The Demographic Cliff: How to Survive and Prosper During the Great Deflation of 2014-2019

by Harry S. Dent Jr.

Bestselling author and financial guru Harry Dent shows why we’re facing a “great deflation” after five years of desperate stimulus — and what to do about it now Throughout his long career as an economic forecaster, Harry Dent has relied on a not-so-secret demographics. Studying the predictable things people do as they age is the ultimate tool for understanding trends. For instance, Dent can tell a client exactly when people will spend the most on potato chips. And he can explain why our economy has risen and fallen with the peak spending of generations, and why we now face a growing demographic cliff with the accelerating retirement of the Baby Boomers around the world. Dent predicted the impact of the Boomers hitting their highest growth in spending in the 1990s, when most economists saw the United States declining. And he anticipated the decline of Japan in the 1990s, when economists were proclaiming it would overtake the U.S. economy. But now, Dent argues, the fundam

Genres: Economics, Business, Nonfiction, Finance, History, Politics, Audiobook

368 pages, Hardcover

First published January 7, 2014

About the author

Harry S. Dent, Jr. (born 1950) is an American financial newsletter writer.

Dent writes an economic newsletter that reviews the economy in the US and around the world through demographic trends focusing on predictable consumer spending patterns, as well as financial markets, and has written several books.

Reviews

[Jin · Rating 3 out of 5]

Heads up: I did buy this book 5 years ago and only just read it today, 5 years later. So, parts of the book were obviously not correct or not up-to-date. Nevertheless, the book had some interesting theories and insights showing the importance of demography in predicting the future.

I didn't expect some magic or great reveal while reading this, it felt more like confirming some theories which were already discussed by others. Even though I like facts and data, I would have wished the graphs would have been better included into the text or just put together at the end of the book so it wouldn't disturb the general reading experience. Also, the positive outlook into the future was too ideological. I expected a more critical approach to governmental institutions and more politics.
Anyway, the book was still ok and felt humanitarian with a capitalist touch. Through all the calculations and data analysis, you could still feel the optimistic view of the author. Unfortunately, as mentioned in one of my previous reviews, I feel like these non-fiction books are too much into repetitions. The book could have been easily 100 pages less and still have proven a point.

[Natali · Rating 3 out of 5]

I wouldn't say this is the most convincing or organized book but he makes some interesting points about demography and the global economy. Dent promises to give advice on how to survive the next economic crash, which he thinks is imminent, but that advice is more about business operations than personal finance. I've heard him advise on radio shows to short the Dow but there is nothing in this book about that. I was disappointed with the advice part of this book.

I think his research is worth considering but grew tired of the repetition in the end. And he hedges his bets with predictions like the next crash will come in early 2104, or at least in the next 5 years. But also, if it doesn't come in the next 5 years it may not come at all. What? I do agree with him that quantitative easing and global debt have perverted our economy and our immigration policies shoot ourselves in the foot. He also talks about how our maternity leave policies discourage population growth which also hurts us.

Maybe his next book should be about government policies that must change before progress can happen. And it doesn't have to be 300+ pages.

[Void lon iXaarii · Rating 3 out of 5]

The book raises some quite reasonable sounding theories about the reliable predictive nature of demographics. Interesting data about ages that correspond to certain types of spending & behaviours allowing a feasible study of birth/death rates & age groups to give predictive information. The plus of this approach is that it gives data decades in advance that is pretty solid.

The parts of the book where I was a bit more sceptical were too much reliance on the cycles, as if given by divine powers. Some of them seemed pretty probable being deduced from many iterations, but others seemed to me to be too big not to be debatable. Once we're talking about centuries I felt that not only didn't the author have enough data points to draw such big conclusions but also what he had in historical data would be subject to interpretation. As such I'm a bit more interested in how these possible ideas mix with real situational century/decade data and analysis as opposed to trusting too much the big waves. Still, a big theory worth taking into consideration.

On a more personal note I liked the author's optimism in science, humanity and progress as well as statements for individual freedom and free markets, but then didn't like his sometimes also strong beliefs in state lead organization and projects of which I am more sceptical (as he is too in other parts). Still, overall I think he sees a lot of things right and his approach is definitely among the more reliable ones. I also saw him apply good critical reasoning about the problems of our times and likely situations in the next decades.

[Julian Ajello · Rating 5 out of 5]

Ever since losing the best job I had, and quite a lot of money, after the Great Recession, I've become a more avid reader of economics. This book is fantastic in several ways. For one thing, Dent strips away the idea that a president, or presidents, really do anything. He reveals the economy as a living, breathing thing, and while people who make policy to contain or cajole it, in the end 'life finds a way'.

He posits, very convincingly, that it's demographics that drive the whole shebang. What we are going through is a downturn in demographics and no amount of rate cutting or money printing is going to stop it. Sooner or later we're going to have to face the music and we're only making it worse.

However, he's hardly doom and gloom. This book made me very optimistic and positive about where we're headed for the first time in years. He addresses many subjects including the environment and how we can handle that. Dent says we're going to have to have a difficult decade to deleverage all the debt, but it will spur wonderful technologies and advancements, as downturns (which he calls the winter season) always do. It will be followed by the spring and all will be well again. As a friend so aptly stated to me once, 'markets go up, markets go down'.

If you want a better understanding of how the world works, and want to prepare yourself for tough times, as well as have hope restored for the good times ahead, I can't recommend this book enough. The information is VERY accessible and it's a breeze to read.

[Stephen · Rating 2 out of 5]

I very much agree with the central premise of this book, that demographics are an important determinant of our future economic prosperity (or lack of prosperity). As demographics change, so will our prospective fortunes change. Unfortunately, that only accounts for the first sixth of the book. The remainder is just neo-liberal, neo-classical, twaddle.

I get the argument that it would be great for America if everyone in the world were to be American. However, they aren't. That piece of wishful thinking doesn't help us in the world in which we live - a world where not all people feel that the public sector has no role, a world where some believe that public debt is a useful bridge across the business cycle, and a worl which doesn't want to take its cues from Wall Street. I wouldn't mind betting that there are parts of America that feel this way.

The book has its moments, but it is mostly dull. It has a repetitive tone in driving you towards Harry Dent's paywall, which didn't sit well with me. My advice is not to buy the book but to borrow it from a library (preferable debt financed - an 'in' joke), read the first three or four chapters, and then return it to the library. This is not a book worth stealing.

[Robert Chapman · Rating 3 out of 5]

I've read a few books from Harry S. Dent Jr. before, all of which I enjoyed which is why I did not hesitate to read this one as well.

The demographic information used to describe and predict the four seasons of the economy is very interesting and I believe it has a lot of merit. What I wanted from this book which I don't feel I really got, was what to do differently in preparation for the upcoming winter season. There was some guidance, but it lacked the depth and was not sufficient to live up to the spirit of the name of the book.

[Lucas Carlson · Rating 5 out of 5]

Really important book to read, but don't take it all too seriously.

[Jen · Rating 4 out of 5]

Dent pulls sociology into the financial realm. He argues as we are born, our spending habits lag years behind our birth in commonly documented ways. In middle adulthood, we are the biggest consumers, our spending peaks in our 40s, and as we enter old age we spend less. Dent parallels stock market booms and busts with generational spending trends to make a fairly convincing argument that while the market has ups and downs, long-term trends of booms/bust line up with demography.

For instance, after this latest housing bust in 2008-2009, demographics will prevent real estate ever being used again as an investment in sheer appreciation. If you want to make any money in real estate, it will be because you rent out your property, not because your property exponentially appreciates. There will soon be way more "dyers" than buyers, pushing home prices further downward through oversupply.

As the subtitle suggests, Dent closes the book with some investment strategies based on where population growth is heading.

[Alex · Rating 4 out of 5]

Really interesting premise that economic tends can be predicted by trends and patterns. For example, that when bubbles burst they go to or below where they started. When a smaller generation follows a larger one, there are downturns in the economy. Also growth occurs not linearly but on a log scale. the only reason I didn't give this book a 5 rating was because it was quite repetitive at times and lengthy. definitely could have been condensed and have the same message in half the pages. Great read! I definitely learned something new.

[Thomas · Rating 5 out of 5]

Dent makes a strong case that human population cycles and life stages of population groups are the greatest driver of boom and bust cycles, and all government attempts to stem the long term trends are vain attempts that can result in greater catastrophe once natural forces take hold.

[Katherine Mandrin · Rating 3 out of 5]

Interesting perspective.

[Stanley Arthur · Rating 5 out of 5]

H.S. Dent's best book to date. A great overall summary of demographics and the implications of the current demographic trends. Demography is destiny...the looking glass into your future.

[Cosette · Rating 4 out of 5]

Four years till I can invest in chips.

[Elena · Rating 5 out of 5]

Excellently sober, informative. I jumped on my next book (G. Gilder's "Knowledge and Power") based on the recommendation of H. Dent inside. Adding to the shelf of favourites.

[Jennifer Chaney · Rating 3 out of 5]

Plenty of good and interesting information, but it is also very repetitive. Lots of "fluff" that could have been left out.

