Trump’s post-election stock boom won’t stop inevitable doom, economist Harry Dent warns

The post-election market rally fueled by the Trump victory has investors cheering for now.

However, outspoken economist Harry Dent is still bullish on America’s 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 bubbles and have a soft landing. Now, that’s what seems to be happening right now, and we’ll see. But I say to people, give it [it until] 2025,” Dent told Fox News Digital a week after Election Day.

“I think the truth will be told next year if they can pop this bubble without causing a crash because I can tell you, [it’s] it has never happened in history. And I can’t even compare past bubbles to this one, given how global and widespread it is.”

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

However, Dent is not backing down from his June prediction that an “everything” bubble could burst by mid-2025.

Moreover, he now argues that Trump’s fiscal policies will not be enough to prevent a cyclical crash linked more to private debt than to federal debt.

“Obviously, he’s seen as pro-business, and yes, tax cuts — everybody likes tax cuts. But we already have the biggest deficit, the 16-year streak of deficits. We 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 Trump probably seems like it’s a good thing to jumpstart the economy,” he continued, “but if he cuts government spending, I’d say it’s going to start a slowdown.” that will build on itself.”

Politicians cannot prolong the inevitable, the economist added, while stressing the possibility of a “very bad fall when it is finally allowed to happen”.

“Covid was the big thing, and I think that’s where central banks and governments made a mistake,” he said.

“They overreacted to COVID… This would be 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 get 9.1% inflation.

Dent estimates that US private sector debt amounts to $630 trillion in financial assets, growing five times faster than global gross domestic product.

The “trillion dollar question” is not whether a market crash will occur, but rather whether whenhe believes.

“I know the best medicine for the economy. It’s called a recession, or even a depression sometimes,” Dent noted.

“This will wash off [and] many bad debts will fail. This is what happens in a recession. It is healthy to borrow and for companies to invest their own capital, too, in growth in a boom. But recessions come along, or occasionally a depression, after a bubble boom. And this is a bubble boom.”

“So people have lost track, especially central banks that 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 is also [quick to] allow failures to occur and drive them out of the economy. And that’s what we don’t have [done]. We haven’t fried in 16 years.”

Overvaluation in the market ultimately damages “indicator no. 1 economy that almost no one watches”: the velocity of money, 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 that formed … it just shows that bubbles are not healthy,” Dent said.

The generation that could suffer the most from a market crash next year are baby boomers, many of whom are retiring and leaning on their portfolios.

“If all these financial assets are reduced that they hold for their retirement, and they’re earning less income because they quit their job, or they’re just on a small pension or something, they’re going to be in trouble deep… But I’m telling you, if I’m right about this crash, and Treasuries go up as a safe haven, they’re going to do nothing but go down for the rest of our lives from there because low inflation is not a good thing. environment for them”, explained the economist.

“So I think the next few years are likely to be ugly. The question is, when does the damn thing start?” Dent positioned himself.

“I think central banks know this better than anyone. They just can’t say that because they don’t want to scare anyone.”

If anything is driving the markets through a strong start to 2025, it’s bitcoin. Dent told Fox Digital that he has bought more of the cryptocurrency since his last interview in June.

“But I think short-term, I would be hard-pressed to buy anything else aggressively if we had the kind of crash that I talked about because bitcoin could go back up to the 15,000, 16,000 levels, the last big low.” .

“I make my long-term projections by comparing bitcoin to other new technologies, like the dot-com revolution of the late 90s, that bubble and what came after it. Bubbles finance new revolution. So they’re a good thing,” Dent added.

“Bitcoin, I see it going from 800,000 to 1 million by 2037 to ’40. So I have a long way to go. So, boy, if that got down to 15,000 or even 20 or 25 [thousand]this would be the purchase of a lifetime. It would be hard for me to buy anything else at those prices.”

For now, market traders are “rolling along” with the post-election bubble even though Dent likened it to being on the Titanic.

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

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

“Stocks, just going back to 2009, that’s 89% in the S&P 500 and 94% in the Nasdaq. This is a total wipe. This is 1929-32. You have to at least admit that this is a possibility here.”