Investing

A Moneychanger Interview: Robert R. Prechter, Jr.
ON THE BACKSIDE OF THE WAVE

 The founder and president of Elliott Wave International, Robert R. Prechter, Jr.  has been publishing Elliott wave commentary since 1976. In December 1989, Financial News Network named him "Guru of the Decade." Bob served for ten years on the Board of Directors of the Market Technicians Association and in 1990 was elected its president. During the 1990s, he expanded his firm to provide analysis on all major markets worldwide for institutions. Bob has written eight books on the stock market. His latest title is The Wave Principle of Human Social Behaviour.  You can order his books and his newsletter from his website, <www.elliottwave.com>.  Bob kindly made time for this interview on August 2, 2001.

 MONEYCHANGER  When you published At the Crest of the Tidal Wave in 1995, you foresaw a massive change of trend both in markets and in society.  Centuries-long cycles are about to turn?

PRECHTER  They’re in the process of turning, actually.  Depending on what market you observe, the turn has been going on since 1996. That year, we also had the final rally top in gold and the secondary top in the CRB commodities index.  We saw gold stocks top out around that time.  In common stocks, the daily advance/decline line topped in April 1998.  The NASDAQ topped in the first quarter of 2000. Even with the recent setback, the market is historically overvalued.  I don’t know if there’s another high coming for the Dow or not, and I don’t really care, because stocks are so overvalued that anybody would be crazy to own them at this point.

MONEYCHANGER And certainly crazy to try to catch one more little leg up in stocks.

PRECHTER  That depends on your expertise.  I would say that the average person in the public they should never have led into the whole idea of a New Era in the first place.  So, yes, they shouldn’t be involved.

MONEYCHANGER I called this change in trend “centuries long.”  How many centuries in the case of stocks?

PRECHTER  The degree that’s topping out is what Elliott called “Grand Supercycle.”  That trend began in 1784, so it’s been 217 years.

MONEYCHANGER  What about social trends?  There has been a trend of centralisation since roughly the middle of the 17th century.  You haven’t limited your work to stocks, bonds, and financial instruments alone.  You also look at the broader effects of these cycles on society.  How will these trend changes work out socially?

PRECHTER  The Wave Principle is a description of the mass psychological swings in the human population between optimism and pessimism. That incorporates a whole lot of behaviours. As optimism waxes, people get more daring, they get friskier, they get more productive.  Along with that, they get a little bit reckless. The further it goes on, the more reckless they get.

MONEYCHANGER More likely to go to war?

PRECHTER No, reckless in terms of taking risks in investment, which in the initial stages is very positive.  It creates opportunities and productivity.  In the later stages it’s closer to gambling. Eventually that results in massive losses to people who overextend themselves because they are certain that the trend will continue. 

It also leads to what you just referred to, more government intervention. It also leads to seemingly benevolent government social programs.  People feel that they can afford both guns and butter, so ultimately, why not have expansive social programs?  This reckless trend is also part of the mechanism that works toward the reversal.  The dangerous centralisations have always come in bear markets.

MONEYCHANGER For instance, the New Deal in the Great Depression?

PRECHTER That’s a classic example, but there are even more dramatic ones. The Russian Revolution took place in a bear market in October 1917.  Further consolidation took place in the 1930s bear market under Stalin, who murdered tens of millions of people.  In China, communists took over in 1949, which was the very end of the world-wide bear market pattern in inflation-adjusted terms.  The worst abuses there occurred in the bear market of the 1970s with the so-called Cultural Revolution, when the government stampeded city dwellers into the country to starve.  Cambodia’s slaughter also took place in the ‘70s. Then as we entered a bull market in the 1980s and 1990s, China softened up a little bit. The same increase in positive mood holding sway in the 1980s-1990s bull market brought Russia to a point where finally the logjam broke and even the Communist Party fell.  So the politics tend to wax and wane along with the wave pattern.

MONEYCHANGER So the greatest centralisations are installed in the depths of the bear market?

PRECHTER Yes.  As the bear market progresses, people search for leaders to take them out of their misery. They tend to conclude that force is the answer. Ironically, it brings much more misery to bear.

MONEYCHANGER How should we understand the success of secession movements around the world today?

PRECHTER That’s a bear market phenomenon, too.  I’ve been saying for a long time that as soon as the tide turns, you’ll see states wanting to secede, and countries breaking up.  I wouldn’t be surprised to see California subdivide.  Canada should end up as two, possibly three countries.  The Soviet Union’s dissolution came from a different direction.  That wasn’t states seceding but centralisation collapsing because of the bull market.  You have to distinguish between the two.  One is a psychology toward freedom and the other is psychology toward separation and decreasing the social unit’s size.

MONEYCHANGER The psychology towards freedom is a bull market phenomenon? 

PRECHTER Not exactly. Maybe you noticed that bear markets bring centralisation but also secession movements, which seem to be opposites. How can that be? Let me explain – it’s rather subtle.

In a bull market people tend toward consensus, and everybody more or less agrees.  Usually that begets a middle of the road psychology.  In a bear market you get polarisation.  On one side you get the people who want to militarise the entire world and on the other side people who want to completely rid themselves of the state and government. Usually the forces of centralisation and statism win.  That occurred in 1917 in Russia, in the 1930s when Hitler took over in Germany, in 1949 when the Communists took China, and in Cambodia in the 1970s.  But there are rare times that the bear market ends with the other side winning.  The American Revolution is probably the best example.  That occurred right into the bottom of a 64-year bear market that we can trace in English stock prices. That was a bear market for England and they ended up losing the continent, but it was a victory for the freedom side of the polarity. The tensions leading up to the Civil War were secessionist, and in that case, as more commonly occurs, the centralisers won.

MONEYCHANGER How will this trend change affect the United States?  You said that Canada might break up, California, etc.  Does that imply the same for the United States?  As I understand it we’re talking about trend changes at a level that literally shakes the foundation of society.

PRECHTER Oh, yes.  They are multi-decade if not multi-century changes. For example, the ‘30s that you brought up was not a Grand Supercycle at all, that was just a Supercycle degree change.  This is one degree larger.

MONEYCHANGER In other words, one degree more encompassing.  When you think about Italy in the 1920s and Germany and the US in the 1930s moving into fascism, you get a taste of fundamental changes so profound that today, 70 or 80 years later, we literally cannot fathom them.

PRECHTER And we’re still suffering from them.

MONEYCHANGER Yes, but we can’t imagine the world that existed before that.

PRECHTER Exactly. For a freedom lover, the preceding century and a half was paradise.  There was no income tax.  There was no spying into your personal life.  No people telling you what you could do with your own property, and so on.

MONEYCHANGER So how will this change of trend affect American society?  Will it be better or worse for freedom?

PRECHTER We’re going to polarise.  We will have the fascist – communist forces that we’ve already seen hints of in the last 10 years.  We’ve got them in our government already.  They’re just dying to militarise everything  -- take over everything from the medicine to banking.  On the other side people are re-publishing the great works of freedom, saying, in effect, “Hey!  Do you remember what we had 100 years ago, 150 years ago?”

Given the polarisation that I expect, the question becomes, which side will win?  Frankly, my initial response is, I don’t know and we’ll have to find out.  Forced to take my best guess, I would have to say that it’s more likely that the forces of control will win, for two reasons. 

First, that’s the general drift since the foundation of the country, and is usually the general drift from the foundation of any free society.  Look at Rome, England, or any of the European countries that were leaders of the world for a while.  They’re all tied up in red tape and socialism now.  A second reason is, as I said, we’re entering a Grand Supercycle bear market.  The last one (in the 1700s) lasted 64 years.  This one, by alternation, should last a lot longer and be a sidewise formation in stock prices.  Essentially we are in for a 100 – 200 year neutral social trend. As free men are incredibly productive, that outcome can only arise with intense meddling from politics.

MONEYCHANGER If the Grand Supercycle began in 1784, that would have been with a low in the market.  Stocks would have been coming down from 1720, all the way into 1784 ...

PRECHTER That’s a 64-year bear market.  So from roughly the current level of the stock market and social mood, which is the highest that social mood has  been since 1720, we will experience a corresponding bear market. If you want to get technical about it, I can explain the differences about why it should last longer, but my argument is it will last between 120 and 200 years.

MONEYCHANGER Twice as long as the previous one?

PRECHTER  Right.

MONEYCHANGER Bob, what will that mean for us?  How will that look?

PRECHTER It will look like a bunch of bull markets and bear markets to most people.  We should start with a dramatic decline that will look like 1929 – 1932.  Then we’ll have a big swing back up again that will look like the recovery into the 1950s, but we’re not going to repeat the 1980s and 1990s.  We’ll go back down again, and then rally back up toward the highs again, and then we’ll decline again.  I think that whole process will take a long time.  It should form what we call a “triangle”, technically speaking.

