In the final installment of this three-part series, Darryl Lyons, CEO & Co-Founder of PAX Financial Group, takes a deeper look at the widely discussed predictions of a potential market downturn in 2030. Rather than leaning into fear, headlines, or doomsday forecasts, Darryl breaks down the four major forces that many believe could collide: government spending, inflation, demographic shifts, and a potential AI bubble.
Darryl also discusses the “Chicken Little” voices that have been calling for market catastrophe for decades, spotlighting the dangers of linear thinking, pessimistic modeling, and predictions that ignore innovation, human behavior, and historical resilience. With a practical and level-headed approach, he discusses why long-term investors often benefit from focusing less on fear and more on building durable plans designed to navigate uncertainty.
In this episode, Darryl covers:
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The four “cars in the intersection” that fuel 2030 crash predictions.
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Why pessimists are rarely held accountable for bad forecasts.
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How linear thinking skews market narratives.
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The potential risks behind government spending and demographics.
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Why AI could be transformative – even if parts of it become a bubble.
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Five practical steps for navigating uncertainty.
If you missed Parts I and II, be sure to go back and listen so you can follow the full conversation from start to finish.
Listen to more episodes here: https://PAXFinancialGroup.com/podcasts
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Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. This is a show where we really want you to stay grounded with your finances and to live generously and to make wise choices on your journey. I’m your host. Remember, this information is general in nature. It’s not intended to provide specific investment, tax, or legal advice.
Visit PAXFinancialGroup.com for more information. This is part three of a series. So, I am concluding a conversation that we had the previous two episodes. So, if you haven’t heard those, go back and listen. But I want to talk about the 2030 stock market crash that is predicted by many. And this is in many ways I’m paraphrasing, this is a collision that would occur at the four way intersection of government spending being out of control, inflation not being handled appropriately, the demographic trends in an aging population, and the artificial intelligence bubble bursting and basically all these lanes, we’ll say they’re cars in different lanes are at some point going to crash into each other.
And there might be a triggering event. And let’s just take this analogy one step further that might cause the stoplight to go out. We call those black swan events. In this last piece, I want to talk about how there is potential that this could, I was in Europe recently, and they had these roundabouts where they’re not, you know, four way lights.
They’re just these, you know, you’ve seen them where you just kind of merge in and out. And I’m in Eastern Europe and we’re going through these things, and I swear we’re going to hit people. But somehow everyone kind of figures out how to weave in and out of each other, and it’s orderly, but it feels kind of scary.
That’s kind of how I feel and my hope. And I don’t want to talk just about hope, but I want to talk about substantive content. But my hope is that we navigate through these things more like a roundabout in Europe versus a traffic light that goes out because of some black swan event, but rather than, you know, just leaning on hope, let’s kind of go into this a little bit more.
I think what I want to do. And if you could grant me this, it’s easy to be a critic and I think if you are a Christian, you should have you should have your skills refined through apologetics on being able to navigate some of these things, a little bit easier. I feel like, not my skills that I’ve developed the skills, but I’ve, you know, engaged enough apologetics conversations to defend my faith enough that me being able to navigate some of these challenging conversations with, you know, people with a lot of convictions, I think I’ve been able to refine my skills.
And I still have a long way to go, trust me. But one of the things I want to talk about is just being a critic. And it’s easy for me to be a critic of people that have you know, these pessimistic points of view. And so, I want you to grant me an opportunity to be a critic just for a second, because there’s some flaws in these Chicken Littles.
Let me give you Glenn Beck as an example. He posted warnings. It said the stock market is going to drop fast. That’s his quote. And in 2009, he said he would not invest in stocks, and he would invest in gold instead. That was 2009. No consequences for people who followed his advice either.
And the consequences were material. We had very much a bull market since 2009, 2020 with Covid was a challenging and scary one, but if you did invest in 2009, you would have done very well. Nobody is holding Glenn Beck accountable for that rhetoric. And by the way, I don’t know if you noticed, but he has a lot of gold commercials.
