As the clock ticks closer to 2024, one outspoken economist is making a dire predication about the markets in the new year.
“Since 2009, this has been 100% artificial, unprecedented money printing and deficits; $27 trillion over 15 years, to be exact. This is off the charts, 100% artificial, which means we’re in a dangerous state,” Harry Dent told Fox News Digital. “I think 2024 is going to be the biggest single crash year we’ll see in our lifetimes.”
“I’m the guy that’s praying for a crash while everybody else is not. We need to get back down to normal, and we need to send a message to central banks,” he continued. “This should be a lesson I don’t think we’ll ever revisit. I don’t think we’ll ever see a bubble for any of our lifetimes again.”
Dent, who spent the majority of his career analyzing proprietary research, credited his against-the-grain prediction to overvalued markets and excessive stimulus spending.
While recent rallies have overwhelmingly provided investors with mild recession expectations, Dent remained firm that an “everything bubble” will burst next year.
Historically, market bubbles are characterized by a rapid rise in stock prices, before being met by a sharp fall.
The economist noted that this bubble actually started in late 2021 after the height of the COVID pandemic, with the first signs showing in 2022 when Nasdaq was down 38%.
The new year will bring the “B wave” of the crash.
“The Roaring 20s bubble was not an everything bubble. [A] real estate barely bubble [in 2008], it was stocks and urban real estate that bubbled,” Dent said. “This is the one time I’m telling you, do not listen to your financial adviser. Things are not going to come back to normal in a few years. We may never see these levels again. And this crash is not going to be a correction. It’s going to be more in the ’29 to ’32 level. And anybody who sat through that would have shot their stockbroker.”
“That’s an 86% crash in the S&P and a 92% crash in the NASDAQ. And crypto, it’s going to be 96%. So that is a big deal,” the economist added. “And real estate, by the way, is only projected, by me, to go back to its 2012 lows… but that’s a 50% crash for the average house, which went down 34% in the last crash, more than the Great Depression, more than any time in history. That is what’s going to hurt people the most.”
Criticizing investors who have played into a year-end market rally where the Dow Jones Industrial Average ended last week scoring its third record close after crossing 37,000, Dent encouraged Americans to “get out of the way.”
“If I’m right, it is going to be the biggest crash of our lifetime, most of it happening in 2024. You’re going to see it start and be more obvious by May,” the analyst stressed. “So if you just get out for six to 12 months and stuff stays at the highest valuation history, maybe you miss a little more gains if I’m wrong. If I’m right, you’re going to save massive losses and be able to reinvest a year or year-and-a-half from now at unbelievably low prices and magnify your gains beyond compare.”
“We’re still up there. We’re still near the highs, and that shouldn’t have happened. So you’ve gotten a gift… you’ve gotten this rebound where you get a second chance to get out near where you could have before. Boy, [that’s] lucky, lucky, lucky.”
Last week, the Fed hinted it would end its historic campaign to bring down inflation, propelling a new streak of records for the Dow.
Policymakers, in their annual projections, priced in the potential of three rate cuts, with the federal funds rate falling to a range of 4.4% to 4.9%, down from the current 5.25% to 5.50%.
Looking at the Federal Reserve’s rate trajectory, Dent argued there’s “no chance” of a soft landing. He believes continued disinflation will turn into deflation for the first time since the 1930s, and that the central bank has a “weak” economy in its hands.
“The only reason they had to tighten so much is because they stimulated too much over COVID. But that tightening is now going to hit way more in 2024,” Dent said. “And when you stop that gravy train and reverse the tightening, you’re going to be in a depression within a year, not a mile. All this talk about, ‘Oh, yeah, now we’re going to have a mild recession’ – not a chance in Hades.”
“Depressions are different from recessions. They go much deeper, and they end up in deflation,” he further explained. “It’s going to bring down a lot of consumer price inflation, and especially housing… When this asset bubble bursts and the price of everything, especially housing, comes back down to reality, imagine, not only can you buy the house you want at half-off… you can buy twice as nice a house here for the same mortgage you were going to get before. How’s that for a Christmas present?”
The “everything” bubble will leave a lasting slowdown impact for 12 to 14 years, Dent cautioned. During that time, he agreed America’s wealth gap would widen as the rich get richer and the poor get poorer.
“This is going to hurt the rich a lot more than the average person. The average person is going to lose their job for six months to two years. The average rich person is going to lose 50% to 80% of their lifetime accumulated net worth,” Dent said. “They’re going to see the biggest comedown to reality. And then the next stage of the boom is the millennial boom, which will not be as long as the baby boom, but it’ll go into 2037 before we slow down again. That boom will be less rich-get-richer, it will be more the middle class catching up again.”
This story originally appeared on NYPost