So we’ll have a bear market, then a big recovery for several decades as occurred in the mid-1700s, and then another decline, another recovery, another decline, and the whole thing will take a long time. 

MONEYCHANGER And the mood of social dissatisfaction increases all the time, as it did in the 18th century?

PRECHTER It actually waxes and wanes with each one of those waves.  But you’ll find in this particular pattern that the worst of it comes in the second down wave – Elliott Wave people call it “Wave C”.  As an example, 1929 – 1932 brought the worst financial devastation, but wave “C” that lasted from 1937 to 1942 brought the worst social devastation.  That’s when World War II began and the worst of it was in the early 1940s.  From then on things actually began to improve. The upcoming “C” wave will be even bigger and more dangerous. It should occur a few decades into the new century.

MONEYCHANGER What does this imply as a target on the Dow?  And I know you’re not a fortune teller.

PRECHTER Oh, I’ve been really wrong as to how long this up-wave would take.  We originally thought it would take eight years.  It lasted nearly twenty from 1982, so I’ve been wrong plenty of times. 

I don’t think the basic intrepretation is wrong.  In fact, everything we see supports it.  It’s a fifth wave, there’s no question, so we have to retrace the whole thing. We’re going to go a long way down on the Dow.

MONEYCHANGER  Well that means that the middle class will be entirely wiped out.

As you well know, to appreciate the potential for decline, you yourself have to suffer through the deception of a bull market mentality in a market turned bearish.  Before your unbelieving eyes, all of the previous build-up in value is destroyed.

PRECHTER And more so.  I’ve studied all the manias going back 400 years and in every case the prices that existed before the mania started are exceeded on the downside. Market prices don’t go back to where they started; they go below it.  And that’s because fortunes and businesses are completely wrapped up in the mania, and when it starts down, many people lose everything.

MONEYCHANGER What does that imply for real estate?  I’ve been watching the “focus of hope” shift from stocks to real estate.  Now people are saying, “Well, I can see that stocks can come down after all, but real estate won’t; real estate never has.”

PRECHTER You know why they’re saying it?  Because real estate is the last thing holding up.  They’ve been saying this for five years in other ways.  “Yeah, junk bonds have fallen apart, but that’s okay, the big ones are good now.  Yeah, this particular market isn’t doing very well, but that one is, and so on.” 

Now they’re pointing to real estate.  Actually, real estate has been softening.  High priced home sales are down.  If you’ll rent an apartment in Atlanta now they’ll give you all kinds of enticements, even a vacation to Florida.  So I think it’s a smoke screen, and I think we’ve got at most six months left of the economy in neutral to positive territory.

MONEYCHANGER Which will begin to take down real estate?

PRECHTER Oh, man, the worst thing about real estate is the utter lack of liquidity in a bear market. At least in the stock market when you’re down 60% and realise you’ve made a horrendous mistake, you can call your broker and get out -- unless you’re an institution with millions of shares, and you’re stuck.  In real estate, you can’t do that.  You need a buyer for your house to sell it.

MONEYCHANGER And the buyers completely dry up.

PRECHTER They go away.  They move back home, Mom & Pop move in with the kids, the kids move in with Mom & Pop, people start living in their offices, stuff like that.  Suddenly there is a massive glut of real estate.

MONEYCHANGER Yes, and not only that but also there tend to be waves of panic in real estate.  All the buyers will hold out for a long time, and then one breaks and sells at a much lower price.  Then it’s as if all the rest suddenly looked at each other and experience an epiphany.  Immediately they drop their price 30%, too.  All at the same time.

PRECHTER And then what happens next?  What’s the buyer’s psychology like at that point?  “Well, gee, real estate prices have been coming down.  Why should I rush?  I’ll wait till they come down further.”  The further they come down the more the buyer wants to wait.  Then you get in the spiral taking you in the other direction..

MONEYCHANGER What screams “bubble” in real estate is the massive leverage, literally infinite in some cases.  People can buy a house for $100,000 without any down payment at all, if they qualify.  And what is the qualification?  That they’re not able to pay!  [laughing]

PRECHTER Another amazing report in recent weeks has been that the economy is only staying as good as it is (just above neutral) because people are now rushing to borrow the last pennies possible on their homes. Another amazing report in recent weeks has been that the economy is staying even as good as it is -- just above neutral -- only because people are now rushing to borrow the last pennies possible on their homes.  They’re re-financing so they can go out and buy TVs and cars and whatever else their little heart desires at the moment.   That is an unbelievable disaster ready to happen.  The banks are going to own most homes in three years, and they won’t have anybody to sell them to. A mortgage is nothing but turning ownership over to your bank, in exchange for whatever short-term item you would like to own this month.  It’s a terrible idea, and it stems from the reckless overconfidence I mentioned earlier that is a symptom of a major top in social mood.

MONEYCHANGER What about social violence?  Does that increase in pessimistic cycles?  I ask because I think the United States already stands in an extremely fragile truce.  Clearly defined interest and racial groups have for decades thrived on creating hostility.  There is a significant centrifugal potential in American society.  Is that part of the mix of this downtrend?

PRECHTER  One of the most important things about a bear market, particularly a major one, is that it brings extreme polarity.  The polarity shows up in every imaginable field -- political, which we’ve already discussed, and social, in terms of, say, financial class. That’s why Populism becomes a force in bear markets. A populist politician promises to take money away from these rich people who don’t deserve it and give it to you.  You get polarisation in the racial area.  It’s a cousin to the separatist movement where people say, “I can identify myself as a smaller unit, something different, and I’m angry at the other unit.  I want either separation, or reparations, or something of that type.”  It also happens in the area of religion.  Some of the population gets much more devout, and another sector gets much more libertine.  Each one feeds off the other as being something that needs reforming or is harmful to society.  You get the polarisation in every imaginable area.

MONEYCHANGER But that raises another question.  If the polarisation is that widespread and that deep, inevitably human tempers get shorter, patience gets shorter, and conflict becomes more likely.  That seems to point to more violence in those areas where population is concentrated.  Is that a correct inference?

PRECHTER Yes. You tend to get union strikes, racial conflict, religious persecution, political demonstrations, coups and war.  In the 1930s we had communist and socialist demonstrations in the United States.  In the 1970s you had them in Europe.  You’ll see people in groups forming to scream & yell at other groups.  The Middle East should be a complete disaster.  You’ve got at least three major religions in that area that all dislike each other and the truce of the bull market has already been tenuous, so that area is going to blow up.

In the late ‘70s – early ‘80s, when survival was a big topic, it was of course a major bottom, and you shouldn’t have been thinking about it.  Still, everybody was producing million-seller books about how to store dried foods and all that kind of stuff.  The time to be concerned with those ideas is now, at the beginning of the downtrend, not at the end.

Even so, I don’t think that the real risk is social unrest with groups looting your home as much as it is the international problem.  One thing that works repeatedly with the Wave Principle is that when you get a C wave of at least Cycle degree, you get a war, so to me the risk is chemical, biological, and nuclear warfare.  I don’t live in a highly populated area, but I don’t believe that protects me from the social unrest that’s going to come. I think you have to think internationally when it comes to protecting yourself in this major, major reversal, but even that’s very tricky.  The people in Europe who decided to get out in 1939 before things got bad were the smart ones.  But one out of a hundred of them said, “Well, let’s go somewhere safe.  Let’s go out to the Pacific and live on one of those islands in the Philippines.” You might guess wrong.  [laughing]

MONEYCHANGER Exactly, but the general idea in my mind is “Don’t live in an urban area.”  I think that’s an enormous risk, whether you view it from an international or a domestic standpoint.

How will this long term cycle change affect not only the US dollar but also the whole regime of fiat currencies?  Since 1971 we’ve seen a condition history had never seen before, namely, the entire world on a fiat system.

PRECHTER Currencies today are utter fictions.  Bear markets tend to focus peoples minds on areas where the emperor never had any clothes but they hadn’t noticed -- so bear markets do some good.  Sometimes people look around and realise, “I’ve been fooled for a long time, and I need to get back to reality.” So people will question the validity of fiat currency before the debacle is over. On the other hand, let’s face it, governments are pretty strong these days.  They can make it illegal to deal in real money, which of course, they essentially do already.  But they can enforce the restriction more stringently.  Again, I think the ultimate dynamic that you need to keep in mind is polarisation.  You’ll have one side trying to force fiat currencies down our throat, and you’ll have an underground economy saying, “Forget you!  We’re going back to gold and silver.”  I think the 1970s were just a warm-up to the world battle for real money.

MONEYCHANGER So the dollar and all currencies will come under severe pressure?

PRECHTER Oh, the dollar . . . The dollar is already ruined.  It’s just that the marketplace and societies haven’t figured it out yet.  Here are the reasons I believe that to be true.  When the communist regime fell in Russia, the ruble began to fall apart, more than it already had for seventy-some years.  Now why did that happen?  Did the government suddenly accelerate the printing presses?  No.  They had already been printing the stuff for so long that people had it under their mattresses, under the floorboards, in the walls, everywhere.  They said to themselves, “Okay, we’re free now.  We can go out and spend all this money.”

