How to Profit From the Biggest Economic Reset

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0:56Taxes and fees extra. Initial plan term only greater than 50 gigabytes may slow when network is busy. See terms. This is the Rich Dad Radio Show. The good news and bad news about money. Here's Robert Kiyosaki. Hello, hello, Robert Kiyosaki. And today I have a very special guest, longtime friend, and person I have tremendous respect for in an offhanded way is Harry Dent. and the reason I like Harry Dent is Harry Dent is no bullshit. He will change his point of view if he has to change his point of view. So I don't have to worry about there being three or four Harry Dents out there. There's one Harry Dent at that moment, and he will tell you whatever he's thinking to be true for him at this moment, popular or unpopular.

1:42And I was paid the highest honor, Harry, that's saying, you're as pessimistic as Harry Dent. And I said, God, what a compliment that is. You know, it's because a lot of people have Pollyanna, you know, all the stocks. S &P is going up forever. Bonds are safe. You can trust the Federal Reserve Bank. I'm going, what? And so Harry Ditt is a man who will tell you what's going on for him. It may be popular. It may be unpopular. But he will tell you what he thinks at this moment. So, Harry, welcome to the Rich Dad Radio Show. Yeah, nice to be here, Robert. That's good, good, good, good. So can you be as pessimistic as possible?

2:23I think things have gotten a little too bullish here. Yeah, we got to bring things down. No, but the thing I was saying is that you changed your points of view. And some people were saying, well, it's inconsistent. I said, no, he's consistent. He'll tell you what is going on at that moment for him because things are changing. You know, when you and I were kids, America was the richest country in the world. Today, we're the biggest debtor nation in the world. And for us to say, oh, don't worry, the Fed can keep printing, I think it's a lie. I think, I don't know what you think. But we're printing, what, a trillion dollars every two months or something like that.

3:05And as they say, what's that law? Some law says, if it'll end, it'll end. So that's what I like about you is that you're up to the minute. You're a demographer, which means you look at what demographics are saying, and you will tell us what you think at this moment. And a year from now, you may change. I respect that. So, Harry, be as pessimistic as you like. I love it. Well, you know, I mean, here's the simple story here. When I started forecasting the early 80s, you know what I got the greatest criticism for? I was unbelievably bullish and not on Japan back then, on the United States of America.

3:47I mean, Japan had come along and taken a lot of our older industries because they were much more efficient and all that stuff. I said, but Japan is the fastest aging developed country in the world. They're the ones that are going to go down after 1990. And we're going to have the greatest boom in history. Why? we have the greatest generation ever to hit the earth called the baby boom generation back then still is it just now they're aging and they're no longer driving the economy but i mean this couldn't have been simpler and and i and because i didn't have a phd in economics which economists criticized before i was simple enough to say oh here's a good indicator i know for certainty u.s statistics and only the u.s has the best statistics studying consumers every year surveys the average person enters the workforce 20 and spends the most at 46.

4:39So all I got to do to see the future is take the birth index and move it forward 46 years from when the highest amount of people will be spending the most money. I mean, extremely simple. Well, I started doing that in the early 80s and boy, did I get blowback. I mean, I was so foolish and stuff. Oh my God, no, no, you don't understand. We're not going to have any industries left. Japan and East Asia are going to take them all over. I said, no, look at their demographics. They peak in the early, in late eighties, early nineties and fall off a cliff forever. And they're still falling off that cliff, by the way.

5:15And so, so I mean, first thing I learned, you can't just learn. Harry, you introduced the word world to a very important word, demography. yes simple people do predictable things as they age in particular yeah i mean am i'm the economy do i want a five-year-old screaming all the time and crapping in their diapers and and costing all this money and having to see doctors and then you know getting over the cost of the birth thing or do i want a 46 year old the peak of their career spending the most money and just and just getting their kids out of college so they can turn around and do the same thing next round for the next generational boom.

5:57And boy, do I want a bunch of old people? Oh, no. Ask Japan. Japan is, you know, came out of nowhere, took over the earth for a short period of time. They were the ones that got old first. And since I was studying demographics, that was obvious to me that Japan was playing a catch-up game. I kept saying when I was lecturing in the 80s, Hey, yes, Japan's doing great, but what industries are they taking over? Steel, okay? Old industries, okay? Who's leading high-tech information technology, personal computers, Microsoft software? It's us. And who's producing the customized products that go for a premium?

