Content content: Harry Dent has been confusing “experts” for twenty years, predicting economic and financial trends and markets largely based on demographics and economic cycles.
This is his fifth book in a series that predicts economic trends. If Harry Dent is right again, everyone should read this book! Dent’s thesis is simple enough: he argues that demographic trends determine economic cycles that could have been predicted over several centuries, and that these cycles move the economy regardless of much else that happens.
This fifth book traces the giant generation of the “baby boom” – 92 million people in the U.S. born between 1946 and 1964 who have had the greatest impact on our economy and society over the past half century. He explains how these big demographic changes change the demand for goods and services as they go through different phases from the school construction explosion in the 1960s to teach them to the strong economies of the 1990s and early 2000s when they were at peak consumption period.
Currently, the “Great Catastrophe” predicts an economic depression in 2008-2018 or longer due to the aging of this demographic group and declining demand for goods and services. Combined with the wrong government and fiscal policies, this cycle created a giant “bubble” for real estate and credit during the first decade of the 21st century. This period from 2001-2007 was seen as a good time with easy lending and easy access to home.
All the bubbles in the economy fix themselves. Dent describes how the correction of this credit and housing bubble combined with the steady cost cuts of the largest group of Americans worked to create the worst financial depression since the 1930s. It intertwines this over-lending to both the government and the private sector, and how it cannot be recovered quickly. Then it inevitably leads to financial market failures and significant price deflation for the next decade. Dent is not limited to the US. He explains how similar bubbles and demographic trends have led to the depression of the Japanese economy over the past 20 years and to similar problems in Europe and China.
Dent bases much of this on an 80-year cycle of boom and fracture, which his research shows has been repeated many times over the past few hundred years. Now 80 years after the Great Depression we are once again in the “winter” of this cycle, which will last ten to fifteen years until a new spring that will lead to a slow recovery in the 2020s.
It’s hard to ignore Dent’s theory. In the late 1980s, he predicted the demise of the Japanese economy when most economists and experts were set on Japan. Similarly in the 1990s, when many predicted hard times for the U.S. economy, Dent predicted the booms of the 1990s and early 2000s. The book traces the failure of power to fix this cycle because it just can’t do it. It addresses the huge private and public debt that needs to be repaid or written off to rebuild the economy. So far, his macro-predictions have been awkward, so ignoring what he says was nonsense. If he is wrong, it will be the first time in three decades of predictions, and if he is right, hard times await us.
At the end of the book Dent gives tips on how we can use this information to protect assets, wisely invest in this “new” world. It teaches how to forget the behaviors we have learned over the last half century and learn to adapt to the new economy.
Of course, Dent has his critics. A quick Google with his name and books shows a series of very critical articles claiming that Dent suggests too much that his analysis, while technically impressive, does not take into account other factors that will affect the economy other than his demographic projections, and some who offers a complex analysis of Elliott waves, assuming dent is wrong.
At the same time, he has some impressive fans. David Bach, John Thomas, Kim and Charles Hitler, as well as a long list of others support his book. I can’t say for sure if Dent is right or the critics are right – but if he’s right, he’s reasoning. Again, although some details of his predictions may not have always been perfectly crafted, one cannot fail to notice or reject the overall accuracy of his predictions to date.
Usefulness: It should be noted that any predictions of future economic trends and behaviors are inherently risk-averse. However, if Dent’s predictions in this book are as accurate as his previous analysis, it will prove very useful for those who are saving for retirement, investing, doing business, or choosing a career.
Readability / quality of writing: Dent writes clearly and well. The book is full of rather complex economic and demographic analysis. Reading a book is not easy, but it is worth understanding it.
Notes on the author: Harry Dent is the author and head of HS Dent’s network of financial advisers. It issues a regular financial bulletin. He is the author of “The Big Boom Ahead,” “The Turbulent Investor of the 2000s,” “The Next Big Bubble,” and “The Great Depression.”
Three great ideas you can use:
1. The economy is driven primarily by demographic trends, which in turn determine economic cycles. External actions, including wars, natural disasters, and government actions, have minimal impact on these trends. Understanding these cycles and trends is critical to future planning and investment protection.
2. In the later part of the first decade of this century, we entered the winter phase of a very large 80-year demographic and economic cycle. Nothing the government does will change that. This winter cycle will lead to major debt restructuring, market adjustments and deflation. The period between 2008-2018 will be similar to 1930-1940.
3. Understanding this mega-trend and its inevitable consequences is essential for smart investment over the next decade in protecting current assets and exploiting the winter economy.
Publication Information: The Big Crash Ahead of Harry S. Dent Jr. with Rodney Johnson Copyright 2011, HS Dent Publishing, published by Free Press, by Simon and Schuster