They went to the market thinking they were still going to be able to buy a head of cabbage for three rubles, but suddenly everybody else has got fistfuls of rubles while the number of cabbages hasn’t increased.  So cabbages went through the roof and the ruble collapsed not because the printing presses were geared up at the moment, but because they’d already generated the rubles. 

We’ve done the same thing with dollars.  We’ve been creating them since the Federal Reserve system was formed in 1913, but much more aggressively in the past 25 years.  What have we been doing with them?  We’ve been shipping them around the world.  Where?  To everybody’s central banks.  Even to individuals who believe that the dollar is a better store of value than their own home currency.  Billions of dollars are being held overseas as reserves.  When it suddenly (or otherwise) becomes clear to more and more people that the dollar is not a store of value, they’ll have only one option: return them all back to us.  When they come back home the domestic inflation will be, I think, one for the history books. 

So they’ve  already destroyed the dollar.  The Fed can’t call them all back, so once the dollars flood back into this country to buy up whatever physical assets exist, people’s savings will be demolished.

MONEYCHANGER Is Greenspan’s apparent insanity in throwing open the monetary floodgates the predictable end of all that?

PRECHTER Greenspan is sane; he’s just short-term oriented rather than long-term.  People who really want value in their lives build a good character and say, “I may have failures along the way, but as long as my character’s good, and I deal correctly with my fellow man, I’ll be rewarded for it.” 

Unfortunately, a political animal only cares about his tenure.  If he can rack up a lot of debt while he is in office and buy a lot of favours, he is remembered and well loved for a long time.  Of course, he never thinks about who will have to pay the bill.

I think Greenspan’s in the same position.  He’s basically a political animal.  He says, “I don’t want the economy to go under while I’m in office. I will do everything I can to pump it up, even if it’s phoney, and somebody else will pay that bill.”  It’s not long-run rational, it’s short-run rational for the individuals involved in the position at the time, an unfortunate by-product of government.

MONEYCHANGER Isn’t it also an example of the completeness of the social mood of optimism?  Back in the 1930s you can find any number of very good books written about Franklin Roosevelt’s inflationary policy.  They all pointed out that it would end in disaster.  Well, in the short term it wasn’t disaster, but from 1940 to today, the dollar has lost 95% of its value, so it was a disaster.  Right now it seems to me that faith in fiat currencies is so high . . .

PRECHTER . . . despite the disaster.  That just shows the power of psychology and propaganda.

MONEYCHANGER So people are not interested in gold or silver or safety.

PRECHTER Correct, and that’s what provides the opportunity.

MONEYCHANGER How will gold and silver respond?

PRECHTER I’m very excited about them.  I’ve been bearish on them for 21 years. In February I wrote that you need to start thinking about getting your mechanisms in place to buy gold and silver, because we’re coming into a major long term buying opportunity. I’m not sure that I’m going to be able to pinpoint it. I said from the beginning that gold should go under $200 an ounce before the bear market is over. I think that last drop could be in tandem with a last rally in the Dow, or it could be the first part of the bear market deflation when people sell every asset, even their best ones, in order to cover debts and try to stay alive.  I’m not sure quite how this will play out, but I do know that we are probably between three weeks and two years of the greatest buying opportunity for gold -- maybe ever.

MONEYCHANGER Do you still see gold dropping to the $200 level?

Yes, but I’m also trailing a buy stop.  If it goes high enough I’m going to say, that was it, I missed it; get in.  I’m also not against people beginning to buy it already.  Silver is just above $4.00 now.  I think it could go as low as $3.00, but don’t forget, it once was $50, so $4.00 is cheap.

MONEYCHANGER I know, I rode it all the way down, earning a lot of brutal experience.

PRECHTER  Compared to where it’s going, I don’t care if it does go down to $3.00.  You should own physical, begin to accumulate physical, and every time the central banks and the scared people and the people in debt sell gold and silver, buy some.

MONEYCHANGER You said $3.00 on silver.  That’s very interesting because we’ve got two bottoms in 1991 and 1993 at $3.50.  So if it broke through $3.50 . . .

PRECHTER That would crystallise psychology on the bearish side, which is your opportunity to buy.

MONEYCHANGER What about silver relative to gold?  If you had a chart 45 feet long where each foot represented a century, only in the last 15 inches would the ratio ever rise above 16:1.  I think that has something to do with the physical ratio, and for the rest I just have to call it mysterious.  Do you think that silver will outperform gold?

