Recently, I watched a video where Mike Maloneys speaks with Harry Dent. Although, I am not a big fan of Mr. Dent, some of the things he says make a lot of sense.
Highlights:
Japan: Japan ist the perfect example that the Keynsian policies (e.g. quantitative easing) do not work. The problem is that the authorities did not the economic reset to happen. That’s why Japan is the so called coma economy (no growth, no inflation – the Japanese economy is frozen). If you do not go through winter, you do not get to spring. If the reset does not happen, America and Europe will be like Japan. In other words you cannot fool Mother Nature. The coma economy happens when governments mess with Mother Nature.
Bubbles: The greater the bubble the greater the bust. Free money and too big to fail policies create various kinds of anomalies (e.g. speculation, misinvestment). Money costs for a reason.
The next crash: You cannot inflate forever. One day, people will not buy the money printing policies anymore. The next crash will be worse than the one in 2008 and will trigger deflation (like in Japan in the 90s).
Bust: Stocks get hit during both deflationary (e.g. 1929) and inflationary (e.g. 1970s) busts.
Guns: In case of a major crisis, guns and ammunition could become much more valuable than gold.
Gold: The price of gold has been manipulated for years.
Seasons: Everything has seasons (cycles). Be it climate, economy, life, commodities, politics etc. Life is a play of opposites. Therefore, there must be booms and busts. So it is crucial to understand cycles.
China: The Chinese economy is in a mega bubble.
FED: FED saves the big banks by printing money and "kills" savers. The result is an everything bubble (health care bubble, educational bubble).
Inflation: Inflation corrupts people’s minds: lack of savings, speculation, wages go down etc.
Cash: Precious metals are good to have, but cash matters too.
Comment
Mr. Dent describes himself as a student of demographics. He often speaks about how demographics can impact national economies.
In my opinion demographics matters when it comes to real estate markets in the developed countries (e.g. Western Europe). The increasing number of seniors may cause the prices of ground floor small apartments in the cities to go up. On the other hand, the prices of: houses in the suburbs, big flats (3-4 rooms) or the one on the top floors may go down.
Time will show, whether this prediction is accurate, since markets can stay irrational for a long time.
Video: