Mike Maloney & Harry Dent – Gold, Deflation & Reset

Two of the worlds top financial economists, Harry Dent and Michael Maloney, discuss the topic of deflation in a detailed hour long interview.  The term “reset” was used more than 20 times during the course of this powerful interview.  For the first time, the transcript of the interview is available from Nick Giammarino of the Global Currency Reset website.

Transcript begins below, time stamps are provided at appropriate breaks:

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Transcription by Nick Giammarino of Global Currency Reset
HIDDENSECRETSOFMONEY.COM PRESENTS…
Harry Dent (Financial Author and President of Dent Research): What if you could buy Apple, 80% off? How much money are you going to make on that long term?

Mike Maloney (Founder and Owner of GoldSilver.com): This is going to be the first time that we have an economic event of this scale that is global.

HD: Well, I’m going to take some part of my portfolio, and I’m going to bet on stocks going down.

MM: The last time that gold took a dip under $1000, you couldn’t get any physical and if you did you were paying more for it than if you had bought it when it was $1100.

HD: You can do stuff now to be ahead of this and be positioned right when this happens because this is inevitable. You cannot keep a bubble going forever and you cannot prevent deflation forever, you can’t stave it off.

When it happens, like you said earlier, a small percentage of people are going to make a fortune and do very well, and most people are just going to not know what hit them.

THE GREAT DEFLATION

MM: Several months ago we did an interview with Harry Dent in our offices in Santa Monica. Now that the episode of Hidden Secrets of Money that it is about, Deflation episode 6, is coming out, we wanted to come to Florida and visit Harry in his office and do little bit of a follow up on that.

So Harry, we both feel that there’s definitely going to be deflation. I believe there’s going to be deflation before a big inflation or hyperinflation simply because our monetary system can’t function under deflation for long periods of time.

HD: Right.

MM: It starts to implode because of the interest owed on every dollar in existence. So what are the fundamental reasons that you think deflation has to happen? You went over demographics already in the office so we don’t have to do too much demographics. But I see that we are headed for a bond crisis and a currency crisis.

I think that the dollar will go up first. But then, I think that we’re headed for a real currency crisis; that there’s going to be something a little bit different this time.

02:10

ARTIFICIAL VS NATURAL BUBBLES

HD: We know that the history is crystal clear on this. Deflation is rare and economy cannot stay in deflation for long. Deflation always follows major debt bubbles. And what happens in a debt bubble is that not only does debt grow in a leveraged economy and create unsustainable growth, but most importantly debt creates more money that chases financial assets.

It is not just a bubble in debt; it always ends up with a financial asset bubble and a lot of people have been looking for it and governments are keeping this bubble going and they’re printing money like unbelievable.

And people say, “So why don’t we get inflation?” The Inflation is coming in the financial assets: stocks are going up for no good reason; the Chinese stock market just doubled in less than a year, when they just announced that their exports dropped 15% over last year. That is death for China.

China’s economy has been doing nothing but slowing, the real estate bubble is finally going down, and yet the stock market doubles! Why? Because the money has got to go somewhere.

And so that’s what central banks have engineered. We had a natural bubble: debt grew at 2.5 times — 2.6 times actually — GDP from 1983 to 2008 and that’s obviously unsustainable. So that debt bubble was starting to implode, and financial assets with it, and so you saw major financial institutions about to go under. And governments just stepped in and said ‘Well we’re not going to let this happen; we’re going to inflate to offset the deflation’.

3:39

So this is how you get deflation. I call it, ‘you can create money by magic’, that’s what banks do. Governments can print it like magic, which they’re doing now with QE [Quantitative Easing]. It is like magic: now you see it, but also now you don’t.

This money can disappear even faster than it was created. Because when the debt bubble burst a lot of debts go bad, get written off, or restructured – just like chapter 7 or chapter 11 in business when that happens.

But more important than that, there’s more money than debt in financial assets that have been over-inflated by quantitative easing in this natural bubble. Now we have an artificial bubble because the governments are trying to keep a bubble going forever, and I’m like “Who can do that?”. The answer is, “Nobody”.

MM: Right

HD: You can’t keep a bubble going forever.
These financial assets implode — like they did in 2008 before they stopped it, like they did in the early 1930’s — stocks were down 89% and did not go back to those highs for 24 years.

1929 stock market collapse
Housing went down 30 percent and didn’t get back to those highs for 10 years.

4:45

So these assets not only implode, they go down and they don’t come roaring back to new highs. That destroys wealth. There is, I saw something the other day, a major global study, $250 trillion dollars in financial assets — loans, stocks, bonds, you name it — that have been inflated by this global bubble.

$250k Financial Assets 01

Out of that $250, I look at history in the Great Depression: 60% of private debt was washed out as a percentage of GDP because of that deflation.

$250k Financial Assets 02

So let’s say that $100 trillion dollars of that $250 [trillion] — that would be my best estimate, it might be more than that by history $100 trillion— at least will disappear, mostly stock value and loans. Well when all that money disappears, you’ve got less money chasing the same goods; that’s the classic definition of deflation.

05:35

So that’s how even though governments are printing money, all the money printed (QE) — $11 to $12 trillion by different estimates up to this point — that doesn’t compare to that $100 trillion that could disappear [snaps fingers] like that in a matter of years.

So that’s how you get deflation: you bubble up, debt creates money, banks lend against 10% of your deposits, they create money as if it it’s their deposit (it’s your deposit), and that’s what happens.

In the Great Depression, banks lent money to housing but largely to farms and farm equipment. That was the big bubble there; there was a tractor bubble back then. And when those loans went bad in the banks, they didn’t have your money, so that’s how you get a bank run.

06:17

Money is created out of thin air at high leverage – 10:1 in banks. And now again we’ve never seen this before outside of World War II; governments have never just printed trillions and trillions and trillions of dollars. But those bubbles burst — the debt bubble and the financial asset bubble — and that’s how you get deflation.

But the deflation wipes out a lot of debt, wipes out a lot of those excesses, so deflation doesn’t last that long and then you go back to an inflationary economy. We’ve had basically inflation for 90% of the time for all of modern history.

MM: Of course, yes.

HD: As long as your population is growing and standard of living is growing and stuff…

MM: …Since about 1934, yeah…

HD: …inflation is actually a natural phenomenon. But the difference is, once in a lifetime you get more of a hyperinflation — like we saw in the 1970’s — and once in a lifetime you get a deflation. So my biggest thing about deflation is it’s hard to explain to people especially when governments are printing so much money.

People just naturally think “That’s gotta cause inflation”. All it has done is offset the deflation we would have already had, and kept inflation between 0- 2% in most countries.

So they don’t understand deflation because they haven’t seen it. But if you look at history, it’s very simple: it follows debt and financial asset bubbles. Very simple. And like you say, it’s temporary.

07:34

MM: The last time around, though, about 1/3 of our currency supply — and I don’t call it money, because it’s credit that is our currency supply today… actually, there was a 40% reserve ratio by the Fed, but then you’ve got bank credit — was gold.

So you had this component that could not evaporate. It was still there, regardless of what happened. This time around, there’s nothing; it’s all credit.

HD: All credit

MM: There is nothing solid underneath this. And so credit has a counter party risk, and it requires faith that your counter party is going to pay you, for the system to keep on working. It’s a confidence game.

08:23

CREDIT LEVERAGE IN DEFLATION

HD: The other thing about credit, Mike, is that as we move forward, as we get richer, wealthier, more affluent — we are eight times our standard living from 1900 — as people get more affluent they can borrow much more. In the 1920’s, the average person couldn’t borrow to buy a home. There was a 5 year mortgage, and you had to put 50% down.

And it’s kind of like that in China today. So not only is our economy credit, but we have created way more credit than we did in the last financial bubble, which peaked in 1929. And of course that was followed by what? The Great Depression. You might as well call it the ‘Great Deflation’; that’s what it was, it was a great deflation.

09:02

But that deflation cleared the decks, took a lot of debt off of businesses and people… I mean, how is a younger family going to invest for retirement when stocks are so highly valued? The best stock model, say at the valuation that stocks are at today, you would expect -1% return over the next decade. How do you invest for the future?

How do you have a decent standard of living when housing got so expensive? I used to live in San Francisco before here: a starter home, a crappy starter home, was $800,000 there.

How does a young family have a standard living when 50-60% of their salary goes to the mortgage and property taxes?

So this great deflation is a reset. It’s a good thing. We get out all this excess, and we get back to level.

It lowers the cost of living and then we go back to inflation. That happens every time: inflation follows deflation.

mike maloney guide to investing in gold and silver

10:00

MM: You talked about the potential of maybe $100 trillion vanishing. (10:00 minutes) If you look at the 1920’s, the percentage of the population that was leveraged with debt was much lower than today.

HD: Much lower!

MM: Today it is everybody.

HD: Yes.

MM: You said that you had only 5-year mortgages and you had to put 50% down, instead of a 30-year.

HD: With 0% down!

MM: Putting 0% down, right. And so the average person — a young couple, kid out of college and his wife — they couldn’t buy a house back then unless they got assistance from their parents or something. Instead of a bank, today.

HD: And assistance from the government! The government not only guarantees most mortgages now…

MM: ..Nowadays…

HD: ..but now you can do it for 0% down and that allows people to buy something that they really can’t afford. So lot of people are going to get in trouble.

MM: I think it’s much more than the $100 trillion that you said. I think your estimate its conservative.

HD: Yes I’m conservative.

11:00

REAL ESTATE DEFLATION

HD: But for most people, deflation is going to hit all your financial assets. And for the everyday person it’s going to hit their home. Up until 2008-09, people didn’t think real estate could go down. Well it went down. When people used to tell me

“Real estate can’t go down”,

I said

“Well pick up your phone and call anybody at random in Tokyo.”

Real estate in Japan went down 60%, and now 24 years later it’s still down 16%.

japan home real estate prices

It never came back. Because not only was it bubbled up and had to deflate back down to some affordability, but Japan has something that I pointed out, that nobody gets: because the next generation is substantially smaller than the baby boom that bought all those houses and drove them up, even when the young generation comes back and starts buying houses, it should drive up the prices.

Except in Japan, just like they have more adult diapers selling than the baby diapers for the first time in history, they have more old people dying than young people buying houses. ‘Dyers’ are sellers.

more adult diapers in Japan than baby diapers

So people have to look at their real estate. You should have real estate if you’re going to live forever, or if you ran out of positive cash flow. If you think you’re going to get rich off of real estate in your lifetime, probably not going to happen.

But that deflation, who’s out to benefit? All the young generation coming up is going to be able to afford a decent house again without mortgaging themselves to the hilt. So deflation has very positive effects… long term.

But it is the most painful thing that can happen to the economy, to the company you work for or the company you own, or to your own financial assets.

It is a reset. It comes to over here [moves hand upward] and then goes off a waterfall [moves hand downward], now it’s here. Your assets are going to go from here to here, and that’s what happened in the 1930’s.

12:54

JAPAN’S KEYNESIAN COMA


MM: You talked about Japan, and one of the things that I’m amazed at is that for more than 20 years now they’ve proven that Keynesian economics doesn’t work. They’ve tried to print their way to prosperity. They’ve had government policies that kept these zombie banks alive. They didn’t let deflation happen and the debt clear.

HD: They didn’t let the reset happen.

MM: Right. And so since 1989 they’ve been fighting this thing that’s keeping their economy in this really stagnant low level. We recently went to Australia, China, and then Japan. It was really interesting flying to Australia: you land in the year 2000 and you don’t realize this until you fly to China, and you land in Shanghai or Beijing and you land in 2014 or 2015.

You land in today basically – 2016, if people are watching this next year — and then you fly to Japan and you land in the late 1980’s.

All of the buildings, their roads, everything is just stuck in time. Just like the United states is stuck in time in the when the NASDAQ bubble popped. And people don’t realize it until they see a comparison like Shanghai.

It’s very interesting that all these government policies won’t let the deflation happen, won’t let the debt clear. We just get frozen in time, we keep on fighting it, and our prosperity would actually be much higher had they let the free market work.

14:35

HD: Oh absolutely. We would have been over this crisis, we would have been over the deflation by now, if they’d let it happen. And they could have done it in a civilized way. Their governments could actually help restructure debt, help facilitate restructuring, rather than have a collapse, force it in a violent way.

That’s what happened in the 1930’s: everything just fell apart, so we had a natural reset. You could actually do it more constructively; they don’t.

And what I say about Japan, I call it the ‘Coma Economy’.   They did not have a crisis like the Great Depression. Banks didn’t fail, because the government didn’t let it. But the price they paid for that, they’re in ‘Coma Economy’ forever.  They are barely alive; the reset would have reinvigorated them.

I call this deflationary period the ‘Winter Season’.

And what Japan has proven now is – and this winter season rarely lasts more than 10-15 years and the worst deflation rarely lasts more than a couple of years — but because they didn’t allow this reset, if you don’t go through winter, you don’t get to spring.

Japan’s new generation should have already brought them into spring; they’re ahead of us, and that whole baby boom curve, boom and bust curve.  So that’s the price: they are paying a huge price, but they don’t realize, they say,

“We never had a crisis”.

The price is, you never grow again.  Ever.  They’ve had zero inflation, they’ve had zero GDP growth on average, zero everything. They are in a coma, stagnant; they are frozen; just like you said.

So I am very worried, what central banks are doing.  Because they’ve taken over the economy. They set short-term rates at zero, they set the Treasury bonds — 10-year, 30 — at zero adjusted for inflation. It’s free money; free money will always be abused.

But when you set those prices of risk-free bonds, everything is set off that, the whole financial system: mortgages are set off that, stocks are 10 years earnings projection adjusted back to present for the 10-year treasury bond yield.  The lower that is, the higher those stocks will be valued.

