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Edward Dowd, a former Wall Street money manager and founding Partner of Phinance Technologies, predicts a severe financial crisis in the United States, potentially worse than the 2008 crash, with the most critical phase expected to unfold in 2025/2026.
In an interview last month, he warned of a deep recession triggered by a housing crisis that will lead to a huge financial shock in the next 6 to 12 months, with stock market crashes, job losses and bank failures likely to intensify.
A central theme in Dowd’s analysis is the impending failure of numerous banks, particularly smaller institutions, leading to a major consolidation where the majority of banking activity would be controlled by fewer large banks. This consolidation, he argues, would be a necessary precursor to the introduction of a central bank digital currency, which is a tool for unprecedented government control over financial transactions and people’s behaviour.
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Edward Dowd, a former BlackRock portfolio manager who oversaw a $14 billion growth equity fund for over a decade and co-author of the book ‘Cause Unknown: The Epidemic of Sudden Deaths in 2021 and 2022’, discusses the current state of the financial system, particularly the United States’ reliance on debt expansion and monetary interventions like quantitative easing (“QE”), and the potential consequences of this strategy.
Related: CBDCs are a solution for a problem we don’t have, and they want to implant it under our skin
The following are some highlights from his interview last month with Versan and Vandall Aljarrah, founders of Black Swan Capitalist.
Table of Contents
- Debt-Refinancing Cycles and Illegal Immigration
- Housing Crisis and Global Economic Slowdown
- Housing Crisis Combined With Stock Market Bubble Bursting
- Central Banks, Gold and Digital Currencies
- Tokenisation of Gold and Other Assets
- Crypto Markets
- Federal Reserve's Actions
- Banking Sector Consolidation
- Central Bank Digital Currencies
Debt-Refinancing Cycles and Illegal Immigration
As podcast co-host Versan Aljarrah said, the dollar’s status as a reserve currency is being questioned in the US and globally, and there is speculation about whether the current situation is an intentional strategy to inflate the dollar to the point of collapse as a means of resetting the system.
According to Ed Dowd, the dollar is subject to long cycles; Tim Wood, the “Cyclesman,” has identified a four-year cycle. Based on Wood’s research, the downturn out of this sixth economic cycle is now lined up to correspond with the bursting of the largest economic bubble in history. As long as the dollar stays above the last four-year low of 89.10, the bullish long-term trend remains intact long term. At the time of the interview, the price was around 97. For the current price, see Stock Charts HERE.
“[The US dollar is] the cleanest shirt in a dirty laundry,” Dowd said. There is approximately $17 to 18 trillion in dollar-denominated debt in other countries, both sovereign and through corporates, making it difficult for them to get off the dollar without experiencing a deflationary depression. So, while we’re witnessing the dollar’s demise, it’s not imminent, he said.
The death of the dollar is a slow process and cyclical forces may eventually go against the Trump administration’s preference for a weak dollar, with a fast-rising dollar often indicating a contracting global credit system and credit destruction.
Podcast co-host Vandell Aljarrah noted that, historically, charts show an interesting correlation between the US dollar and Bitcoin. There has been a direct inverse correlation between the dollar bottoming and Bitcoin peaking.
The debt-refinance cycle has been occurring every three to five years, Vandell said. But since 2009, every four years on average, there has been a notable pattern of the dollar weakening and Bitcoin peaking around the same time, showing a tight inverse correlation.
Related: The Bitcoin-Dollar system: The fast-approaching digital financial system
When Dowd was asked his thoughts on the debt-refinancing cycle that’s been happening since 2009, he explained that a synchronised global slowdown occurred in 2019 accompanied by a repurchase agreements (“repo”) crisis. Repos are overnight lending between the banks and the Federal Reserve. The repo crisis led to central banks and governments increasing spending.
