The post-election market recovery, fueled by Trump’s victory, is currently arousing investor enthusiasm. However, outspoken economist Harry Dent remains pessimistic about US private debt and the future of its economy, arguing that the euphoria will not last long.

“I can tell you one thing: bubbles never end well. There is no way to go from an extreme bubble to a soft landing. Now, that’s what seems to be happening right now, and we’ll see. But I tell people to give until 2025,” Dent told Fox News Digital a week after Election Day.

“I think the truth will come out next year if they can collapse this bubble without causing a crash, because I can tell you that has never happened in history. And I can’t even Compare past bubbles to this bubble, given how global and pervasive it is.

Former President Trump’s victory over Vice President Kamala Harris in the 2024 presidential election catapulted U.S. stocks to record highs, fueling the best week for the market of the entire year.

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Despite everything, Dent does not move of his June prediction that an “everything” bubble could burst in mid-2025. Moreover, he now says that Trump’s fiscal policies will not be enough to prevent a cyclical crash linked more to private debt than to federal debt.

Economist Harry Dent stands by his prediction that a stock market crash would hit the U.S. economy by mid-2025. (iStock)

“Obviously it’s seen as pro-business and yes, tax cuts – everyone loves tax cuts. But we already have the biggest run of runaway deficits in 16 years. We don’t have haven’t seen a balanced budget since 2001 or something like that. It’s just crazy,” Dent said.

“And I think that’s the big risk here, that maybe Trump seems like a good thing for getting the economy going again,” he continued, “but if he cuts government spending, I would say that this will trigger a downturn that will build on itself.”

Politicians cannot prolong the inevitable, the economist added, while highlighting the likelihood of a “very bad economic downturn when it is finally allowed to occur.”

“COVID has been the major problem, and I think that’s where central banks and governments have made a mistake,” he said. “They overreacted to COVID… This would have been a good time to let the economy rest and let off some steam. But no, they doubled down and stimulated harder than ever. And then they suddenly had inflation by 9.1%.”

Dent Estimates that private sector debt in the United States represents $630 trillion in financial assets, growing five times faster than global gross domestic product. The “trillion dollar question” is not whether a stock market crash will occur, but rather whether Whenhe believes.

“I know the best cure for the economy. It’s called a recession, or sometimes even a depression,” Dent noted. “It will wipe out (and) a lot of bad debts will fail. That’s what happens in a recession. It’s healthy to borrow and for businesses to invest equity as well, in growth during boom times. But recessions come, or sometimes a depression, after a bubble boom.“

“So people have lost track, especially the central banks which are run by economists who, I always say, look like they’ve never run a business. Failure is the secret of capitalism. It’s not just the opportunity to innovate. It’s also (quickly) allowing failures to happen and eliminating them from the economy. And that’s what we haven’t done for 16 years. »

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Overvaluation in the market ultimately harms “the No. 1 economic indicator that almost no one looks at”: money velocity, which is defined as the rate at which domestic consumers and businesses exchange money. in an economy.

“The velocity of money has dropped like a rock since 1997, right in the middle of the first bubble to form…it just shows that bubbles are not healthy,” Dent said.

The generation that could suffer most from a stock market crash next year it’s the baby boomersmany of whom are retiring and relying on their wallets.

“If all the financial assets they hold for retirement go down and they earn less income because they left their job, or if they just get a minor pension or something like that, they’re going to have serious problems… But I tell you, if I’m right about this crash, and Treasuries go up as a safe haven, they’ll do nothing but go down for the rest of our lives, because low inflation is not a good environmental thing for them,” explains the economist.

“So I think the next few years are likely to be ugly. The question mark is: When does this damn thing start?” Tooth installed. “I think central banks know that better than anyone. They just can’t say it because they don’t want to scare anyone.”

If anything gets markets off to a good start in 2025, it’s bitcoin. Dent told Fox Digital that he has purchased more cryptocurrency since his last interview in June.

“But I think in the short term, I would have a hard time buying anything else aggressively if we had the type of crash that I talked about, because bitcoin could go back down to the 15,000, 16,000 levels , the last major low.

“I make my long-term projections by comparing Bitcoin to other revolutionary new technologies like the Internet revolution of the late 90s, that bubble and what followed. Bubbles fund a new revolution. So it’s a good one thing,” Dent added. . “Bitcoin, I’m projecting it to rise from 800,000 to 1 million by 2037 to 1940. So I have a long way to go. So, boy, if it went down to 15,000 or even 20 or 25, that would be l purchase of my life It would be difficult for me to buy anything else at these prices.

Right now, market traders are “accepting” the post-election bubble, even though Dent compared it to that of the Titanic.

“When everyone gets on board, that’s when the Titanic sinks. So I think everyone’s in the boat now,” he said.

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“Look at reality, look at the charts and see again how bad, I’m just talking about real estate going back to 2012. That’s (a) 62% housing crash, which would be twice as bad as the crisis of 2008. And that was bad for most people,” Dent said.

“Stocks, going back just to 2009, are 89% on the S&P 500 and 94% on the Nasdaq. That’s a total wipeout. That’s 1929 to 1932. You have to at least recognize that it’s a possibility here. “.

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