This is creating a bubble and inflating this whole thing.  And the bigger the bubble you create — and history is crystal clear on this, and it’s the law of physics equal and opposite reaction, I don’t know whether it’s the first law or the third law — but the greater the bubble the greater the burst.

So everybody is telling me

“Oh Harry, what’s the problem?  We averted the Great Depression, we are growing at 2%, blah blah blah.  We’re doing better than Europe, we are doing better than Japan”.

The problem is, we’re going to have a bigger bubble and a bigger disaster…

MM: Right.

HD: …because governments will not take the consequences for the debt they helped create.  And governments have guaranteed everything that you can guarantee: mortgages, bank deposits are guaranteed, almost all mortgages.

Now companies are guaranteed.  Nobody can fail.  When you guarantee an economy and you create free money, you’re going to have misinvestment, malinvestment, speculation and greater and greater bubbles

MM: Yeah.

HD: …until the whole thing falls apart.  Money costs for a reason, and if you’re fueling things by free money and/or by endless debt, that has never ever been sustainable in history. Most people are feeling better about the economy. Every year we grow another 1000-2000 points, the DOW or the stock market goes up, I’m like “We’re going to pay a bigger price, I’m getting scared”.

MM: Exactly.

HD: In fact I may have to move somewhere a little safer! That’s how scared I’m going to be.

17:55

USA’s KEYNESIAN DELUSION

MM: You know it’s interesting that they keep on proving that what they’re doing doesn’t work. Alan Greenspan created the real estate bubble by not allowing debt to clear and deflation to happen when the NASDAQ crashed in 2000.  That bubble was created, so the crash of ‘08 was created by Greenspan. It’s a direct causality.

HD: That’s right, Bernanke had nothing to do with it, he just kept it going and same with them, they just keep it going.

MM: Exactly.

18:21

MM: Well Bernanke, his reaction to that crisis of 2008 is going to create this next crash that’s right around the corner.

HD: Exactly.

MM: Right.

HD: And it will always be worth – again it is like the classic drug addict: if you’re coming down off a high, what’s your cure?  You take more.  Well how long can you do that before your system breaks down?

So there’s no question in my mind this next crash, this next downturn, and the deflation that will finally come with it, when people finally realize you can’t inflate forever – because imagine the central bankers around the world, we have a bigger crash than we had before, bigger deflation, and they turn around and say

“Oh you know what, we just didn’t print enough money. We’re going to double down”. You think most people would say “Oh sure”? If it didn’t work and created a greater crash, I think people are going to say

“No. No this doesn’t make sense”.

The next downturn, the next crash can only be significantly stronger than the last one. So it’ll be worse then 2008-09 especially when it comes to financial assets.

MM: I absolutely agree.

HD: And in fact if you look historically in this kind of ‘Winter Season’ where you get deflation only once in a lifetime — that’s why people don’t understand it – it’s typical for stock markets to go down 80-90% before they bottom. It’s not like the 70’s or other deeper sessions where they go down 50% or 60%, or even like 2008; 80-90% is what you would expect. And guess how much Japan’s stock market went down when it bubbled? 80%.

Japanese Stock Market Bubble - 1980 to 2011
Japanese Stock Market Bubble – 1980 to 2011

20:00

Despite endless QE, still went down 80%. And Japan’s real estate went down 60%. Nobody in this country a few years ago — and a few people even now – would think that real estate could go down 60% and really not come bouncing back as usual. This is exactly what demographics, exactly what history, would say is going to happen.

japan gdp
PERSONAL PREPARATION FOR THE DEFLATIONARY DIP

harry-dent-Demographic-Cliff

MM: This scenario is exactly what have been betting on for years. I’m trying to turn it to my advantage if I can. But what do you see that people could do about it? Because this is the thing: deflation is harder to make plans for than inflation, or hyperinflation even. It’s a different type of wealth transfer that’s very difficult for people to deal with. So what are you doing about it?

HD: Well you know, basically you have booms and busts, but you have inflationary bust like the 70’s and you have deflationary busts like the 30’s. They are totally different, but they’re still busts: the economy slows down, people lose jobs, businesses go under.

But in deflation everything gets reset, so there’s a number of things you do. The simplest thing to do, and to sleep well at night, is simply say “We’ve had a great bubble in real estate, great bubble in stocks, all financial assets, I am going to cash out, have my money saved, and wait for the next burst”.

This is what Joseph Kennedy did in the early 30’s: he sold stocks near the top, even shoe shine boys started telling him what stocks to pick. I remember in 1999 taxi drivers were telling me which NASDAQ stocks to buy.

MM: Right.

HD: I am saying ok this is close. You get out at the top, stocks go down let’s say 80%, the typical. Now you buy those same stocks in companies at 20 cents on the dollar; that’s how you get rich overnight. People think

“Oh but I’m in cash, or I’m in safe bonds, and I’m not making any return”.

Your return is on the deflation. Because everybody else is going to lose their assets in that deflation. You’re going to be buying those assets when they deflate because nobody is gonna lend you money.

MM: … At fire sale prices…

HD: If you don’t have cash or liquid money or safe bonds, something you can liquidate, you’re going to see the vacation home of your dreams, in the Hamptons, and it’s going to be 10-20 cents on the dollar, and you’re not going to be able to buy that bargain. Same thing with Apple…

MM: …Yeah…

HD: Apple stock, your favorite company, is going to survive this. A lot of this reset is to shift market share to the most efficient and invest focused companies long-term. Apple’s going to come out of this screaming. So will Samsung. There’s a lot of companies; these companies will survive.

What if you could buy Apple, 80% off? How much money are you going to make on long term? So that’s the simplest thing. The most complicated thing, the flipside, you bet on things going down. The good thing is, bubbles go up much faster than normal markets.

Most bubbles build over 5 to 6 years in stocks and typically more like 10 years for real estate. The trick is they burst much faster. They burst 2 to 3 times as fast as they build, so if somebody realizes things have to go down, you don’t get crazy and get leverage and try to be a fancy trader.

If you just say “Well I am going to take some part of my portfolio and I am going to bet on stocks going down” and you just sit on it — you don’t have leverage, you don’t get stopped out or anything, don’t get margin call, if we’re right, and my indicators particularly point down in the next 5 years from 2016 into early 2020.

Germany Demographics

And you just say okay I am just going to be short some stock index — could be the S&P or the NASDAQ, whatever, if I could short anything I’d short Germany, Germany is going nuts and they’ve got the worst demographics of any country in the world, just like Japan in the 90’s — just sit on it and when the stocks go down, you’ve made money: down is up for you.

MM: Right.

23:52

HD: Now most people say “Oh, I don’t short stocks”. Well just do it a little bit. So it is a whole spectrum of get safe and just be in liquid safe bonds or cash. And guess what? The dollar went up in the last crisis in 2008. Not down, went up 27%.

I think it’s going to go up 40% or more. The dollar will go up in the deflationary stage and then — I’m kinda agnostic about the dollar, I think the dollar will probably go down more than that, but the dollar is the safe haven.

We’re talking about destroying financial assets and loans. There are more dollar-denominated financial assets and loans — 40% more than euros, 3 to 4 times more than yen, won, and everything else — when we destroy all this money more dollar’s going to be destroyed than any other currency. So far a short period of time the dollar will appreciate.

Then God knows what happens to the currency markets, because there is going to be a major reset there. But people can be in the dollar to hedge, or you can have some part of your portfolio short things that are going to go down.

One of the things that I get — especially when I debate people who are more (25:00 minutes) on the gold bug camp, a lot of people listen to me and then listen to Peter Schiff — is that “You’re both right about the crisis, both right about debt, you both make sense”. But he’s saying ‘do this’ and I am saying ‘do that’.

I am saying deflation, he’s saying inflation comes first instead of deflation. I’m like if you’re not 100% sure about that, the one thing that goes down in an inflationary crisis or a deflationary crisis is stocks. Real estate will go up in an inflationary crisis, commodities will go up.

Gold and silver are the king in an inflationary crisis. Stocks go down either way, they just go down more; stocks went down nearly 89% at worst in the 30’s, and adjusted for inflation they were down 67% in the 70’s. So it’s worse.

So I tell people decide your risk tolerance in and take some portion of your portfolio and just be short stocks. I think right here in 2015 is a good time: they say sell in May and go away, I think this may maybe a darn good time to sell stocks.

MM: Sell in May and go away for the rest of the decade. [laughs]

HD: In this case, yes. In this case I’d say for 5 years. But most of the time if you sell at the beginning of the May and buy back in the second or third week of October, if you did that consistently over time your returns would be way higher than somebody sitting in the SMP 500.

And your risk would be way lowered, because most of the corrections — and it doesn’t happen every year — but most serious corrections happen in the second half of the year.

MM: Yeah, yeah. You said that the dollar is a safe haven, that’s where everybody…

HD: …During the deflation…

26:35

MM: …and I do agree that the dollar is probably going to go up and I believe that we are going into deflation. The one area that we’ll have to agree to disagree is precious metals. I see that as another safe haven. It is the other safe haven. This time we’re in for a currency crisis, in my opinion. I do think that you could see gold go under 1000.

You could see it go down to 700 or something like that. But that’s going to be the paper gold; the last time that gold took a dip under 1000, you couldn’t get any physical and if you did you were paying more for it than if you had bought it when it was 1100. I was a dealer, or I am a dealer, and there were tremendous shortages back then; for over a month our only gold product was kilo bars, so the cheapest thing we had was $30,000.00.

There were three days where we couldn’t get any product — we were out of business for three days — and everything we did have was selling for tremendous premiums over spots.

So even though the precious metals fell dramatically during the crisis of ‘08, the actual physical price to buy and get a bar that you can hold in your hand, or a coin, pretty much stayed flat or went up during that point when the COMEX, the futures, the paper gold and silver, were falling dramatically.

Annual Gold Price vs Oil Price 2000-2016
Annual Gold Price vs Oil Price 2000-2016

Now will that happen again? I don’t know. My portfolio used to be almost all precious metals, and it still is mostly precious metals.

But I have a higher cash balance than I used to have; I’m keeping a lot more cash. I also keep emergency food, and I’ve never been a gun person but I did buy a couple of 9mm and a 12 gauge shotgun. You said in one interview that shot gun shells make a good currency.

HD: Yeah. Shotgun shells, and little bourbon bottles, who wouldn’t want that in a crisis. [laughs]

MM: Those and I think these food pouches of emergency food,

HD: Oh, absolutely.

MM: I think those might end up being a major currency, and I think that we’re definitely headed for something that is going to be a topsy-turvy thing that people will not be able to figure out because nothing like it has happened to them in their lifetimes.

HD: In their lifetimes. Nobody saw the 1930’s who are alive today. May be a few people and they can’t even remember.

MM: Yeah.

HD: Nobody is going to see this coming. How many people saw the inflation coming in and gold doing so well? Nobody saw that coming until it happened.

PRIVATE DEBT TO AMPLIFY THE NEXT CRISIS

29:18

HD: Nobody is going to see this and this is going to be more destructive to financial assets in particular than the ‘70’s was, than inflation was. In fact, sometimes when I’m arguing with people who see hyperinflation instead of deflation, or see inflation instead of deflation, it’s kind of like

“Governments should be punished for printing this money”. It’s like a moral argument. I’m like, “Wait a minute, if you want to punish governments, deflation is way worse punishment than inflation”.

Would you rather have been in the early 1930’s, or the mid-1970’s? I’m telling you the 30’s were way worse. Anybody living there would have told you that. So deflation is a huge consequence.

(30:00 Minutes)

MM: Deflation was because of all the credit that was created during the 20’s.

HD: Absolutely, it was during the bubble.

MM: It was a consequence of printing.

HD: And most of the printing, people think governments are printing money. Government set rules and regulations that allow banks to print money. Most money is printed by private banks. And again, at the top of the last debt bubble in 2008, we had $10 trillion in federal government debt, we had $42 trillion in private debt.

And it is the private debt — especially the debt that leverages financial institutions, and that was the biggest component of the private debt more than corporate, more than household – that is what deleverages the fastest.  We didn’t have that factor. We didn’t have Fannie Mae and Freddie Mac or government backed agencies/mortgages and all this sort of stuff.

So yes we created way more debt. Our total debt ratios at the top of this last bubble were more than twice what they were in 1929. And 1929 was followed by the greatest depression in US and world history, so imagine how big a downturn you were going to have when we were coming into this with twice as much debt, and on top of that governments have created money out of thin air.

I don’t want to be an alarmist, but people should be scared.

MM: Yes

HD: And then you should get serious about studying what happens in the deflation.

GOLD AND DEFLATION

gold bars

31:22

HD: My difficulty with gold is that it’s been manipulated for almost all of history, until it started trading freely in the early 70’s. And so I can look at everything else — real estate, stocks, commodities – and see what happens when there’s deflation; I can look back at history.

Gold, I don’t have a way to say… I think at time’s gold’s going to go up, and at times it’s going to go down in this deflation. Because it is a crisis metal and it is something people have confidence in, and it’s real.

MM: But we only have one cycle to look at…

HD: …All we have is a very brief cycle in 2008. I mean gold went down for a couple of months and then back up…

MM: …The 70’s bull market and then to 2000…

1970's gold bull market

HD: …but that wasn’t deflation.

MM: Right.

HD: Now there is no question that gold does well in inflation. I have a chart that shows correlation between gold and inflation is almost….

MM: In the 30’s, though, the process of gold going from $20 per ounce to $35 per ounce was a month and a half of unpegging, and exchange rates would fall, and so the dollar was sinking basically compared to gold and then they would repeg every day.

It wasn’t just Roosevelt; yes he was given the power by Congress to devalue the dollar up to 50% against gold so he would be able to double, he was allowed to raise the price to $40 an ounce. And they unpegged, they repegged, they unpegged, they repegged, and over a month and a half it was this slow sinking of the dollar and gold going from $20.67 cents per ounce to $35.

gold price chart - 1927-1946
Gold price chart – 1927-1946

But the fact that it wasn’t just a signature and suddenly it’s $35, that it was actually the global markets causing this thing, to me that bodes well for gold in a deflation. The only great deflation that we can look to that’s really well-studied.

I read Murray N. Rothbard’s America’s Great Depression, Milton Friedman’s Monetary History of the United States from 1867 to 1960, which half was about the Great Depression, and Ben Bernanke’s Essays on the Great Depression.

I’m considered a gold guy but I am really more of a cycles guy. I am not a gold bug. I’m in gold right now because of the beliefs that I’ve developed being a cycles guy. You are a cycles guy and a demographics guy like I have never seen.

HD: I was a cycles guy before I was a demographic expert.

MM: Oh really?

33:54

HD: Demographics is just one of the most useful cycles I stumbled on. And it’s useful because I can project it in the future and I know exactly when people are going to spend money, exactly what they’re going to do by age, in any consumer category overall when they are going to invest, save. But no I’m definitely a cycles guy.

MM: But gold rose 70% nominally in the Great Depression. And then purchasing power went way up, the prices fell by 30%, so it more than doubled in purchasing power during the Great Depression.

prices during great depression 1927 to 1941

Will it this time? I don’t know. That’s no guarantee. The government had it manipulated; gold was still $20.67 per ounce like it had been before WWI, and they had inflated and gone from $1 billion worth of national debt before WWI to $25 billion by the end.

We had established the Federal Reserve and pumped the currency supply. Base money had grown from being just gold, to gold plus Federal Reserve (35:00 Minutes) notes and with just a 40% reserve. The base money growing allows the banks to then do the fractional reserve lending that caused the Roaring 20’s, that caused the bubble, that caused the crash.

HD: It is not an accident that the greatest depression in history followed the creation of the Federal Reserve.

MM: Right.

HD: Because what the Federal Reserve sees as its task is to prevent recessions. As if you should prevent recessions. I don’t want a cure for the common cold: colds help your body get rid of stuff, and it’s not something to get rid of. Recessions create efficiency and innovation. You get the greatest efficiency and innovation in recessions, not in booms.

So what the Federal Reserve did, we had very volatile markets in the late 1800’s/early 1900’s, it said “We need somebody to tame this thing”, so they tamed it.

S&P 500 1820-2010
S&P 500 1820-2010

Which they’re doing even more today. Every time you have a recession or slowdown you pump more money; you pump more money, you get more debt, you get more leverage, and you create a bubble and then it bursts. And so we’ve had depression before in the United States 1870’s,1880’s, 1890’s, 1830’s, early 40’s, but never one as bad as the Great Depression.

MM: Right.

HD: Because the Fed came in and tried to make the economy better rather than letting the economy run itself. The economy is the dynamic opposites of democracy and capitalism, and boom and bust, and inflation and deflation. You need all these seasons.

I mean everything has seasons. I am a cycle guy, and everything I study including climate, has seasons. Seasons were not created by accident; it’s a fundamental part of life. These seasons help facilitate change, progress, and innovation, and our standard of living goes up because of it.

So when governments come in — like the Fed did initially in the early 1900’s, and now central banks are doing globally on a scale that the Fed couldn’t even imagine — they’re killing the golden goose.

They’re killing free-market capitalism, which is how we got rich in the first place. So I am not only warning people about this reset and saying you can see this coming, it’s inevitable , you can do something about it, you can prosper instead of get annihilated by it, but I want this reset to happen.

If we don’t get this reset, we’re going to be like Japan, in a ‘Coma Economy’ forever. We are going to die as a country; the whole Western world’s going to die. You don’t mess with Mother Nature from my point of view, you facilitate it; and they are messing with it.

37:30

MISGUIDED SOCIALIST POLICY TO MAKE NEXT CRISIS WORSE

MM: Yeah, but they have messed so much.

HD: It’s unbelievable.

MM: And they when the reset starts to happen, they will try to prevent it.

HD: Absolutely.

MM: And it looks like the leaders that we’re going to have through the next elections will be even more socialist than we have right now, potentially, and what really worries me isn’t the reset; it’s the reset trying to happen and government rushing in to save us

HD: …then reacting…

MM: … and then deciding that because all of this stuff is imploding that they have to share the wealth, that we have to go down this road that has never worked. There isn’t an example in history — I mean if socialism worked, the Soviet Union would have been the winner in the Cold War.

HD: Exactly. China is still is a top-down-driven economy. Government planning, which is proven not to work — and I’ve been telling people, you talk about a bubble, we are nowhere compared to China — China is the greatest bubble, the most government-pushed, manipulated, leveraged bubble in all of modern history.

china stock market mirrors 1929 crash
China Stock Market Mirrors 1929 crash

China is not going to see a soft landing, they’re going to fall like an elephant. And I think we’re going to have some civil unrest and a lot of problems here, but I tell you, you couldn’t get me in China for $1 billion.

They are really going to have problems. And this is what happens when governments mess with Mother Nature, mess with natural cycles; you can facilitate them, but you can’t manipulate them and try to prevent them, and that’s what they’re doing.

This is extremely dangerous stuff. I’m hoping for two things. My cycle suggests that, again, 2015 to early 2020, all four of my long-term cycles (and they are very comprehensive) all point down for the same time like they did in the early 30’s and the early/mid-70’s.

So that says it’s going to happen in the next 5 years, but the most dangerous time looks like 2015-16. I am hoping number one that we start to have the next financial crisis before the 2016 election, so maybe we elect somebody that looks like they could be a turnaround manager instead of another endless money printer.

39:42

MM: That’s one of the problems though, we don’t elect people that have any business experience.

HD: Janet Yellen, Ben Bernanke — have they ever run a business?

MM: No. They’ve never hired anybody.

HD: They studied the Great Depression, Ben Bernanke studied the Great Depression; studying the global depression  and going through it….

MM: Right, studying, all those white papers and stuff. [chuckles]

40:00

HD: And the other thing I’m hoping for is that when this next crisis comes — and I think it’s sooner than later — I’m hoping the people of most countries, or particularly the United States, are smart enough to say

“You already did this. You already tried to print your way out of the last deflation or depression or failure of our economy”….

MM: …yeah, but if they were only that smart…

HD: … “All it did was create a big bubble, all it did was burst bigger, we are not going to let you do it again. We’re going to be against it”. Now I don’t know if that’s going to happen or not.

MM: Hasn’t happened in Japan in 25 years. [laughs]

Japan Property Index 1986-2010
Japan Property Index 1986-2010

HD: But Japan is unique though in a way because they went through their great reset — their bubble burst, their real estate and stocks, and endless it was — they went through it when the rest of the world was having the greatest boom in the history.

MM: This is what scares me, is they had us to sell to during that whole time.

HD: That’s what I am saying: their export machines were running at full tilt…

MM: Yeah, right.

HD: …that made it lot easier. They didn’t have the spill-off of a world crisis combing their economy like everybody had in the Great Depression.

So they were able to do this, and they had been on quantitative easing forever, and it hasn’t worked except that it’s kept the banking system from falling down. So my theory is:  It is possible that the whole Western world goes into this ‘Coma Economy’, just keeps printing and keeps doing their own stuff.

I think people will say something’s wrong.  Because I think that most people know that you don’t get something for nothing, and that when government whenever there’s a problem they just create money… people have got to be sitting there saying on one site,

“Something for nothing, there’s something wrong about this” and on the other hand

“Yeah but we didn’t have a great downturn, I still got my job, the economy turned around”.

I am hoping that people say “No” and the Germans say “Nein” and on and on. We’ll see.

MM: I don’t think they will because that average person that could say “No” has a mortgage.

HD: And their house is gonna be underwater.

MM: They are the leveraged out people that are going to lose everything. The Great Depression, it was anybody that had debt lost everything they had, they lost the family farm…

HD: …The farmers were the hardest hit. And you know what, I think this’ll be the opposite…

MM: …The farmers were the ones that could borrow currency…

HD: …Because of their land and their equipment…

MM: … And their crop cycle. They would borrow every single year, to replant and grow the crops, and then they’d pay it back once they harvested. And so they were carrying debt when the deflation hit, and so that’s one of the reasons that they were the hardest hit.

42:33

BIG BANKS TO FACE CRISIS THIS TIME

FDIC - Bank Failures 2000-2014

HD: Well you know, a lot of people don’t get it. I think it’s going to be the opposite this time. Back then it was the local, smaller banks that got hit from the farm loans and all this stuff and those were the ones who went under. This time it’s going to be the big banks…

MM: …The ones that are most highly leveraged…

HD: …because the big banks have backed and done all this leveraging, and done all these mortgages and stuff, and all these financial securities and stuff. They’re going to be the ones. It is going to be Citibank, and Bank of America, JP Morgan, all these.

And the government, basically, they won’t quite say this, that their major motive for this endless money printing has simply been to save the banks.

And the Federal Reserve does not represent the people, it’s not democratic-like, it basically represents the banks. And so they’re saving the banks while killing anybody that saves money.

And in creating this ‘Coma Economy’ that can never really grow and innovate and reset, and it’s not just a financial asset bubble — it doesn’t benefit everyday people who have very little stocks and financial assets — we have a health care bubble, an education bubble, that is being fuelled by this. Kids now have to get $100,000.00 to $150,000.00 student loans just to get a college degree.

How are they ever going to make it on the top of the high cost of housing, and older people health care, and younger people education. How are they going to make it?

So government’s doing all these crazy things just to keep the banks from falling down. I’m saying, let the banks fall down, restructure, and go forward. Did we lose banking after the Great Depression? Everything came back stronger than ever.

MM: No, but we lost about a third of the banks. [chuckles] A lot of them.

Bank Failures 1920-1945

HD: Yeah, we lost a lot of banks. But the ones left.. we lost a lot of companies, but the ones left… My motto from history and life is what doesn’t kill you makes you stronger. The problem with people is we are a bunch of sissies; nobody wants challenge, everybody wants the good stuff, the easy life, everybody wants boom and nobody wants bust. Life has to have both.

Life does not work without boom and bust, inflation and deflation, male and female, and every opposite you can think of. Life is a play of opposites, light and dark, sleep and work. People want one side of it and not the other. And if you think that way you are not going to be as successful as you could be, and you’re not going to see these cycles coming.

44:49

HISTORICAL CYCLES ARE PLAYING OUT

HD: There are cycles, and there have always been cycles. And some people say to me “Oh cycles are bunk”. Or “We don’t have or we’re not going to have recessions in future”.

(45:00 Minutes)

I say “You’re crazy”. There have always been cycles; if you don’t believe in and study cycles, you’re going to miss a lot of stuff, it’s that simple.

MM: I absolutely agree.

HD: Because cycles always happen.  And the cycle we see most is you come out of it deflationary reset, you have a boom with mild inflation — I call that ‘Spring’ — but then you have a bust with high inflation and then very low productivity. That’s what we had in the late 60’s, 70’s, and early 80’s.

Then you have a bubble boom with disinflation, and disinflation is always followed by deflation before you go back to inflation. So anybody who says we’re going to go from inflation to disinflation back to inflation first, no you have to go through deflation.

MM: Disinflation encourages debt, it encourages…

HD: …and speculation…

45:45

MM: …It encourages lack of savings, because it’s the Federal Reserve conditioning everybody to use their house as an ATM simply because 5 years from now you’re going to be able to refinance again at a lower rate and take more cash out.

HD: Here’s what it kills me Mike, when you get into this fall, ‘dis-inflationary bubble boom season’ I call it, naturally this will happen, just falling interest rates encourages more borrowing, falling interest rates pushes up everything from real estate to stocks and then financial assets.

This is happening, this will happen, you’ll get a bubble anyway. When governments step in and stimulate lower interest rates…

MM: Now it’s a super bubble.

HD: …you get a bigger bubble. This is already going to happen anyway, the governments just make it worse.

The government made the 20’s more of bubble than it needed to be, and they made the 90’s and 2000’s more of a bubble. And now they’re trying to keep the bubble going on forever which is the lamest thing I’ve ever heard of.

MM: Insanity, yeah.

HD: Who could possibly think you could keep a bubble going forever? And why would you want to? In a bubble, the rich get richer and the everyday person gets crucified. That’s what’s happened already.

Wages for everyday people gone nowhere, in fact they’re down in the last 20-some years; rich people are doing better than ever.

The capitalist system already flavors rich people and innovative people, and people take risks, and they should. The government is supposed to keep some balance and say

“Look this has to work for everybody”.

Democracy is the opposite of capitalism. Most people say “Oh this is like brothers and sisters. No, they are opposites like male and female”.

MM: Right.

47:24

HD: It balances, the capitalist system. That’s why we’ve done so well – ‘When Sally met Harry’, I call it. In the late 1700’s, democracy emerged — especially in the United States — as the model, and the industrial revolution really created free market capitalism and then Adam Smith and all of that theory.

He was the first true economist that understood the dynamics, the play of opposites, in free market capitalism. No economist I see today even remotely understands that. If they’d ever run a business, ever had sex, or anything they would understand, they don’t understand it.

I mean really, Yellen is a nice person, Ben Bernanke’s a smart person, and I’ve met Alan Greenspan, he’s actually an economist who’s funny and has a sense of humor. But these people don’t understand our economy at all. You can know a lot about something and not understand the actual dynamics.

They are killing the golden goose here and that’s the worst thing that I fear. I’d rather have the worst reset in history than be in a ‘Coma Economy’ for ever and basically die, and that’s what Japan has chosen.

I don’t think the whole world can choose that option. I think Japan could choose it because they had it to themselves.

MM: They had us to export to.

HD: They had us to export to. The whole world goes down and we’re all going to affect each other’s economies. In the Great Depression, trade shrank for everybody, and everybody put up tariffs and made it worse. Like you say, government reactions are almost always wrong.

In the end, if you look at history, no government is big enough to offset the entire free market system in the world. It’s bigger, Mother Nature is bigger than us, the free market capitalist system is bigger than any central bank. So the central banks are going to lose this battle and you’ve just got to know…They’re winning it right now.

They are inflating just enough to stave off this crisis. At some point, something’s going to go wrong: the China bubble burst, Germany… I’m telling people, we predicted the demise of Japan in the late 80’s. People said it’s impossible, they’re the greatest county in the world.

We said Japan’s going down — purely demographics and bubble. Germany’s got the worst demographics of any country in the world in the next 8 years. Nobody sees Germany fall. Germany’s going to fall on demographics alone, and they’re holding the Eurozone together. Without Germany they are nothing.

So something’s going to go wrong and these clueless central bankers are going to lose control and this reset is going to happen. You need to sit down and say “What do I do to protect my business, my family, my financial assets?”.

Even where you live is important. I want to be in as safe a place as possible. You can do stuff now to be ahead of this and be positioned right when this happens, because this is inevitable.

(50:00 Minutes)

You cannot keep a bubble going forever and you cannot prevent deflation forever, you can’t stave it off forever.

When it happens, like you said earlier, a small percentage of people are going to make a fortune and do very well and most people are just going to not know what hit them. They’ll be walking around in a daze thinking

“What happened? My house went down 60%, I’m under water on my mortgage, I can’t refinance. I lost my job, all my neighbours lost their jobs, my kids can’t get a job, they’re all moving in my house and ,all their friends…”.

People are just going to be like “What happened?”. History is crystal clear what happens when a bubble boom bursts. Crystal clear. Deflation, reset of debt, and reset of financial assets. That’s what happens. So you can prosper from that if you see it coming. You’re right: 90% of people will not see this coming.

MM: So the most important thing that people can do is study this as much as they can and try and figure it out for themselves.

HD: To make the type of changes we’re talking about here, to go against the grain, you’ve got to be damn convinced of this. That’s all I tell people. I say

“Don’t just read my book or listen to audio tape, we put on a seminar, come to it… you need to be convinced of this”.

You spend enough time with me, I’m telling you, you will be convinced.

Because we have history and the facts on our side. And when I argue against people who say otherwise they’re always talking ideology and they are always stretching the facts.

MM: Right.

51:24

HD: I have that all the time, a lot of people will agree on the debt thing, the crisis, and will totally disagree about the deflation versus inflation side. And I have to say well that’s not right, that’s not right, that didn’t happen, this is not the facts.

I’ve studied the damn facts. I have studied history more than history professors have and as far back as you want to go. I don’t tell people how far back I study history, they tell me I should get a girlfriend, sort of a thing.

MM: [laughs]

HD: But you know, history repeats itself. It’s crystal clear what happens. So if you see this, you can do the right thing and it’s very clear and not complicated.

MM: What do I see in history is that the public never gets rewarded for mass stupidity and if everybody is leveraged out to the max…

HD: …And everybody’s doing something…

MM: … you don’t go straight into inflation. That has never happened in history, that I can see, where the public wins at the expense of the banks.

HD: That’s right.

MM: So when everybody is leveraged out, the thing that has to happen is deflation. It’s like the majority in the stock market has to be wrong eventually, otherwise markets don’t work and there’s no opportunity.

HD: Markets peak, not only when trends like demographics or debt bubble or something peaks. And basically we’re way past peak debt; nobody needs to borrow anymore, everybody’s in debt.  But bubbles and bull markets also end when all the investors have piled in, when most people are piled in, you are talking the great majority and they are going to be wrong, because there’s nobody left to buy after them.

MM: Right.

HD: The last people to get in are what they call, I hate to call it, the ‘dumb money’.

MM: The bag holders.

HD: Yeah. In 1987 you had a 40% correction of the stock market. There was no recession, there was no slowdown in the economy, nothing. It’s just stock market’s been down for a long time, then all of a sudden started going up.

Everybody piled in and it went down just because everybody piled in. Now we are talking about everybody’s piled in, and hedge funds and financial institutions are leveraged 30-50:1 with zero cost money almost, and the fundamentals of demographics, the fundamentals of excessive debt and financial leverage are all negative.

I tell people with high confidence, that the next several years will be the worst economic and financial crisis you will see in your lifetime or maybe even in your kids’ lifetimes.

But certainly in your lifetime, you will not see something like this. So what you do today is more important than any time in your life, because wealth does disappear much faster than it bubbles up.

54:11

MM: Yeah, I have been telling people that this is coming for about a decade now, and I call it the greatest crisis in the history of mankind. This is the greatest wealth transfer that there has ever been in history because crisis like this, I mean… the Great Depression was almost global…

HD: …yes, almost global…

MM: …it affected the advanced economies. This is going to be the first time that we have an economic event of this scale that is global and there isn’t any place…

HD: …Because emerging countries don’t have the demographic decline that the wealthy countries do. But they are largely commodity exporters. You know the biggest thing to collapse so far has been the commodity prices: iron ore, steel, oil, things like that, copper. (55:00 Minutes) I mean we’ve been predicting this for years.

Commodities run – I’m a cycle guy — on a 30-year cycle like a clock: 1920, 1950, 1980, and then just recently 2008-11. Commodities are plunging and this kills emerging countries and their exports and their major companies.

So this time it’s not going to be just the developed countries going down, like in the 30’s, the emerging countries are going to feel this at first. Now they’re going to come out of it much better and I also…

MM: …I would rather be in a country where their currency supply is mostly base currency and not all this credit, the voodoo debt that the banks create.

HD: Emerging countries, since they have lower incomes, they never have the same… China’s the only super high-end debt emerging country. Their debt ratios are fraction of ours – India, or Russia, or South Africa, countries like that — so that’s an advantage for them.

The emerging countries also have very strong demographics, except for China, coming out of this great reset, and also this commodity cycle will turn back up. I think the next commodity boom will be perhaps the strongest in history because the next global boom is going to be driven much more by emerging countries and their higher populations and their new middle class than emerged countries.

Because we are aging — except for a few small countries, we’re aging.

And those emerging countries are much more commodity-intensive. India spent 60% of their spending on commodities, Chinese 40%; we spent 10% maybe on commodities, something like that if you add it all up. So I think when I’m arguing with people who say that gold could go to 5000, I say

“Yeah, in the next boom.”

I think the next commodity cycle into about 2038 to 2040 may be the strongest commodity cycle in history and emerging countries will benefit from that. Developed countries don’t like commodities going up, because we import them, they export them so they like high commodity prices.

The 70’s was great for emerging countries. So there’s a lot of dynamics, but it goes back to their cycles: their cycles and debt, their cycles and demographics, their cycles and commodities. I have a geopolitical cycle, that’s really simple: 17-18 years good, and 17-18 years bad. Think about 1983 to 2000, did anything go wrong with the world at that time?

We had 100-hour war with Saddam Hussein, kicked him out of Kuwait, and then said, “We’re not going to try to take over your country, restructure you, and oppose you”. That’s the worst thing that happened.

MM: Didn’t we invade Grenada, too? [laughs]

57:40

HD: No inflation, no global conflicts, the Cold War was winding down, everything was hunky dory. Now you look at 2001, what happened there? 9/11. How’s the world been since 9/11?

One failed war after the next, one civil war after the next, one dictator doing this after the next. Now we got ISIS on top of all that, makes al-Qaeda look like nothing. So this is a negative geopolitical cycle, and it’s going to stay negative — it’s a cycle — until about 2020.

And then all of sudden the world’s going to get better again and nobody’s going to… It’s just a cycle.

This is a cycle I’ve measured back 200 years. So wouldn’t it be nice to understand that; it’s not just generations spending enough — that’s a very project able cycle — but the geopolitical environment, it goes through very clear cycles. So if people were just aware of it.. Think of being a farmer and you didn’t understand the seasonal cycle.

You knew nothing about it, you had no idea when spring was going to come or when to harvest. People learned that thousands of years ago and now it’s a science. Nobody argues about the tides, nobody argues about spring. It is just useful to understand cycles. That’s why I’m into cycles above everything else. To me it is the most important thing to understand about the world, because there are cycles in everything.

MM: So we agree on 99.9% of everything we’ve talked about with the exception of, I lean a little bit more towards precious metals, I’ve got little bit more cash, but precious metals, and I believe that ultimately they‘ll come out doing well either way. Even if they go down I believe it’s going to be temporary.

Like I said, when it comes to the contraction of the currency supply, the deflation, we’re right here now [indicates a high point], we’re going to take this severe deflation. Our monetary system –global monetary system – can’t work in persistent deflation without the whole thing imploding, and the central bankers know that.

I think they‘re going to throw hundreds of trillions of dollars at it and that we could end up in either big inflation or even hyperinflation, and I believe that precious metals are a safe haven. But like you I also have cash on the sidelines.

So tell us your website, tell us about some of your books, (60:00 Minutes) and once again tell people what you think what they can do in this deflation to protect themselves. Getting out of debt, too. I don’t carry any debt; do you carry any debt right now?

HD: I only do on my vacation home. I don’t want to pay back a tax-deductible, low-interest mortgage loan — any other debt I don’t want. Certainly not credit card debt and student loan debt if I was a younger person, that sort of thing.

So no, people that have low debt and high liquidity are the people who are going to do well in this downturn, it’s that simple. For more information from me, I have a free newsletter. It’s called Economy and Market.

You just go to harrydent.com, put in your website, you are on my newsletter.

MM: You mean your email address.

HD: Yes, just put in your email address, you’re on this free newsletter. It’s daily, high content, you get to know us and hear what we say about everything.

We also have a website, dentresearch.com. My most recent book is the Demographic Cliff, it’s going to come out in paperback in August 2015. That’s a great book, because we’re really focusing on this deflation season in that.

But I also tell people to go back and read my first published book, The Great Boom Ahead — came out in late 1992.

People go back and look at that book, we predicted the entire 90’s: the fall of Japan, the great boom, the real estate bubble, all this stuff before Clinton got into office.

Politicians think they caused it, it had nothing to do with them. It will allow you to see that the cycles we study work.

They make sense. I can’t predict exactly when this bubble’s going to burst, or exactly where the stock market going to peak, but I can tell you that bubble’s going to burst and I can tell you when the danger periods. So the Demographic Cliff for sure reading, and if you have time go back and still get on Amazon, get The Great Boom Ahead.

MM: Excellent. Thank you so much for your time, and good luck to you in the deflation.

HD: Deflation’s going to do me well, I can tell you that. I’m going to benefit, not be wiped out by that. That’s something I am confident of.

MM: I’m hoping for the same. Thanks.

The video below links to the full interview you have just read.  It is not hosted here on GlobalCurrencyReset.net, but is currently available from Mike Maloney’s website below by clicking on the picture:

mike-maloney-harry-dent-deflation

About Mike Maloney

mike maloney

Michael Maloney is the founder and owner of GoldSilver.com, a global leader in gold and silver sales and one of the world’s most highly regarded investment education companies since 2005. He is author of the best selling precious metals investment book of all time, Guide to Investing in Gold and Silver, published in 2008.

Several years ago, Mike met financial educator Robert Kiyosaki, author of the “Rich Dad, Poor Dad” series, and was invited to speak at one of Kiyosaki’s seminars. That experience inspired Mike to share his understanding of economic history and recurring “wealth cycles” with others, so that they, too, would have the ability to secure their wealth and their families’ futures against the certain future crash of the global currency system.

He began speaking at investment seminars all over the world. After founding GoldSilver.com in 2007, he began work on his book, Guide to Investing in Gold and Silver. In 2010 he launched WealthCycles.com as another forum with which to help educate and empower others to benefit from history’s greatest wealth transfer.

“For 2,400 years as people have lost faith in fiat currencies, they have turned to ‘real money,’ gold and silver,” Mike says. “Today the stage is set for a world-wide ‘gold rush’ to the safe haven of precious metals just when supplies of those metals are precariously low.

The opportunity for those who position themselves in precious metals ahead of the crowd is like none we will see again in our lifetimes.”

Mike Maloney – YouTube      GoldSilver.com

About Harry Dent

harry dent

Harry S. Dent Jr. studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of his chosen profession that he turned his back on it. Instead, he threw himself into the burgeoning new science of finance where identifying and studying demographic, technological, consumer and many, many other trends empowered him to forecast economic changes.

Since then, he’s spoken to executives, financial advisers and investors around the world. He’s appeared on “Good Morning America,” PBS, CNBC and CNN/Fox News. He’s been featured in Barron’s, Investor’s Business Daily, Entrepreneur, Fortune, Success, U.S. News and World Report, Business Week, The Wall Street Journal, American Demographics and Omni. He is a regular guest on Fox Business’s “America’s Nightly Scorecard.”

Harry has written numerous books over the years. In his book The Great Boom Ahead, published in 1992, he stood virtually alone in accurately forecasting the unanticipated boom of the 1990s.

That same year he authored two consecutive best sellers: The Roaring 2000s and The Roaring 2000s Investor (Simon and Schuster).  Harry’s latest book, The Demographic Cliff – How to Survive and Prosper During the Great Deflation, shows why we’re facing a “great deflation” after five years of stimulus — and what to do about it now.

Harry Dent YouTube 

HarryDent.com

This interview covered the following common topics and questions:

Why is Deflation bad for the economy?  Deflation News, US Deflation 2016.  2016 Inflation or Deflation.  Why is Deflation a Bad Thing?  What are the effects of Deflation?  Inflation VS Deflation.  Money Growth and Inflation.  Harry Dent predictions.  Harry Dent gold forecast.  2016 Dow Jones prediction.  Mike Maloney Industry News.

If you enjoyed the transcription, please leave a comment below, and be sure and support both Mike Maloney and Harry Dent.

I conducted an interview with bestselling author Willem Middelkoop, that interview and the transcript is available here:

Willem Middelkoop The Big Reset Interview

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