So, I think we have to just recognize that there’s a conflict there. What about Harry Dent? A lot of people don’t know him. But I studied him for a long time, and I actually, this was early in my, I’d say early in my career, but maybe 2007, so maybe eight years into my career, Harry Dent, Harry S. Dent, he wrote many, many books.
You can find them – The Next Great Bubble Boom, The Great Crash Ahead, The Great Depression Ahead. I mean, he’s just waiting. He’s waiting for something to happen. Amazing research on demographic trends, business cycles, consumer purchasing power. And he will get it right eventually. The Chicken Little gets it right. One time. Meredith Whitney, I talked about her on my first podcast.
A lot of people don’t know her, but she’s a bank analyst who warned us about the bond bubble bursting and she predicted, in 2010, a crash in municipal bond defaults that absolutely never came. And Robert Kiyosaki, somebody else that talks a lot about this, published in 2014, he published A Rich Dad’s Prophecy, The Biggest Stock Market Crash in History.
Now I’m laughing because he’s like, it’s just a matter of time. It’s coming. They’re never wrong. It’s just they’re early, there’s new information, it’s coming. And so I just want to point this out because. It is laughable in a lot of ways, not only the conflicts that exist, but just like they continue to do this and without any accountability, of course.
But a lot of times what they’re doing is something called, they’re thinking these are, by the way, these are smart people, many of them much smarter than me. And the research is impeccable. But many of them, one of the problems, not all the problems. One of the problems is linear thinking. Linear thinking is a way of thinking that you like, think about things in a step by step, sequential approach to reasoning.
It assumes that things move in a straight line, cause, effect, result. And as a financial advisor, I wish things work that way as I model out people’s lives and look and see if they run out of money or not. I know since I’ve been 18, my life hasn’t been linear, not in terms of my income or my health or my family.
You know, nothing’s been linear, nothing’s been generally predictable. And if your life hasn’t been linear and predictable, then you can imagine that society as a whole hasn’t been linear and predictable. Let me give you an example of how this might look. In 1970, there are 150 people that were Elvis impersonators. That was in 1970.
150 people were Elvis impersonators. In 1980, there were 2000 Elvis impersonators. So, at that growth rate, at that linear growth rate, by 2030, one out of ten people in the world will be Elvis impersonators. That’s linear thinking. Now, that’s a silly example, but it looks at population growth trends and inflation trends and government spending. And it just forecasts what these look like.
And then oftentimes it will rely on, here’s the other thing that it does. In some of these Chicken Little modeling, it’ll anchor to Rome. The Great Depression, I mentioned that earlier. And then I think oftentimes it says like, how can I fit because you’re so biased, like these, these Chicken littles are so biased that they’re like, how can I fit this linear modeling into Rome and depression to substantiate what I’m doing?
And of course, the biases are real. You know, there was one the other day that I really got. This was a couple years ago. I got completely angry. I lost it because he was saying all these half-truths and because I know the markets, generally speaking, and I know the, you know, what’s right and wrong, what’s half-truths.
And then he was selling these trading platforms to really good people, to make them rich. And talking about, you know, the market crashing and taking it was just nonsense. So, you see, you have to look for these biases, and you have to recognize that they always use linear thinking. And then you have to see that they substantiated with history.
That’s kind of the game plan for these Chicken Littles. But I will say, I think it’s important to say that the threats are real. This intersection is legit. Let’s talk about the first car in the intersection. That’s government spending. This is definitely a problem. We won’t stop spinning. We tried the DOGE thing. Like we’re going to, scoot up a bit here.
We tried the DOGE thing where we were going to reduce spending. I think the jury’s still out whether or not that had any material impact on the spending. I’ve said it before, and I said it again. The only way you really impact spending is touching Social Security and Medicare. That’s the big one. But here’s how I think about the debt issue.
So, when I was starting PAX, generally speaking, I was, this was pre-Dave Ramsey. So, I had $50,000 in credit card and I had my income was $50,000. So, it was really hard to be a financial advisor during that time because that’s like being a shop teacher with no fingers. And so, I was completely broke.
