Is another stock market crash looming on the horizon? Many of the television experts tell us we've turned the corner and good times are ahead. Readers of this Web site have seen several pages offering a different opinion.
On this page I'll give you an economic forecast that is a little different from what you've read at books-empower.com. Our mission is to provide quality content to help you decide.
Stick with this page all the way through and you'll read some very encouraging predictions based on mathematical facts and dependable historical cycles.
We're drawing this analysis from someone with a really good track record. Back in 1989 with the Japan economy roaring along, Harry Dent predicted that the Japanese economy would collapse into a decade long deflationary cycle. He was roundly criticized in media circles. But he made this prediction based not on emotion, or even personal gain, but rather on basic mathematical formulas.
Of course soon after, Japan's economy did tank. It is still struggling enough for the Bank Of Japan to pour massive amounts of fiat currency into their country to try to spur any growth.
Around that time Harry Dent also predicted a recession for the U.S. to hit in 1990. Which also came to be correct. In 1993, he predicted the largest boom cycle in our history to begin a few years later. And it did.
He also based that opinion on solid math and proven cycles.
Now he is warning of a very large stock market crash and is offering his opinion of what will go along with that crash. And how America will come out strong again after it is over. He further expects another large boom beginning around 2020.
First I'll give you the math behind his work and then I'll pass along the details of what he expects to happen next. And the math is compelling.
He states that new generations come along about every forty years. Using that number it is possible to pretty much track boom periods and then slowdowns. No emotion, just numbers.
Here is a chart for the boomer generations peak spending which is usually after age 31 and before age 55.
And to show consistency, here is a chart with results for the previous generation during their peak spending years. The economies had to slow down when they did because of the slowdown in consumer spending. No emotion. Just facts.
Here are his three warnings...
The baby boomer generation is the largest group so far. And this group is either close to retirement or already there. This group drove the economy in their peak earning years but now they are hoping to wind down spending a bit and prepare for retirement.
Consumer spending drove the economy before and as spending drops, so does the economy. The federal reserve system has tried to prop it up with various quantitative easing. But when that stops, so does the "recovery".
The largest credit bubble in our history will continue to sink. Harry Dent believes deflation is destined to follow this credit bubble bursting. We've listed several opinions predicting inflation is the end result of this credit collapse. Check out the page about this debate if you missed it.
Mr Dent gives this scenario.
A pretty heavy drop first. We had that one in 2007 and then again a couple years later.
A rally upward driven by government stimulus. We are there now.
A very large stock market crash followed by years of deflation.
This is the same thing that happened in Japan. He was able to correctly predict that one for the same reason he predicts a stock market crash in America. The Japanese generation that drove the consumer spending was nearing the time to pull back.
He further expects a large rise in bankruptcy filings followed by many bank failures. Similar to 1930 in America.
And one more similarity to that time for number three...
A very large drop in real estate values. I've mentioned in several pages that I also believe the real estate bubble has not fully burst. He sees drops of over 30% in home values. I would agree with that number.
A real estate collapse was a big part of the last depression in 1930. This will cause more loan defaults and leave many more vacant properties.
I know what you've heard about housing being better, but I think there are still many thousands of houses being held off the market by banks as they hope to see values go back up. Housing is tied to jobs. We haven't come close to fixing that problem yet.
As I said at the beginning, this page is about a coming stock market crash. But it is also about a recovery. Harry Dent believes a deflationary time will flush out a large portion of debt. He believes the very strong companies will survive. And he believes America will come out better on the other side.
I read his book, "The Roaring 2000's." It was written in 1999 and forecast the biggest boom in our history. He wrote another bestseller before that titled, "The Great Boom Ahead." I'll be reading his latest book, "The Great Crash Ahead."
So there is something for you to consider. The math tells us a stock market crash is predetermined. Government currency printing may hold it back a while. But not indefinitely.
Whether we get runaway inflation or stifling deflation is open for debate. I'm trying to be prepared for either. The specific plans may be different. But acquiring knowledge is the first step. I do agree with Harry Dent in his assessment that America will come out stronger on the other side.