people it's the Rich that are going to get smacked the hardest. It's not going to be easy on Homer Simpson.

I bet people will be happy to hear that. Because the uber rich, I think, are just ridiculous. They're the crony capitalists and they think they're invulnerable.

Every person I know that has owned something, you know, super expensive real estate in Martha's Vineyard or London or New York or San Francisco or Sydney, Australia or Vancouver, I can't talk one of these people out of it. They think these places will never go down and people like them will never stop buying. And they are going to be so wrong. It's going to be unbelievable that, that.

Whole market in, in, you know, uber rich real estate market, it operates on one principle, the greater fool theory. No much I paid, some greater fool will come along and pay more. There, there's no sense to it. There's no cash flow metric. There's nothing logical about it.

Well, guess who the greater fools are today, Jason? The wealthy Chinese. Just like the Japanese were in the late 80s. Japanese had a big bubble while nobody else did in the world. It made them a lot wealthier. And they go around, start buying real estate in London, New York, Double beach and stuff.

History repeats itself.

I know why they don't care about the price, Jason. Because they're laundering money. They're getting money out of their country and this is the only legal way they can do it. They pretend like they're moving temporarily to California to get their kids in a good college, and they buy as expensive a real estate as they can because they're trying to get their money out of China before the bubble blows. They're not idiots.

They're looking for the Brinks truck, okay? And America's always been the Brinks truck. Not. I'm not sure if that will continue, but you know, it's. It's a, it's a game of relativity, right? It's just all we have to be is slightly better than everybody else, right, As a place to put your money. And, and that's what the South Americans are doing in Miami and South Florida. That's what the Chinese are doing everywhere.

You go to Miami, it's Brazilians with bags of cash from illegal activities buying condos. They don't haggle either. But it, but it's more than anybody now. The Chinese are the last fool standing because the Russians got do this. They got killed by the ruble being smacked. The Brazilian economy is, is doing really horrible. So it's really now main. The Chinese are the last Fools. And I tell you when, when their real estate and stock market implodes. And this is beginning already and we've been forecasting this for years that China was going to be the biggest bubble burst. China was going to take down the world more than any single country. When that real estate bubble implodes, these wealthy people are not going to have the money to buy these 50 million, 20 million, $100 million condos and houses.

Yeah. Okay, so tell us more about China. Like, I mean you've spoken about the Chinese demogr problem with a one child policy and you know, you wait. I don't know how far you push that out, but I want to say it's like 15 years from now, China has a big lopsided demographic where you got too many older people, not enough younger people. I'm not sure the number of years, but you're the expert. What, what? Tell us more about China. It's interesting.

Yeah, yeah. They're the only emerging country that doesn't have favorable demographic trends. Their workforce has already peaked in 2012. It slow and it kind of kind of flattens out over the next decade and then about 10 years from now they start aging as fast as Japan did in the 1990s and stuff. So China doesn't have the demographics. They've overbuilt their infrastructures, their industry, their housing, their offices by I'd say basically 12 to 15 years out. So they've been building stuff for nobody. 27% of condos and in Chinese cities are empty. You got whole cities like Ordos built for a million people, nobody. There's got empty malls and stuff. So they've been building stuff just to drive the economy and keep people employed. And what happens to these? Right now there's 240 illegal rural migrants in Chinese cities that have no access to health care, welfare, education, anything. They're only legal back in their rural areas which are now paved over and they can't go back. They're trapped in these cities with low skills. They're in underclass. And when this machine building stuff for nobody stops, they're going to be dead. They're just going to be trapped in these cities. And the only positive thing is there's going to be a bunch of empty condos for them to squat in. But, but these, China is the last place I'd want to be in the world right now because they're going to have unbelievable urban unrest when this happens.

Wow, that's a big deal. When you look at economy as large as China and a population as large as China. I mean, will the Communist Party survive that, I wonder?

I don't think so. The only thing they got going for them is older people don't rebel and revolt like younger people do. And like you said, they have an aging problem which is unique in the emerging world because of their one child policy. All the way back to the 70s is when that started. So that's, that's hitting them now. And like I said, it's going to hit them much bigger ten years from now. By time they get to that real point of demographic weakness, they're going to have gone through a 10 year digestion of all this overcapacity of everything. So when we do finally have this crash and this reckoning, I'd invest like crazy in a place like India and many other emerging countries, but I still wouldn't be bullish on China even after they have a major crash.

So what's going to cause their crash? Like specifically?