6:38So, you know, I don't know. I just learned because I didn't study economics, Robert. I had a major in economics, and after the third course, I said, this is conceptual, vague, boring. Nobody likes it. I can't even learn much from it. And my father's best friend said, you know what? We wish we had done little Harry. They called me. They said, we wish we'd have studied accounting and finance. That's what kills us in business. We know how to market. We know how to manage. We're people, people. We can't figure out the damn numbers and read our own balance sheets and P &Ls. So that's what I majored in in college, but I always had my eye on Harvard Business School or Stanford.

7:19And I knew I wanted to get an MBA and I was going to take what I call the important marketing management, big picture stuff there. And that's what I did. And I started with a major in economics and quit it after that third course and studied everything else about business. And then I worked at Bain & Company, consultant to Fortune 100 companies that were failing back then because of the Eastern and global competition. And then I couldn't work with big companies. They were just too slow. So I jumped off. I took a job turning around a publishing company in California. And then I just, after that, I got one job after the next.

8:01All small businesses do is fail. That's why they're so productive. Failure, by the way, is the secret to success. Tolerance makes entrepreneurs and the most successful people, because most people, as Elon Musk said recently, will quit after the first major failure. So I turned around six companies in difficulty in the 1980s, consulted a lot of small businesses, and then started my own business around my newsletter in 1989 and never went to an office again, still sitting right now in my, you know, my den doing my work on my computer in Puerto Rico, looking over the water, not close to anything.

8:43I could be in Lincoln, Nebraska, you know, and so, you know, that just happened naturally. But I learned that the key thing is the truth. If you dig hard enough, you can find the truth about anything. People kept telling me, Harry, nobody can predict the economy that far out. There's too many things that can change. The president, I don't care who's president. I have never cared who's president. They make differences in some areas here and there. I've never had to rely on that to predict. It's 300 million people in the United States growing up, costing everybody money and causing trouble when they're young, but learning rapidly, entering the workforce, getting better and better and better, more and more productive.

9:27that's 20 to 46 and then plateauing in the middle life into the mid 50s and then slowly declining into retirement and then disappearing and all of those stages have their pros and cons who invest all the money the people from 50 to 63 when they enter in a retirement okay they're the ones that invest the most but who spends the money 20 to 46 now it's 47 in most countries um and this is what makes the economy macro so predictable? 46-year lag on the birth index. Only one thought is I have to adjust for immigration and I can do that accurately. It's just hard. Harry, that's why I respect you because you will tell it the way it is as you call it, as you see it.

10:14So my question is, what do you see coming for America, then Japan and Germany? Because I was just traveling. I traveled the world. And you remember not too long ago, Japan and Germany were our enemies. They became trading partners. But today, Germany and Japan and America, as you say, our demographics are changing. And what's that mean to the world when Germany, Japan, and America's demographics change? What do you see coming? Well, very simply, Northern Europe and North America have the best demographics in the developed world, East Asia. And this includes China, even though they're not a developed country yet.

10:57But Korea, Japan have the worst. OK, when we for some reason, when when when people in East Asia get affluent, they not only have less babies, they have a lot less babies. Everybody that gets affluent basically starts to think about money and think about their kids getting into a good school and then making money. And that means they don't want to have four or five, six kids as they did in the good old days in the 30s, 40s and 50s. OK, they want to have one or two kids and get them into Harvard or Stanford or whatever. OK. And so affluence actually eventually slows country because there's fewer kids.

11:33So if you're not having kids and or if you're not like the United States where, hey, we're having fewer kids, but we are strong on immigration and Australia is even stronger than us. And New Zealand, those kind of Australia, if I looked at their charts, their demographics and didn't know they were rich like us, not quite as rich, but neither. I would think they were an emerging country. Why? They're getting constant flow of immigration, not from South America and Mexico, from East and Southeast Asia, where everybody loves those workers. So they've got high quality and high quantity of immigration.