[Brian · Rating 3 out of 5]

The Demographic Cliff by Harry Dent Jr. seeks to explain how the world economies will be impacted by the changing of demographics from Baby Boomers and the resulting Echo boom and what can be done to combat the supposed round of deflation that will occur between 2014-2019 based upon demographic trends. This book provides great insight into demographics and is thoroughly researched although with a tendency to repeat itself over and over but like most attempts at trying to explain macroeconomics it comes up short. If we held everything else constant, then this book would be spot on but as in most macroeconomic systems there is more going on than demographics and while this is an important factor and one that should not be discounted there are governmental policies across the world that are shaping the markets that Dent is trying to address. For those interested in the effects on an aging population and the effects of a lower birth rate that is not filled vis a vis immigration there are some great lessons in here as well as fascinating discussions on the 80 year demographic theory for cyclical economies. Overall though you have to be into economics and demographics to really appreciate this book and I think the casual reader would find it bogged down and repetitive.

[Jordan · Rating 2 out of 5]

I was attracted to this book because I became fascinated by the fact that almost every country on earth is entering a period of population decline. I wanted to learn what the implications would be of such a concerning demographic situation.

The data Harry Dent presented was very interesting. His predictions were frightening. But the process that brought him from the data to his predictions was silly.

Dent is obsessed with finding a simple and predictable formula to predict an incredibly complex world economy. He searches for patterns, such as seemingly arbitrary 11 year or 72 year cycles, or the ebb and flow of sun spots, and uses these to project forward. I once heard him on the podcast talk about some Serbian mystic who predicted the future.

All this to say, while I actually found it quite interesting and speculative, I would never bet money on Harry Dent.

[Kyle Sales · Rating 2 out of 5]

I was looking for a Mark Yusko demographics book when I saw this one. It wasn't the book he recommended, but I went with it anyway. The headline is a bit sensational and it doesn't take a genius to realize it didn't happen. The underlying elements for a major correction seem in place and there're still learnings to take away. I just didn't like the book that much. Too wordy and perhaps would be better broken up with distinct sections by geography.

There was a tangent that I found really interesting with regard to currency. The book (rightly) points out the significant challenges to the US dollar via massive and prolonged periods of budget deficit, etc. However, perhaps the superiority is maintained as it's the least bad alternative among other currencies. Time will tell.

[Jason · Rating 2 out of 5]

The basic premise is very interesting. We are for sure seeing people groups go into demographic decline. Europe, Japan, and even the United States are in for real trouble in the not too distant future. Dent goes into great depth to explain cycles of summer and winter in markets and societies. All of his looking back information is great, the warning that we have problems is good, the long-term trends are disturbing, but the projections of the near term future have been very, very wrong.

[Kristin King · Rating 3 out of 5]

A lot of interesting points about the economy and how demographics play into that. When Dent got down to applying current demographics to forecasts about relestate and retirement planning, this all came together IMO. Will the situations turn out the way he says? Maybe so or maybe not, but it doesn't hurt to consider these ideas as we make our own plans.

[Bill Smith · Rating 5 out of 5]

The thesis on demographics and buy/sell dynamics was worth the purchase alone. I never knew that information. This was my first Dent book. I know he takes alot of flack for past predictions. But this demographics argument seems solid to me.

[Max Lapin · Rating 4 out of 5]

A great book. Same league as Taleb's and Silver's bestsellers. Indeed, Harry Dent sees what others miss.

[Bruno Konieczny · Rating 4 out of 5]

Yes .. another doom and gloom book.
But really stresses the importance of demographics that helps drive the boom and bust cycles.

[John Galt · Rating 3 out of 5]

Since the mid 90s, and the author's excellent stock market 'call', the author has been peddling new predictions. Just a broken clock is correct twice a day, perhaps he'll be right again.

[Jackson Hyl · Rating 4 out of 5]

Good

[Tricia · Rating 4 out of 5]

Fascinating but just a piece of the bigger macro picture

[Justin Carley · Rating 3 out of 5]

I would say first that the author knows what he is talking about. There are two main flaws with his views. One is looking solely at a single age for peak spending or home buying and ignoring the entire group of consumers or home buyers. All that matters to home prices is the size of the "total" available buyer pool each year, not just one age. Other research using total size of home buyers would then say home prices are fine until about 2020 or so.