“Then, lo and behold, covid magically came along, and this crisis allowed and gave central banks and governments license to spend like drunken sailors,” he said. So, the Federal Reserve printed money and the US government spent it, resulting in actual inflation for the first time since 2009. Before 2009, inflation was asset inflation, the sustained increase in the prices of financial and real assets, such as stocks, bonds, real estate and land.
Related:
- Lockdown wasn’t imposed to protect the world from a new virus but because the real economy had to be shut down
- ‘The Great Taking’ on The Exposé
- Professor Richard Werner: Banks make money out of nothing!
The inflation, combined with the Federal Reserve’s unprecedented monetary hike cycle, led to a situation where another acceleration of government spending was needed, which was provided by the Biden Administration through increased deficit spending. Dowd believes a large part of the Biden Administration’s spending was due to logistical operations related to illegal immigration.
“I believe, and it’s starting to come out, that a lot of that spend was on the purposeful logistical operation of bringing in 20 million people into the US which did affect the economy,” he said.
Dowd believes that large-scale illegal immigration has introduced a new economic variable that affects the economy and makes traditional recession indicators less reliable. He said that his “recession call” in 2023 and 2024 was wrong because he was looking at the “normal economic cycle indicators that had always worked,” but digging a bit deeper, they found that mass illegal immigration was having a significant impact on the economy.
Related:
- Next Crisis to Trigger Massive Banking Sector Consolidation, 8 Banks to Call All the Shots – Ed Dowd, Kitco News, 23 September 2024
- Huge Financial Shock Inevitable & Hitting Now – Ed Dowd, USA Watchdog, 11 May 2024
Housing Crisis and Global Economic Slowdown
“[The immigration] trend is reversing, and it’s going to have an impact on the economy,” Dowd said. For example, “illegal immigration was holding up housing. Housing started to roll in 2022, but prices didn’t come down because rents were elevated. That’s all going away.”
The housing market, which was supported by elevated rents due to mass illegal immigration, is causing a slow-rolling crisis, with leading indicators already showing a decline. This crisis will eventually affect the stock markets, construction activity and lead to layoffs. That’ll be “coming in the next 6 to 12 months,” Dowd said, calling it a “deep recession.”
The deep recession Dowd speaks of is characterised by a housing crisis. This trend is not limited to the US but is being observed globally, with countries like Japan and the UK experiencing similar declines in their housing markets. The global real estate market is starting to show signs of a synchronised decline, with the stock markets and companies related to homebuilding not performing well, Dowd said.
“In the last month, we’re really seeing a synchronisation. Japan had bad numbers in housing this month, the UK and the US. So, it seems like it’s global and it’s synchronised at the moment,” he said. Yet, he noted, this situation is not being widely reported in corporate media, “nor will it be until it starts to affect the hard data and the stock markets finally give up the ghost.”
Related:
- “No Way To Avoid Pain Of Worldwide Recession” – Ed Dowd Warns Of “Perfect Storm For Trump Admin”, ZeroHedge, 10 February 2025
- Danger of deep worldwide recession in 2025, Phinance Technologies, 1 January 2025
Housing Crisis Combined With Stock Market Bubble Bursting
In addition to the housing market, the stock for home building companies is expected to take a hit. “I think we’re going to see new lows in the home builders over the next couple of months, which will be a leading indicator for housing,” Dowd said, with stock losses of between 30% and 50%, similar to the declines in stock prices as seen in the dot-com (or dotcom) bubble.
The current stock valuations are at record levels, similar to the dot-com bubble in 2000. Comparing current levels of S&P dividend yields with bonds, the 10-year projected return on equities is not good. “If you put all your money into stocks right here, right now, your 10-year forward returns are abysmal,” Dowd warned.
The stock market is driven by “big-cap” technology stocks, such as semiconductor company Nvidia, a $4 trillion company. “Big-cap,” “large cap” or “large market capitalisation” refers to publicly traded companies with a market capitalisation of $10 billion or more.