PRECHTER  I have no idea.  I wish I could answer that for you.  I can’t.  I think you should have some of both.

There is some industrial use for silver, and some people say that’s dropping because of digital photography, but who knows what‘ll be invented tomorrow? That’s part of the mix.  For many years and in many cultures, silver was more prized than gold.  That could return, but I don’t think I can predict that.

What I can predict is the dollar’s collapse, so you need to buy something real that will hold its value while that happens.

MONEYCHANGER What about other safety measures?  If someone held stocks in an IRA or portfolio, real estate and so forth right now, what safety measures should one take?

I have always been reluctant to tell people to buy T-bills.  I understand rationally that US Government debt is theoretically the lowest risk debt instrument in the economy, but at the same time the US government has an unbroken record of stiffing its creditors. What can you do?

PRECHTER  I look at it from the standpoint of “Let’s try to be right with where we put our money.”  That’s why for all these years I’ve been bearish on gold, because it’s a bear market formation. We completed a bull market in January 1980.  You have to be practical, I don’t want to own it even though I’m a 100% believer in free market money and hard money as opposed to fiat money or government-controlled money.  We still were in a bear market, so why would you want to own it? 

I feel that we can apply the same thought to Treasury bills.  Right now, treasury bills are okay.  When the government defaults, which it will, that’s the last thing it will default on.  Also, as interest rates ultimately rise during the panic, everybody who thinks they’re pretty smart investing in Argentinean bonds and Russian paper and all that pure garbage will realise, “Oh, gosh, we need to buy something else.” I think the money will flow in to what’s perceived as a stronger instrument for a while, but even in Tidal Wave I said that ultimately treasury bills will go.  So you have to be practical there, too, and get out at the right time or before the right time.  The next step is, where do you go from there?  I would say that’s the point at which gold and silver will either start going up or begin accelerating the uptrend that is already underway. 

MONEYCHANGER So there’s no strategy of stability that you can adopt forever.  You’ll have to be nimble enough to see the big changes coming, and make changes accordingly.

PRECHTER  It depends on how much you are willing to pay for the stability.  Today, if you were to buy gold and silver, willing to see the dollar value of those things drop another 30 to 50% before they rise who knows how much, then I would say, that’s the price you’re willing to pay for stability.  There are other options.  Swiss cantonal bonds, for instance, are a lot of trouble to buy and they’re probably pretty safe, since you avoid betting on the US government.  I don’t think the Swiss cantons are suddenly going to elect a politician who won’t pay you off, while in the United States, it could happen in the next presidential election.  There are alternatives; they just tend to be a lot of trouble and most people won’t take them.

MONEYCHANGER  I see US government debt as a two-fold risk: currency risk, and political risk.

PRECHTER  Absolutely.  Remember when they closed the gold window? Suddenly all kinds of value went out that closed window!  Here’s my political concern.  I think that the financial collapse -- but not the economic collapse -- will be complete by the next presidential election.  Every time the market has collapsed into an election, the incumbent is thrown out in a landslide.  Historically, the replacement at that degree has behaved as an authoritarian, our two examples being Lincoln and Roosevelt. I think they odds are that we will get a really serious authoritarian as our next president.  If that’s true, the administration won’t care about the average person, so who knows what might surface as a “save-the-country” measure?

MONEYCHANGER Not an Al Gore but a Hillary Clinton.

PRECHTER  Exactly.  In fact, if I were going to predict specifics, I think that’s whom we’ll end up with, and we’ll have our own Eva Peron.

MONEYCHANGER Well, that’s certainly a cheerful outlook!  [laughing]

I already suspected something like that, but I consider myself an extreme thinker, because I tend to take things to their logical extreme without putting on the brakes and recalling that society is more unpredictable than that.  Things tend to get damped down as they unfold.  When I hear other people whom I consider to be fairly reflective ask those questions, however, it sends a little thrill of fear down my spine. 

PRECHTER  You have to ask those questions.  The people whose lives were the most thoroughly destroyed in history were those who didn’t get out of the way of domestic implosions.  Whether you lived in Germany in the 1930s or Cambodia in the 1970s, the right thing to do early on was to get out of Dodge. 

MONEYCHANGER Are copies of At the Crest of the Wave still available?

PRECHTER Sure, they can order them off the website, www.elliottwave.com, and they can just click on “Store” and then “Books.”

MONEYCHANGER Thanks, Bob, very much for your time and courtesy.

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