The other flaw is telling the market what it should do as opposed to what it will do. The author doesn't consider the possibility, and what is actual becoming much more likely, is that government (FED and central banks) will go all in on socializing the equity markets. The BOJ is already buying equities, the ECB is next and the FED will do the same thing. In the end we get nothing for a decade or more, but investors are unable to wait for the crash and get the huge rally off the bottom. Central banks are not even close to their limit, they are just close to being able to make dumb citizens look the other way. In this scenario, the market could double before it crashes. I would take all the timelines in the book and add at least 3-5 years if not more as the central banks have thus far been given a big high-five to "do whatever it takes". At the very minimum, wait until the next recession signs are visible before bailing out. Then, maybe, the recession may prove too powerful for central bank action.

For those at home, don't listen to CNBC and all that crap. Here are four very simple LEADING recession indicators you can follow. If 2 of these are not warning of risks, then don't bail on equities and risk as the central bankers may be waiting to announce a new round of BS stimulus that shoots the market higher. It is possible that all the bears finally capitulate to central bankers and there is tremendous dry powder on the sidelines that could cause the market to double before a crash. Keep this possibility in mind.

[Ian Bost · Rating 3 out of 5]

I did find the idea of generational spending cycles, purportedly the thesis of this book, to be illuminating. As I understand it, if we look back to a peak birth year and fast-forward to an average person's peak spending year (somewhere in our mid-40s), this should correspond to a peak in markets. According to Mr. Dent, the baby boomers, the largest generational peak, are entering into the downward slope of their spending curve. Thus, despite central banks' attempts to fight it, we will see deflation and stock market crashes.

I don't imagine that generational spending curves are set in stone (especially if a particular generation has way less money to spend--the Millennials?--or if we live longer, work longer, etc.), but in fairness I can't imagine Mr. Dent does either.

A lot of the "demographic cliff" material is outlined in the first sections of the book. I agree with some of the other reviewers who point out that the remainder of the book is not very focused (and I admit I mostly skimmed the section on business strategies). Not to say I didn't find the rest of the material useful in some way ...

As it is now well into 2015, the author's repeated contention that a crash would begin in early 2014 was a bit awkward to read. Something else I found interesting is Mr. Dent's idea that the "winter season", the coming deflation, would help restore the middle class. The thinking seems to be that the assets of the wealthy will be hammered, there will be increased taxes on the rich, and that "new technologies" will emerge that will benefit our Joe and Jane Shmoes (supposedly an echo of the middle class-friendly period from 1929 to the mid 70s). It will certainly be interesting to find out.

[David · Rating 4 out of 5]

I like this book somewhat solely base on the perspective that author uses: population and debt..many columnists, economists are b.s about the economy in the aspects of supply/demand, % this and that..but to look deeply population drives the consumption, and the debts (from suppliers/consumers) drive/crash the overall economic engine..simple..no population: no spending at all..too many debts: can drive China into the abyss of no return (too much public ghost spending)..Author is very focused on these two criteria...that is driving another for-seeable problem (again): real estate bubble..another 2 key predictions author made: Nikkei will never reach 30,000 and DJIA should crash around 16,000 or sometime in 2014. (we will see) also prediction of possible EU members leaving EU (south EU members)..heavy bombardment on China public policies that will lead to her collapse. Overall, authors focus on population/debt are cleaning many countries into the cliff of population and cliff of economic growth (halt)..I do not agree with author about the downgrade of gold..because gold is what human love..author carries a tone of Goldman Sachs/zionistic point of view..with a sloppy MBA institutional guidelines to survive for the upcoming storm..which is a 18 year down cycle (continue to be down until 2018/2019). Author does not believe USD is in severe devaluation..(reflecting his parallel incorrect view on gold depreciation)..which I believe author is incorrect somewhat..worth the read..because sh.t will hit the fan very soon..

[Will Ducey · Rating 3 out of 5]

This book is 33% charts, 33% repeated information from other pages, 33% insightful information.

The focus of this book is a call for an immense deflation on a global scale. The reason is demographics. Dent says that the world is headed for deflation simply because there will be more people leaving the workforce then entering and less spending.

Dent's insight comes from many different aspects of research. He concludes that peak spending occurs around the age of 44. I wonder if this book tries to pull in too much information and loses credibility. Dent says we can use sun spots to predict market cycles. While this may be true, I think you can always look into the past to use information that predicts what has already happened.

I was also surprised to see an entire section devoted to how to survive as a business in the coming deflationary period. It read more as a business book than an economy book, but I really enjoyed that section and highly recommend it.

My two major complaints which lead me to believe that Dent doesn't have the full picture:
1) He views gold as a commodity, and completely discredits gold's place as true money and a store of wealth.
2) "None of the 2012 presidential candidates had a clue about what actually caused this economic crisis and why there are no magic near-term solutions. (p.299)"

Summary: Read the book. Gain some insight into demographic trends. Think for yourself.