So here I am with this credit card debt. Do I just like, keep screaming and say I’m going to pay down more? No. My solution was to make more money. That was my only real solution. Yes, but I had to stop the spending, of course. And so my hope is, is that we at least stop the spending or, you know, get it kind of leveled off, which so far seems to be the case.
Again, we don’t know exactly in this new administration. It seems to be the case that spending is leveled up, leveled off. But the reality is we just have to make more money. So, one of the ways that this administration is trying to make more money is through tariffs. And that’s one way. And one of the things I want to point out is you might say, well, tariffs are going to impact all of us and like really mess with the economy.
Let me make sure I put in perspective. And I don’t know if these numbers are generally true. But just as an example you have $100 pair of shoes that you buy, whatever, you know, whatever kind of shoes, let’s say Nike. I don’t know if anybody buys Nike. If you have, it doesn’t matter. Hundred-dollar shoes.
What’s the cost of those shoes? Let’s say, I’m going to make this up. Let’s say it’s $20. So, the import tax is going to be, I say import tax. The tariff is going to be on that $20, cost of goods sold. So, a $2 tariff on a $100 shoe. What will happen is these business owners will absorb a dollar and then pass on a dollar to the end user.
So now our shoes will cost $101, spread out of the economy overall, I don’t, at least at this time we’re not seeing how it is still a lot to be said. We’re still not seeing how it’s going to really damage the consumer in a lot of ways, I think it’s, we’re navigating it pretty well as an economy, but that’s revenue that’s coming in.
The problem is it’s not like a huge amount of revenue, but it is revenue. And so, I think that the idea is to grow the markets, grow, you know, let corporations thrive, let entrepreneurs start businesses, and you’ve got to make more money to get out of this thing. You stop spending and you’ve got to make more money.
And when you look at Robert Kiyosaki’s model, there’s no model in there that accounted for a boom in the economy. There’s no model that accounted for tariffs. And if you look at modeling in history, no one ever accounted for railroads or televisions or the internet. And so those types of things are inflection points that are very real.
And they do resolve a lot of problems if we level out the spending and we make more money and we put that money towards our debt, that’s our solution. That’s our only solution. There’s another one. I should say it’s austerity, which means really tightening the belt. And that’s, you know, that’s a solution that we don’t want to have to do.
But other countries have done it. Greece did it. And it’s a potential strategy. So, government spending is a problem. There are some solutions is what I’m trying to say, inflation. A lot of people, I get it. But we’ve kind of peaked out in inflation. I say that because we had almost 9% inflation over 12 months.
And inflation is not going away. I think if you look at a lot of the fed nerds, the nerds in the Federal Reserve, they have these regional banks, a lot of them are still concerned about inflation, rightfully so. But to think that inflation is the same as what we experienced in the 70s, it’s not in the 70s.
It’s oftentimes this is the commentary I’ll get from many of my friends. Hey, we have inflation problems, and this is the same language almost 90% of time. I remember interest rates in the 70s and 80s. Have you ever said that before? I remember what interest rates were like in the 70s and 80s. And in that concerning time in history is something that we’ve all anchor to.
I wasn’t alive, I mean, I was alive, but I wasn’t, in the 80s, I remember, but the 70s, I don’t. For example, peak mortgage rates actually were in 81. They were 18%. So, your mortgage was 18%. We’re not there. We’re not in that territory. And I would suggest to you that it doesn’t look like we’re getting there anytime soon.
In terms of peak inflation, it feels like we’re starting to get a handle on that. And I don’t think we can, I don’t think we can take what happened in the 70s and 80s and apply it to today, necessarily, because we’ve started to see us get a better handle on inflation. It’s not we’re not completely out of the woods, but we’re not 70s or 80s either.
So that I think that’s pretty much it. A lot of the, I would say this, a lot of the forecasters are saying that inflation is going to break our backs, and it feels like that’s not something that’s materializing. I don’t want to say it’s completely gone, but inflation is now under 3% and our interest rates are really low and there’s no sign of it going up.
