Financial writer and forecaster Harry Dent explains why he predicts a “very strong sudden tightening” of markets has not yet sent a full shock to the economy.
Market experts are sounding the alarm over the worsening of the country’s debt crisis and are proposing a “detox detox” in anticipation of the “next great economic boom.”
“We must finally detox our short-term debt before we embark on the next big boom,” financial author and HS Dent founder Harry Dent said during an appearance on “Kabuto: Coast to Coast” on Tuesday. I guess,” he explained. .
“Here are the numbers, Neil. No one is adding this up. Since the 2008 recession, we have been adding up debt and deficits from government and money printing to get us through that long gap and spending. and $27 trillion,” Dent said.
“And now Millennials are ready to spend money from 2024 to 2037, which I also predicted for a long time,” he continued.
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The economist argued that the U.S. has a “massive financial asset bubble with extremely high levels of undeleveraged debt,” which could lead to even bigger problems.
Dent cited an overreaction to the over-stimulus around the coronavirus as one of the many reasons for current debt levels, saying the effort “wasn’t worth it.”
The national debt is the amount that the United States owes its creditors. $34,608,412,560,642.47 As of Monday afternoon, according to the latest figures released by the Treasury. This is an increase of about $1.7 billion from the $34,600,643,492,585.10 reported the previous day.
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In comparison, just 40 years ago, national debt It remained around $907 billion.
As a result, the Fed will be under “severe pressure,” which Dent predicts will be felt by Americans “by a year and a half late, in early to mid-next year.”
Asked if debt was reaching a breaking point, Dent blamed the Fed’s 525 basis points. That number triggered the “deepest recession” and tightening of 1980, forecasters said.
Federal Reserve policymakers have raised interest rates to their highest levels in 20 years, with the benchmark federal funds rate currently in the 5.25% to 5.5% range.
These interest rate hikes were made in response to the inflation rate reaching a 40-year high of 9.1% year-on-year in June 2022, but had fallen to 3.2% as of February 2024. This amount remains above the Fed’s target rate of 2%.
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“If you overstimulate and infuse a lot of money, you end up overinvesting, overspending, overborrowing. So they’re already borrowing from the future. After that. , when they have to turn around and crack down because they caused 9.1% inflation, which, by the way, happens overnight in a zero-inflation economy, and that’s another thing my indicators have been predicting for a long time. ” Dent emphasized.
“Then you end up with a mess where you’re like, oh my gosh, now we’re suddenly going to force you to deleverage all this excess debt,” he added.
Dent explained that economies “always overdo things” and then “deleverage” to detox debt into bad investments.
The economy is “not allowed” to detox, Dent said.
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“I think we’re going to be forced to do this. I just want to say to investors…wait until this stimulus takes full effect. When does it take full effect? “We won’t know until early to mid-next year. I think we’ll be in a recession before people realize it,” he stressed.
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The market forecaster told host Neil Kabuto that what we are witnessing is a “classic example” of governments intervening in an economy they don’t understand and trying to make it better.
“They end up making things worse,” he said.
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FOX Business’ Megan Henney and Eric Revell contributed to this report