Well, you see the stock market has started going down crazy because there's too much speculation and went up 160% in one year while the economy declined because the app, because people in China saw that real estate, the greatest bubble in history, finally started going down. So you couldn't make money there. So they all of a sudden became stock flippers. So people just buying stocks and they said 2/3 of the people who open new accounts there, which were meteoric in the rates of opening new accounts, 2/3 of them didn't even have a high school degree. So this is the dumb money piling in the markets. And now what's it doing? It's just falling apart. The government had to step in and get brokerage firms to pony $20 billion to buy stocks to buoy the markets. They've told all their pension plans and in the country you can only buy stocks. We will not, it's against the law to sell stocks. Do you understand how desperate this is? So this bubble, this bubble is going down just like 1929 did. And the US government at first did the same thing. They had brokerage firms step in and purposely buy stocks and it only worked for a couple weeks and next thing you know, the market was down, you know, 89% couple years later. So this is not going to work. It may work a bit temporarily, but when a government has to step in and tell people it's illegal to sell stocks and you have to pump up, prop up the market artificially, it's just, I've never seen anything this insane. And the one thing I've done More than anybody is study history. And this is central bankers gone mad.

Yeah, it really is. It really is. Well, speaking of central bankers, any thoughts on Janet Yellen? You know, bring us back to the US and, and just, you know, any of your predictions, you, you predicted some amazing declines for gold. You know, I, I'm sure you view the stock market as being in a ginormous bubble right now. But you know, tell, tell us, what do you think is going on here?

Well, again, you know, they've reinflated the bubble. They've done it now for six years. Things are starting to crack. Greece, the neck. You know, the next problem is going to be Puerto Rico and Illinois and Chicago and the United States, the frackers. That's a trillion dollar industry with 600 billion of highly leveraged debt that is going to default and make Greece look like nothing. And that's just one sector and it's going to start killing the junk bond market. And then of course Portugal, Spain, as you said earlier, I mean we've just got a whole string of debt defaults coming around the world. You can only keep a bubble going for so long and whoever sits sitting in the chair, I. E. Janet Yellen, that is the next president, whoever it is, when this bubble burst, is going to take the blame for it, even though they didn't create it. But Janet Yellen has followed Bernanke. Bernanke didn't create this bubble either. You had to blame it more on Alan Greenspan and George.

Well, I think Greenspan was the bubble maestro, you know.

Yeah, but they get blamed and nobody wants a bubble to burst on their watch. That's why these central bankers just keep printing money. They really don't have any other option. As soon as if they were to stop printing money, this bubble would burst so fast it'd be unbelievable and we'd be in a depression within six months.

Yeah, yeah. Okay, so a couple just rapid fire things. So what's the future hold inflation, Deflation.

Deflation long term will go back to an inflationary economy at mild levels. But deflation always follows. And deflation is a sign that a bubble is bursting. A credit bubble bubble, debt is being written off and financial bubbles are coming down to earth and it destroys. We have, I estimate, and this is a big figure, Jason, 100 out of $225 trillion in financial assets, including loans and mortgages around the world. 100 trillion of that could disappear in the next several years. $100 trillion disappears. That's less money chasing the same goods. That is deflation. I've had this debate with the gold bugs over and over and over again and I keep winning the bets. I keep saying gold is an inflation hedge and a really good one. It did wonderful in the 70s when inflation was a trend. But what the gold market realized in 2013, that's why it dropped so strongly that Japan just tripled their QE. The US just committed to QE3 forever and inflation kept going down. So the market markets finally got that. We're not going to get inflation in a deflationary world. And the only reason we have mild inflation is because of all the money that's printed so far. So gold's going to go down, we're going to see deflation. Dow, I think the next stop is below 6,000 and that's not the final stop. I think the Shanghai is going to go from 5200 down to 1000 at least.

Listeners, do you hear what he's saying? So the Dow is going to go back below 6,000. You were talking about the Chinese stock market. Where's that going?

A thousand from 5200.

And you know, so that's, that's going down by 80%.

The U. S market, that's 70%. Now I'll tell you the neat pattern and I don't understand people in so denial on Wall Street. This is the simplest pattern. It was the same thing that happened in the late 60s, early 70s when the last generation peaked. You get, you get. The market keeps going to new highs and then crashing to new lows. It's called a megaphone pattern. So we're right back at that. You know, we're in the third bubble. We're right at the kind of the resistance line around 18,000 on the Dow. And the next new low in that pattern would be projected to be just below 6,000. So I have a specific reason for having that target. That may not be exactly what happens, but that is what you should expect when a debt bubble bursts, when a financial bubble bursts, every burst is going to take the market to lower lows because we pumped up the condom even more and got more out of balance. The economy knows how to balance itself. I tell people like, hey, you eat some bad sushi, your body knows what to do. Flush it out as soon as possible. It's poisonous. The body's good at this. That's what the economy wants to do. In central banks, they keep interfering.