Inflation going up to 10 or 15%. There’s no sign of interest rates and mortgages going up to 20%. So, until we see something different, I don’t think these inflation Chicken Littles have much reason to continue to substantiate that as the breaking point. The third car in the intersection are demographic trends. Really, this comes down to a dependency ratio, meaning we don’t have enough kids that can support the aging population.
And I say kids, young working adults because of demographic trends. And we may be too late. I think we are too late. But one of the ways to improve the dependency ratio is to make America healthy again. And we, you know, the chronic diseases are very real. There has been some, some technology that’s helped, you know, some of the weight loss drugs have helped a little bit.
They really have, believe it or not, some of these, if you look at the fast-food numbers, they’re down considerably, but we still have chronic health issues. I think alcohol awareness has actually been better. So, of course, making America healthy again is important because the reality is the three big killers for our health care system are diabetes, Alzheimer’s and cancer.
Those are the three big ones in that order. And so, as people age, they start to have consequences from those three diseases. And there’s just not enough people to pay those bills. And immigration helps. But again, it has to be orderly immigration. Immigration of people that paint into a system and not participating does not help. And so, the thing about it is, I think we might actually start getting some good political.
See, part of it is we need people who are voting to start voting for some resolve here. And let me say with this, let me tell you what this means. The people that are going to pay the price for this imbalance are not the aging population, because nobody in their right mind is going to cut off grandma from health care, not politicians and not the kids.
What they will vote for. And they’re starting to the political, the youth are starting to vote now. We all know this. What they will vote for is a healthy country, which requires us to start increasing the taxes on Social Security. And that’s going to happen. We’re talking about increase in taxes on wages. Not only is there a cap on the amount that you pay for Social Security.
So, if you make over 176,000, you don’t pay into Social Security, that cap will be removed. The tax will go up from 12.4 to 12.6. They’ll probably increase the retirement ages. Again, if you have immigrants, you come over cool. But you have to pay into the system. All those things will be done and it has bipartisan support, but they’re not talking about it right now.
And that’ll probably be the next big talking point in the election because we have got to do it. But basically, the National Academy of Social Insurance conducted a survey of about 2000 Americans and said, hey, would you support a package that would make Social Security and Medicare healthy again? And all of them raise their hands. I say all of them.
About 75% of both parties said, yeah, we’re willing to do something there. So, I think there’s bipartisan support as long as there’s people who are voting that said, we want to make the country financially solvent. Then I think we’ve got something to work with there, and we can fix that dependency ratio.
The AI bubbles the fourth car in the intersection. I know I’m going long here, but thank you for bearing with me. Again, defining a bubble, defined by new innovation, easy money, and new investors that come in and that join the hype and have a bunch of FOMO. But I have got to tell you, artificial intelligence is very real.
It’s like electricity. And you imagine, like early adopters of electricity were like some people had a candle and some people had this weird stuff that you couldn’t describe. It was very strange. That’s what artificial intelligence looks like. Back when we had oil lamps and all of a sudden, we have lit rooms. It completely transforms industry and transportation and medicine.
It’s freaky. We don’t understand all about it. But, it doesn’t like, it doesn’t add to the world. It completely rebuilds it. And that’s what artificial intelligence is. It’s very, very real. As an example, Walmart can use this artificial intelligence to, you know, stock summer gear in, San Antonio at a different time than it would in Chicago, because the temperatures are different at different times.
And you right now, they might stock them, you know, generally close in time. Now they can stock them to the day and really make sure they’re maximizing inventory. So, I know they do some of that now. But now they’re going to be doing it very precisely because of artificial intelligence. I think a big one that you’re going to see is medicine is not going to be general in nature.
It’s going to be very specific for you. And so, you’re going to get treatments that you don’t have to guess as much, whether that’s vitamins or medicine. And you’re going to know exactly based on your DNA exactly what you need. And so, there’s bubbles that do exist in the marketplace. I mentioned one a long time ago called the Tulip Bubble.
That was when people were paying as much for tulips as they were houses. That’s not the case here. This is a real, real, viable but transformative opportunity, very much like the internet. So, a lot of people think like this AI bubble thing is like the internet. And in 99, the market crashed because we got too excited about this.
