Economists keep a watchful eye on possible economic downturn

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Prominent economists agree real estate values rising, interest rates falling and gas prices below $3 and $2 is going to cause a greater economic crash than in 2008.

The US Central Bank has created $1.39 trillion in new money put into circulation following the 2008 crash.

Economists fear in the event of a large stock market crash the government will force restrictions on savings and earnings to bail itself out of debt.

“The U.S. dollar has been appreciating,” said Delta College’s Joel Beutel, professor of Economics comparing to other transferable currencies such as the Chinese Yuan and the Australian Dollar.

He also explained these countries have been going through their own economic declines so the U.S. dollar is becoming stronger over seas.

Another large factor that could cause a 75 percent stock market crash is the same one that started the recession in 2008, the real estate bubble.

Since the housing market crashed nine years ago mortgage rates have fallen from 4.7 percent to 2.6 percent according to mortgagecalculator.org.

aAccording to CNN Money, rental values have risen by 15 percent in northern California.

Economists fear these prices have blown up the real estate bubble to the same breaking point that we suffered in 2007 and 2008.

Low mortgages force people to hold on to their house regardless of income and high rental values discourage consumers from buying in.

Beutel said consumers should feel safer with rental values being higher than mortgages because this keeps production values from growing higher than rental value, which was the cause of the market crash about a decade ago.

The final big factor that could be a sign that the stock and housing markets will crash is the fact that stocks are overvalued.

Economist Andrew Smithers warned The Sovereign Investor on Feb. 18, 2016 “U.S. stocks are now about 80 percent overvalued,” and the last time stocks were this high was in 1999 when the stock market crashed 78 percent.

In that same article, Economist James Dale Davidson, who correctly predicted the stock market crashes of 1999 and 2008, says the market is about to plummet 50 percent.

“When stocks were at all time highs at the end of last year they were still about average historically,” Beutel said.

In regards to stocks that are overvalued, “in large scale there was, but in generality [the stocks] were normal,” he said.

“I don’t think there is a general consensus, some are saying we’re going up, some are saying we’re going down,” said Beutel who is an expert that believes we’re doing just fine.

“The hardest part is you listen to people who were right in the past and wrong in the past,” said Beutel who listens to economists such as Smithers and Davidson for a career.