Yeah, you know what is a good metaphor for. That's a great metaphor you just made. And so I'll just add to that a Little bit. It's like, you know, you go to the doctor, the traditional western medicine type doctor doctor, and you say, well, you know, my back hurts. They give you a painkiller to cover it up. You don't fix the problem. If you go to a more holistic thing, they actually look at the problem. Whereas what we do in, in the, you know, Keynesian economy is we just cover things up. We cover up symptoms that are too painful, you know, we don't want to experience them.

Yeah, you know, Keynes, I mean, brilliant guy in some ways and people abused what he said, but basically he was the original pusher. He invented financial drugs and, and it got accept in economics starting in the early 70s like you say with Nixon and everybody else. We're all Keynesians now. We've been printing money, borrowing money, running deficits, running trade deficits, creating debt ever since then. Because you're supposed to borrow more and run deficits in bad times to offset the private economy, but you're supposed to run surpluses. We haven't run a surplus in hardly anything since the early 70s. So we've gotten addicted to financial traffic, drugs, and we can't kick the habit. And boy, when you go down, when we finally come down, I don't see how it couldn't be worse than the Great Depression. And that's the worst downturn we had in history. And by the way, what preceded the Great Depression, the creation of the central bank, the Federal Reserve, they prevented the economy from rebalancing. So we got bigger and bigger bubble and so when it burst, it was horrific. And that's what we're going to get again.

Yep. You know, that's, you know, it's hard to argue with that. It certainly does. Okay, what about interest rates? Where are they going?

I think that, well, junk bonds are going to get crucified. So you're going to see a huge spike in that like we've already seen in Greece and some of the southern European countries. Fracking bonds are going to totally default. What's going to happen is interest rates are all going up now despite quantitative easing around the world. That's a sign that the central banks are finally losing control of zero long term rates. At some point. The safest, the highest quality government and corporate bonds, like a Coca Cola bond or a ten year treasury, their rates are going to go down for them when the deflation sets in. But they're going to keep spiking up for junk bonds and riskier bonds because there's going to be growing default risk. The more Governments and the more companies default, the more the bond market worries about it. The more it raises rates, the more credit costs, the more defaults. So it's a vicious spiral. So interest rates are going to up for most bonds which is going to kill the bond market. But ultimately after maybe six or eight months and this happened in the Great Depression, there was an initial spike in all rates including government bonds. But after that the government and the AAA corporates did well. Their rates came down, their bonds appreciated and the risky bonds just rates kept going up. So this is something if you look at past debt crisis is what you'd expect.

Okay, but what about mortgage rates though?

Mortgage rates will tend to come down because they, they play off of the.

10 year treasury and bellwether rate. Yeah, right.

So yeah, I tell people, you know, you might want to get a, an ARM rate now but, but maybe three or four years now you're probably going to get the lowest cost mortgage of your life.

Very interesting, very interesting. Good stuff Harry. Give out your website.

Okay, It's Harry. Harry dent.com We've got a free newsletter, Economy and Markets. I've also got, you know, other products and things you can look at. I've all. I've also got an unpublished chapter on China you can download@harrydent.com so that's the best place to go. Daily newsletter for free. And if you like us after a while you can subscribe to our big boy newsletter. And I would get that chapter on China. The book was just too big the demographic cliff to put that in there so I let people download it for free on our website.

Good stuff. Harry Dent. It's always such a pleasure to have you on the show and it's so interesting to talk to you and look at these patterns. And so much of this stuff is based off of demographics and when that interplays with the economics and the fiscal and the monetary policy, it just gets really fascinating. So it's great to have you back and we look forward to having you on the show again. Thanks for joining us today.

Okay, thank you, Jason.

I've never really thought of Jason as subversive. But I just found out that's what Wall street considers him to be. Really?

Now how is that possible at all?

Simple. Wall street believes that real estate investors are dangerous to their schemes because the dirty truth about income property is that it actually works in real life. I know.

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1 complete with over 20 hours of audio, go to jasonhartman.com store if you want to be able to sit back and collect checks every month just like a banker, Jason's Creating Wealth Encyclopedia series is for you. This show is produced by the Hartman Movie Media Company. All rights Reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email mediaartmanmedia.com Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Advice opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc. Exclusively.