And there were a bunch of nonsense companies like Pets.com and Boo.com that were getting a ton of money that didn’t have a profitability. There’re some good ones, obviously, but, people were too excited and we’re there now, honestly. You know, there’s bubbleish traits. So, 99 was the market crashed. I guess 94 was when we started to get a lot of traction in this internet kind of craze.
A lot of people were like, every morning I hear CNBC say, we’re like 1996. There’s still more runway here for artificial intelligence, but everyone knows and we all know it’s, you know, there’s too much money going in. The prices are high, but there’s good companies. It’s not, it’s not tulips. There’re good companies transforming the world.
It’s happening in real time. And it’s affecting all types of industry because you need data centers. You need energy. We’re starting to see some booms in natural gas and nuclear. So really cool ancillary business opportunities. And I’ll say this, there’s Goldman Sachs chief global equity strategist Peter Oppenheimer said, unlike earlier episodes of bubbles, he argues today that the rally is supported by strong fundamentals, meaning that these companies have a lot of cash and they’re actually selling products.
So, it’s very likely that artificial intelligence has to take a breather at some point. So that means recession. Sure. That’s a cleansing out of nonsense, but it is good in the fact that there’s companies that are actually transforming our economy as we know it. So, in this intersection, again, sorry to be long winded. In this intersection that exist, I see it more of a roundabout where it’s pretty close calls, where there’s potential crashes that could exist because there are some things that are happening that just shouldn’t happen, whether it’s, you know, government overspending or byproducts of inflation from too much government spending or that dependency ratio being out of whack, or irrational exuberance and artificial intelligence, all of that is, there’s danger in there, there’s no doubt.
But I do believe that we’ll get through it. I want to reference in 1979, Businessweek, August 13th, 1979. Businessweek put out an article, and the headlines are actually the cover of the magazine said, the death of equities. And then it said how inflation is destroying our stock market.
If you invested $10,000 on August 13th, 1979, invested in the S&P 500, it’d be worth 2 million today. I think there’s consequences of being a pessimist. And we don’t ever think about that. To me, more people have lost money trying to time this, time the next crash than actually the crashes themselves. So, what do you do in general?
There’s five things you can do really quickly. First, look at your own personal plan and stress test it. There’s 500 different ways to stress test it. We do it for our clients all the time. You need to stress test things. Two you could hedge. There’s plenty of tools out there to hedge. I still think owning good companies over an extended period of time is the way to go.
But you could, you could definitely use structured products or even, you know, adding bonds to your portfolio may hedge, you know, there’s gold. There’re all kinds of ways to hedge your bets, for lack of a better word. Third, keep cash. Certainly, there’s no problem keeping cash on the sidelines, but I use it as an angel vulture.
So, an opportunity to buy stuff when other people are freaking out. Four, don’t try to time it. There’s no way to time it. Don’t think you’re special. I hate to just be direct, but there’s no way to time it. I’ve lost hundreds of thousands of dollars trying to time it, and I’ve tried and I’ve talked to people.
I’ve never seen it done well over an extended market cycle. And then finally, don’t be addicted to the news. The news is going to continue to tell you negative things. And so just don’t be an addict. And I think that’s just for your health and your sanity. So, thank you for listening to this. The three-part segment probably could have done a fourth and fifth, but I hope this helps.
Hope this puts things in perspective. And remember, if I had one more, I’d give you five pieces of advice, for navigating this stuff. But if I could give you one more, it’s remember, you think different when you think long term. Have a great day.
Resources:
The State of the Federal Budget: From Tariff Revenue to Deficits and DOGE Cuts – WSJ
What Will the World Look Like After the 2030s Great Depression?
Boom or bubble: How long can the AI investment craze last?
This Is How the AI Bubble Will Pop – Derek Thompson
How the Great Inflation of the 1970s Happened
Here’s What Experts Say It Will Take to Fix Social Security | The Motley Fool
The Collapse of Medicare Is Happening Faster Than Expected – The Winston Group
Goldman Sachs Strategist: No Stock Market Bubble, Yet | The WealthAdvisor
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