“So, we have unfortunately … a housing crisis coming – and again, we don’t know how deep it’s going to be. It could be moderate, could be shallow, could be severe, but it’s going to happen. And then you have a tech bubble/stock bubble. So, you could have a stock bubble bursting and a housing crisis. So, think of like 2000 [dot-com bubble] and 2008 [Great Financial Crisis] combined,” Dowd said.
Noting factors that might affect how bad the coming recession will be, Dowd said the consumer is not as leveraged as they were in the 2008 housing crisis, the potential effects on the banking system are still unknown and the Federal Reserve and fiscal responses will be important in determining the outcome.
“What would stocks do? Anywhere between third at 30% and 50%. The last two big recessions we had were the dot-com bubble recession – stocks went down 50% over a two-year time frame according to the indices – and in the Great Financial Crisis, we went down 50%. So, I’d say anywhere between 30 and 50%. You’ll get a Federal Reserve response and a fiscal response, and then we have to see from there what’s going to happen,” Dowd explained.
Related:
- Central banker tells his nephew: We control the press and the politicians
- Mark-to-market: A BIS scheme that helped to set up the 2008 Global Financial Crisis
- James Rickards: When the next financial crisis hits the elites are planning to freeze the financial system, worldwide
Central Banks, Gold and Digital Currencies
Versan mentioned that central banks are accumulating physical gold and promoting a digital future, which seems contradictory and may be a way to distract from the underlying issues in the market. The illusion of a stable market cannot continue indefinitely, and the suppression of gold prices may not be sustainable in the long term. “How long can this illusion go on?” he asked Dowd.
Gold is expected to increase in value long-term, despite potential short-term pullbacks, Dowd responded. Investors should view any downturn as a buying opportunity, rather than selling their gold or using excessive leverage in gold futures. “Long-term gold is going higher … because there’s this focus on digital currencies,” he said.
The classification of gold as a Tier 1 capital asset at banks, which came into effect in the US in July, allows banks to lend against physical gold and central banks have been quietly accumulating gold ahead of this change.
Related: What Do They Mean When They Say Gold Is a Tier 1 Asset? Metals Edge,
“In the 1970s, when we went off the gold standard, they made it a commodity. So, they’re kind of remonetising gold,” he explained. Central banks are accumulating gold and some states, such as Texas, are legalising gold and silver as legal tender.
Note from The Exposé: The United States stopped using the gold standard in stages. The process began in 1933 when President Franklin D. Roosevelt suspended the gold standard for domestic transactions, prohibiting the private ownership of gold and halting the convertibility of currency into gold.
While domestic transactions were no longer backed by gold after 1933, the international monetary system continued under the Bretton Woods Agreement, established in 1944.
The gold standard was finally and completely abandoned on 15 August 1971, when President Richard Nixon announced that the United States would no longer redeem dollars for gold, a move known as the “Nixon Shock.” This action ended the Bretton Woods system and marked the definitive end of the gold standard for US currency. Since then, the US dollar has operated as a fiat currency, backed by government authority rather than a physical commodity.
No country currently uses a gold standard to back its currency.
Related:
- Catherine Austin Fitts: While the central bankers are building the control grid, they are also preparing for a near-extinction event to save themselves
- Is the “paper gold” scam the reason why Trump and Musk’s audit of US gold reserves was cancelled?
- Did the Bilderberg Group orchestrate the 1973 oil crisis?
Tokenisation of Gold and Other Assets
Distributed ledger technologies (“DLTs”) are digital systems for recording transactions and other data across multiple locations, institutions or nodes simultaneously, without a central administrator or single point of failure. They are gaining traction and may play a critical role in cross-border financial transactions.
Central banks and financial institutions worldwide are actively exploring and testing DLTs to improve cross-border payments and settlement. Is there a strategic plan to bridge physical assets like gold with digital networks? Yes, Dowd said, “there’s a lot of talk of tokenisation and there are people trying to tokenise gold and other assets and it’s going to be interesting to see how that works. The term ‘smart contracts’, what have you.”
