A top economist has warned that a "crash of a lifetime" is due to occur in 2025 .
Harry Dent, a financial author and economist, has cautioned that we're in for a financial crash bigger than the Great Recession .
Speaking to Fox News , Dent said the "everything" bubble has still not burst.
“In 1925 to ‘29, it was a natural bubble. There was no stimulus behind that, artificial stimulus per se. So this is new. This has never happened,” Dent said on Tuesday. “What do you do if you want to cure a hangover? You drink more. And that’s what they’ve been doing.”
“Flooding the economy with extra money forever might actually enhance the overall economy long-term. But we’ll only see when we see this bubble burst,” he added. “And again, this bubble has been going 14 years. Instead of most bubbles [going] five to six, it’s been stretched higher, longer. So you’d have to expect a bigger crash than we got in 2008 to ’09.”
US stocks ended the month of May with gains as Nasdaq finished at 6.9 per cent. Additionally, the S&P 500 was up 4.8 per cent and the Dow Jones was up 2.3 per cent.
But Dent stressed what he thought was coming, "I think we’re going to see the S&P go down 86 per cent from the top, and the Nasdaq 92 per cent. A hero stock like Nvidia, as good as it is, and it is a great company, [goes] down 98 per cent. Boy, this is over."
“We have never seen [the] government sustain a totally artificial bubble for a decade and a half, and see what happens after that,” he continued. “But I can tell you, there has not been one bubble, and this is far larger and longer, one major bubble in history that has not ended badly, period.”
Dent made the same claim back in December, but has now edited the timing of it, saying market bottoms are likely to show between early and mid-2025.
At the centre of this bubble is real estate , with Dent predicting that housing would see 2012 lows.
“No time in history has housing been so widely owned and so many people having second and sometimes third homes just for speculation,” Dent said, highlight countries such as China and Japan, that are seeing an increasing number of residents buy empty properties as collateral to a potential market crash.
“If you understand what the real cycles are, you don’t have to buy the most expensive home in history right at the top of the market and then moan for 14 years while it goes through the next downturn, like ’29 to ’42 or ’68 to ’82,” the author expanded, “or what would have been, without all this $27 trillion stimulus, 2008 to 2022.”
However, Dent has faced criticism with some calling his hypothesis "crazy" and accusing him of fear mongering.
But Dent has hit back, arguing he is just saying "what I see".
“Looking at it from history and standing back, nothing’s more obvious,” Dent continued. “A lot of other bubbles in history just do not have the steepness or the magnitude. Why? We’ve never realised the power that central banks can have to just print money out of thin air.”
Dent's final message to investors was to remember: "The government created this bubble 100 per cent… totally artificial, injecting a drug to artificially perform stronger. And again, everything from human life to history shows, you don’t get something for nothing, and bubbles always burst… it’s a much, much higher possibility than anybody gives it.”
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