12:10So between births and immigration, and I've got a bell curve of immigrants, Robert. It took me some work on that, but I did my research and I can take the immigrants coming to the country and distribute them back to when they were born as if they'd always been in that country. So that same birth index that I lagged for 46 years and will tell me almost 50 years in advance who's going to boom the most and when, and who's going to bust and when works even better when I can calculate an immigrant. So that's how simple the economy can be. I was bullish way on, and now, yes, I'm bearish. So let me ask you this question then.

12:51Immigration is a big issue today. Namely, when Biden took down Trump's wall, I think 13 million came across it, whatever it was. So you have immigration. Without being too racial, is there better immigration from different countries? Because immigration is a big problem in Europe. There's no question there's different quality of immigrants. is that, again, Australia is the most favored country because their birth rates or their domestic birth rates are really not any stronger than Northern Europe or United States where they compete with standard lim stuff. But their immigrants are not only higher as a percentage of the economy than even the U.S., and we're seen as the biggest immigrant magnet in the world, but compared to the size of the country, Australia gets a higher percent.

13:44And coming from East and Southeast Asia, they are more educated. They have a stronger work ethic. Okay. I hate to say it. I mean, there are differences. They are stronger as immigrants than the typical people we get from Mexico and Central America. But even those immigrants are motivated and work hard. And I'll take them every day of the week. Okay. So when we come back, I'm going to ask you those questions. When you say East and Southeast Asia, I'm going to ask you a couple of questions. when we come back. What countries come, what countries are East and Southeast Asia? And the second question I have is, we have guys like Records is writing a book on AI.

14:24And I was at a conference the other day about super AI. And then the idea of going to school to get a job might be an obsolete idea. Do you know what I mean? Because I can do now, I can do contracts off of GBT. I don't need an attorney. And so this idea of going to school for job security, I want your point of view from a demographic point of view, what is AI going to do to affect so-called education? What educational choices or professions? And what they're saying right now, Harry, is you want a profession where you work with your hands, like an electrician or a plumber or something where you have to work with your hands.

15:03But if you're working purely with your brain, you might be planning to be obsolete in a few years. So those are the questions I want to ask you. So when we come back from the break, at that point, you can gear your brain up to tell us what you see from demographic points of view, immigration, specifically which countries, and then what your viewpoint on AI is to education. So is going to, will you be a better, more secure as a plumber than as a accountant? I don't want to be a plumber. I'll start there and I'll get when we come back. We'll be right back. Okay. So Harry, glad you're part of the Rich Dad Show.

15:44I always enjoy it because I know you won't bullshit us. So thank you. We'll be right back with Harry Dent.

15:55Welcome back. I'm very happy to have a very special guest. Long-time friend and a person I respect is Harry Dent. He introduced me to the term demography. Demography is destiny. And that you can predict the future by looking at demographics. And the thing I like about Harry, as demographics change, he'll change. And the other day, Harry, I was saying to you, somebody says you're as pessimistic as Harry Dent. And I took that as a compliment because, no, it's because you won't bullshit us. as you and I know in this world of YouTube a lot of bullshit out there and so that's why I respect your forthrightness your candor and right or wrong you'll tell us exactly what demography is telling us so before we went to break I ask you Australia is introducing immigration of certain countries which countries from what races are they coming from it's basically uh China, Japan, Korea, Southeast Asia, Thailand, Cambodia, Indonesia which is right on top of Australia, Australia and India so Australia is the only western country along with tiny New Zealand which is definitely more sleepy okay um it is right on the edge of the Pacific Rim which is the growth explosion I mean one long after I'm dead it's going to be Africa but Africa is not going to be the big player in our lifetime.

17:26It is Asia, East Asia, Southeast Asia, and next after China, and China's already maturing. In fact, they overexpanded and made some huge mistakes, but India is absolutely, I'd stake my life on that. Everything I know is going to be the next big thing, and they are going to be, if anything, richer than China and have even more people because their population is still going up. China's getting ready to shrink from 1.4 billion to 800 million over the next 50 years, while India goes from 1.4 to 1.7 or 1.8. And I've been to both countries, and I love Indian workers, and particularly Indian professional and managerial people, I mean.

