73 of 77 people found the following review helpful:
5.0 out of 5 stars
Solid Overview - Excellent Research. Why It's Worth Your Time to Read and Share, September 21, 2011
This review is from: The Great Crash Ahead: Strategies for a World Turned Upside Down (Hardcover)
Inflation versus Deflation. It's one of the most hotly contested topics in economic and financial circles. As a college instructor and business writer, there are a few authors that I always make a point of reading...Dent is one of them in part because of his deflationary position. He is an unapologetic, hard-core deflationist...I'm not, but there is a great deal of value in keeping an open mind and considering all points of view.
However, Dent is also a superb researcher with a focus/concentration upon demographic research which is worth the time and effort to read in its own right. Unlike many authors that fail to provide sufficient references or resources for their claims (ie, opinions), Dent takes great pain to substantiate all conclusions with research, data, articles and graphics while remaining reader-friendly and engaging.
The first section of the book covers basic economic and fiscal theory, history and the expected "how we got here"...depending upon your school of thought, you may agree or disagree with some of the assumptions but the data is equally fresh and relevant. Dent does a stellar job with this section and really goes above and beyond the same old stale data to truly paint a picture of the madness gripping both this nation and the globe.
Next, the book covers what "to do" and what "not to do" with an emphasis on small business owners rather than merely individual investors. Both are included which is a nice change from solely a personal finance perspective.
Finally, there are pages upon pages of references for those interested in pursuing additional readers...as well as the "sales pitches". Now, as for the "sales pitches"...these are a modern irritation which I've never quite learned to live with. There are sporadic insertions inviting the reader to sign-up for a free webinar, newsletter or other throughout the book with several pages of pitches at the end of the book. Aside from that, the authors are fairly restrained and do not skimp on information nor require the reader to participate in sales to access "the meat" of the issue.
As for topics covered...the author(s) make some compelling points regarding deflation at least in the short-term then relate how various investments will perform in light of these assumptions. Real estate, bonds, the stock market at large, foreign investments, small business ownership, multiple streams of income etc are each reviewed. Special emphasis is placed upon retirement planning as well as various other demographic cohorts and associated spending patterns. An excellent overview of government retirement obligations and implications on retirees, future taxation, benefits etc is a "must read" for everyone!
All in all, a well researched book that is well worth the time and effort to read even if you do not agree fully with some of the basic assumptions (ie, rationality for example) or suggested course of action.
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46 of 50 people found the following review helpful:
5.0 out of 5 stars
Must read to understand current crisis -- and prepare for it, September 22, 2011
The Great Crash is Harry Dent's best book, and I strongly recommend it.
Economic doomsaying is nothing new. Howard Ruff and others sold a lot of books in the 1970s advising people to buy gold and silver to survive the "certain" financial disaster that never happened.
And many others now are predicting either hyperinflation or deflation will soon destroy the world's economy.
Dent is different because he doesn't just rail against excess government spending like an Old Testament prophet, but points out a dimension of society ignored by most economists: demographics.
In the late 1980s, while the perennial Chicken Littles were claiming the sky would fall because of the size of the government's budget then, Dent said the 1990s and 2000s would be an economic boom time. Why? Because the baby boomer generation would be entering its greatest earning and spending years.
He also pointed out (yes, 20 years ago) that this would end around 2010 or so, and there'd be a crash, a depression that would probably dwarf the 1930s lasting until around 2024.
We've lived through the boom, and now we're entering the crash, so that's what this book is about.
The theme of this book is that the huge amount of debt we've created at all levels from you and me to all developed country governments -- combined with the aging of the baby boomers and the consequent change in their spending and investing patterns -- is going to slow the world's economic growth for years to come.
In fact, it's going to create a situation that frightens the powers that be --justifiably -- far more than inflation:
Deflation.
Much of the book is taken up with examining the history of the crisis. The government and personal debt that so frightened people in the 1970s is, interestingly, a tiny blip compared to current levels of debt.
Thanks to the financial crisis as individuals we have less debt than in 2008, but still far too much -- especially mortgages on houses that aren't worth what we paid for them. Companies owe too much. State and local governments owe too much. The federal government owes too much. (Not even counting the unfunded liabilities of Social Security and Medicare). China and Japan owe too much. And, we've learned recently, many European countries owe too much.
There's no way we're going to pay off the trillions of dollars owed around the world.
Much of it will have to written off. That's the purpose of depressions -- to wring excess debt out of the system, so we can get on with building the next boom time.
But because it's painful, politicians are determined to avoid it. That's why the chairman of the US Federal Reserve System is working overtime to create new dollars, to keep the current system running.
Many current financial doomsayers look at how the government is running the printing presses overtime and are predicting runaway inflation.
Dent says you can't force 60 year old boomers to stop saving for retirement and buy new cars, houses and gadgets -- especially when they're afraid of losing their jobs.
Therefore, once the Fed's extraordinary efforts to keep the economy going fail (and that appears to have started), the crash is going to be deflationary.
That means continued high unemployment, lower prices in general, a collapse in the price of gold, and (wonder of wonders), higher interest rates leading to . . . (drumroll!) . . . a strong US dollar.
Given the current state of the euro (and the determination of Japan's central bank to keep the yen from going up in value), that doesn't sound quite as crazy now as it would have last year.
Dent gives advice on surviving (and profiting from) the crash that is so different than what you usually hear (and ironic given the S&P's recent revaluation of the US government's credit rating) that not everybody will agree with it.
This is a book many will argue with. However, you can't beat Dent on the facts. He backs up everything he says.
You can argue his interpretation, and his conclusion that we're in for a period of deflation -- while most are telling you to buy gold to hedge against hyperinflation.
The foundation of investment risk management is diversification. Placing your "bets" entirely on either hyperinflation or deflation risks the other happening (or, incredible as it seems, neither -- the world's economy has been muddling along for decades, so maybe it will somehow continue to do so), so I stand by my advise in
Bring on the Crash! A 3-Step Practical Survival Guide: Prepare for Economic Collapse and Come Out Wealthier to invest in things that people need whether the economy and the markets are up or down.
(Hint: people need food and energy to survive, but NOT gold.)
The problem with predicting the future is that things happen you don't predict. I wouldn't use Dent's projections to "trade" the stock market. He has a poor short-term record. He predicted that before this crash came, the stock market would experience a boom that would dwarf the late 1990s. We know that never materialized.
But he has a great long-term, "big picture" record. Before you sell all your stocks and bonds to buy gold, you need to read his arguments for deflation.
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34 of 39 people found the following review helpful:
5.0 out of 5 stars
Level-headed approach to the new financial landscape, September 20, 2011
This review is from: The Great Crash Ahead: Strategies for a World Turned Upside Down (Hardcover)
Dent's predictions may have seemed extreme when he published
The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History, but now that we're amid an ongoing debt problem in Europe and at home, coupled with lingering job troubles, and constant worries on other economic fronts, it seems that Dent was right all along. His perspective in this is more of the same--here he warns of a massive correction in the stock market over the course of 2012 and '13, and suggests that investors avoid it during that time and stay with more conservative investments.
Of course, the critic will claim, Dent has made predictions in the past that have not come to pass (didn't he predict a crash in 2010?). But, one might argue that the various mechanisms and boondoggles that the Fed has instituted over those few years have effectively kicked that can down the road. They haven't alleviated the strains of the economy, though, and instead have made the inevitable correction that much worse.
The underlying argument is strong and can be summed up with some of the rhetoric that Dent uses describing the "madness of the Fed." And who can argue that his is the sensible approach? The only question some investors will ask is whether they can profit from the madness a little more while others start to take more caution.
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