18:07So India is going, and even economists, and Indian economists try to argue me why India will never be like China. I'm like, no, India at the same stage of urbanization development is already ahead of where China was. So I was just in, I was in Mumbai, India in the slums because I went to study what causes slums because of homelessness in America. So I went to Mumbai to study the slums so I could see what's happening in America. So I went to look at that, you know, what's the correlation? And the thing I want to say this, I paid the Indians a high compliment. They're gearheads technology. They're very smart technologically.

18:49And they're realists. They look at fact. They're very matter of fact and down to the point. Yes. I agree with you. I've been the most impressed of any major country. And when I'm in Japan, because I'm Japanese, I can criticize them. They don't get it because in the Japanese culture, Harry, savers are winners. But what has happened since the Federal Reserve, since 1971, when Nixon took the dollar off the gold standard, savers became the biggest losers around. but the Japanese still save money. And I took a company public in China, a gold company out of Toronto Stock Exchange, and the Chinese stole it.

19:27They called me up and said, how badly do you want your gold mine in China and Dalian? And they said, bye. They wanted$2 million, Harry. And I went, I'll never do business in a country where they do not respect law. The order of law. So I like Australia and New Zealand, although they're a bunch of characters, beer drinking, rugby players, as far as I'm concerned. But they respect the rule of law. So that plus demographic, ethnicity. And the Indians are very, very technologically smart as well. The thing that I get excited about here, back in my Roaring 2000s book, that was back in 1998, okay? People ask me, well, Harry, you don't talk about AI, AI, AI.

20:19I said, I called it the automation of managerial and professional work all the way back in the 90s when nobody even thought that that was possible because that's where the most intelligence is. And that's where it would take the highest computing power and sophistication. And that's what AI is about. We automated farmers down to 2%. They used to be 50 % of our population. Now they produce more than we can eat and export on one and a half to 2%. Well, then there was the manufacturing workers. Well, they were 40 % of our workforce. Now they're, they last, I thought it was 14. They're already down to 10 % a few years later.

20:56Cause, cause the way there's two ways to get rich. You grow up and learn more into the workforce at 20 and then explode in your productivity. The other way is you automate lower skills and you move people into higher value added skills. So automation, everybody, oh, we're going to lose all our job. No, losing jobs is precisely how you make money, especially if it's lower end. And most managerial professionals, that's why I couldn't work in corporate America. They're just bureaucrats. They're not doing creative stuff. They're obsolete. I mean, yeah, they're obsolete. And so I had to keep trading down Bain and Company as a consultant to these monsters, and then small companies, and then literally entrepreneurs, startup entrepreneurs.

21:42Oh, here's my people. The highest value added is a person that will have a vision, create something that does not exist, and prove it and stuff, and get it into the niche markets where they'll be tested. And then that becomes an S-curve that explodes in the world. that's how you create the highest value and guess who still leads in that today us of a even over canada even over northern europe other people more like us okay so so that's our thing we're we're the entrepreneurial factory of the world and we're still doing that so the more we can get all these smart managers i mean i came out of harvard business school most of the people there were not entrepreneurs.

22:26I pretty quickly just was kind of forced into being an entrepreneur because nothing else worked for me. I just kind of had to be. But more and more of these bright people can become entrepreneurs and create new businesses or expand young businesses because there's far more growth and payback there than keeping making the old giants just a team. All we did at Bain & Company was make these dead companies a little bit more alive so they didn't just worry over it. What's going to happen to these smart Harvard business guys is you don't need them because AI will replace AI. No, no, exactly. I mean, there's, I say that 80 % of what managerial and professional workers and corporations, even small, mid, large, most, you know, professional workers is still 80 % left brain work.

23:16Computers are left brain machines at light speed. And you could take the expertise of those people, program machines, automate those out, and then people only have one choice. They have to come in and greatly improve an existing operation, or they have to create something new that didn't exist. And of course, when you do that, it comes down a learning curve and a cost curve, becomes more affordable. That's how we build wealth. We take things that are expensive and hard to get now and make them mass affordable, both making consumers better deals than what they get and workers get better jobs at the same time.

23:52So we have to keep trading up. We can't keep deals. We ought to let these old ended. We ought to sail them across the Pacific to Asia, these jobs. So once again, AI will replace AI. It's called super AI. And so the reason I'm into this, because as I've been saying for years, biggest obsolete idea is go to school so you can get a job do you know i mean it's today you better be an entrepreneur exactly i mean that's what's it all comes down to we have create what what we haven't automated is the right brain and you know the right you know i know plenty of spacey right brain people that can't tie the shoe but the right brain compared come tagged with a strong left brain or with computer left brain that's where the creativity to improve things and create things that don't exist now people say oh that's not possible you know how many times i've told people it's not possible to predict economy past the next election that's the biggest phrase i've gotten all my life and i'm like no i i have a harder time predicting accurately the next couple years the long term is a piece of cake countries are urbanizing at predictable rates and getting higher gdp for capita at predictable rates from that people grow up and go through predictable ages of spending investing all these things.

25:11There's a lot of predictable stuff. And these things all measure how we create higher value. And we can always do more. Check this out. That game board behind me is right brain, isn't it? Color or form. It's accounting. I took the most boring subject in business school for me was accounting. Exactly. And I turned it right brain into a board game. that's what i did so i love you so much people can learn it easier right yeah well you gotta make learning fun because guys like you can go to harvard business school i went to military school and we're trained differently do you know i mean there's you know guys at harvard generally modeling and we learn military military i think is different than modeling theory and and so it's completely different but our kit my whole point of view is kids are not prepared for what's coming because your competitor is now living in india yeah and they're creating ai and the reason i'm in reason i'm in phoenix arizona is because you know texas taiwan tsc taiwan semiconductors move their plants here so i just know from real estate not being a very bright guy, that real estate depends upon jobs.

26:30So when Taiwan's semiconductors moved to Arizona, they call it Silicon Desert, not Silicon Valley. So Arizona is Silicon Desert. Our real estate's booming. I mean, it's not rocket science, but I didn't go to Harvard Business School to know if there's jobs, there's rental property needed.

26:51So Harry, one more prediction on demographics. I think this one's the one I wanted you to comment. This is my friend, Jim Records. And he's talking about money GBT will replace banks. It says that it's a very dire prediction. Money is just going to take away money. But it's a good thing. Yeah, the whole crypto movement, which Bitcoin is just a standard for and maybe the center of, is all about radically decentralizing money and finance. It's always been difficult. It's always been hard to reach a bureaucrat. No. I mean, it just makes it direct. This is a huge thing. You have basically AI is going to take that higher automation of work and stuff.

27:44And it is crypto that's going to transform the entire financial services industry. and you know how much money, how much financial assets there are in the world? I'm the only guy that knows. 630 trillion and growing, five times 105 trillion GDP. It's the biggest number in the world. And when I heard that crypto is basically about decentralizing and automating finance, I'm like, oh, that's going to be a really big thing. No question. And it is. And it's in its infancy still. And that's why I say AI and Bitcoin, which are related, really. Yes, they are. Yes. It's going to change the world so fast, Eric, because we all use intelligence and we all use money.

28:28Three things. I got three charts on my desk. One's the QQQ, the NASDAQ 100. One's Bitcoin, the crypto trend leader, and NVIDIA, the AI. All three of these charts right now are accelerating, but in a declining channel that looks like it's about all three of them. In fact, NVIDIA is the only one that hasn't quite hit its peak, another 1 % or 2%. I think that we've seen this big stimulation. These new technologies have emerged strongly, and we're getting ready for a shakeout, which always occurs at a certain stage in the industry lifecycle. So as much as I love these industries, all three of these charts tell me big crash likely ahead in the next couple of years, and that will shake down.

29:14And people don't understand. I was a turnaround manager. Failure is wonderful. When people fail, you can change things 10 times as fast. You learn 10 times as fast. Failure is the secret to success. Not getting your ass kissed and everybody, oh, you're so great. And Harvard MBA, I mean, the Harvard education can work against you, okay? Literally, okay? You can be overeducated. So I think we're about to see some exciting times, but it could start off. we really should have had this crash back in 2020 to 22 when the baby boom demographics were still down and that was weak okay but all this stimulus and i got a number on that 29 trillion since 2008 has been poured in the in economy it's averaged like maybe 18 20 trillion in gdp it's now closer to 30 but average that's that means it's like eight percent a year average stimulus for 16 years poured in and people think, oh, we're doing good.