Dowd has spoken to people in the business who have confirmed that they’re trying to start the tokenisation of assets and smart contracts in the gold market. However, “what they’re saying is no one wants to do it because they like doing business the way that they’re doing business, because tokenisation will take out a lot of middlemen, and the middlemen are not happy about being taken out. So, it’s a slow process. I don’t think it’s going to happen overnight, but it’s beginning.”
Crypto Markets
Vandell feels the crypto market is like “the wild west,” with 99% of cryptocurrencies and cryptocurrency companies expected to go to zero value, while a handful of companies with real-world use cases, utility and solutions to trillion-dollar issues will emerge.
He believes the crypto market is designed to give people the illusion of decentralised finance, while actually being a centralised system tied to the blockchain. Some stablecoins like XRP and XLM have been mentioned in documents by the Bank for International Settlements and the World Bank Group, Vandell noted.
There’s a correlation between the dollar and cryptocurrencies, and a correlation between Bitcoin and the NASDAQ, Dowd said. Cryptocurrencies tend not to do well when the dollar goes up, and so most will go to zero.
Meme coins seem to be a rigged system, Dowd said. “If I was buying a meme coin once it’s offered to me, I’m pretty sure I’ll lose money if I hold it for any length of time.” Like cryptocurrencies, Dowd believes most meme coins are expected to go to zero value.
Related:
- Cryptocurrencies are playing key roles in the development of CBDCs
- Trump’s banning of CBDCs is a moot point; Americans already live under a CBDC system
- Stablecoin surge: Here’s why reserve-backed cryptocurrencies are on the rise, World Economic Forum, 21 July 2025
Federal Reserve’s Actions
The Federal Reserve’s decision to keep interest rates steady, while other central banks are lowering theirs, may be doing a disservice to the US economy, as real interest rates of 2% can exacerbate economic slowdown and monetary contraction.
Dowd thinks the Federal Reserve is relying on flawed labour market data, such as non-farm payroll numbers, which economists like Dr. Lacy Hunt and Daniel Di Martino believe are incorrect by over a million jobs.
Related: Dr. Lacy Hunt on what the huge downward revision in the jobs data means for the economy, The Julia Le Roche Show, 27 August 2024
When the economic downturn occurs, it will happen quickly. The combination of the incorrect non-farm labour data and the Federal Reserve’s current stance on interest rates could lead to a rapid decline in the market when the truth about the economy becomes apparent, catching many investors off guard. It’s going to cause everyone to have an “aha moment” and they’ll have to adjust their investment portfolios, all selling stocks at the same time, Dowd said. “So, this could be phenomenally fast and dangerous.”
Banking Sector Consolidation
Sudden and rapid selling off of stock has the potential of a ripple effect in the banking sector, causing a crisis that could lead to banking consolidations. People may have forgotten that there was a close call in 2023. The unprecedented deficit spending and the Federal Reserve intervention with its Bank Term Funding Programme (“BTFP”) prevented a banking crisis in 2023, Dowd said.
In 2023, BTFP offered loans with maturities of up to one year to eligible banks, savings associations, credit unions and other depository institutions. Loans could be repaid without penalty before maturity. This prevented a banking crisis,
“These banks, over the previous 14 years before the rate hikes, were buying very low-yielding treasuries and corporate credit. With the interest rate hikes, they lost money on paper. That started a bank run in March of 2023. Silicon Valley Bank went away, a couple others just disappeared overnight. So, the Federal Reserve put the finger in the dyke and stopped that,” Dowd said.
Related: Was the looming global financial crisis, the meltdown of the current financial system, predictable?
However, the current situation differs from the one in 2023. We’re at the part of the cycle when credit is going in the wrong direction and the Federal Reserve is unlikely to lend against bad credit.
“We got commercial real estate, we’ve got housing loans that are going to start to sour, and then we have this other private credit debacle because the banks … they’re ones backing a lot of the private credit loans, they give these firms loans to then go make loans,” he explained. And “there’s been a lot of Ponzi finance in the private credit markets … another shadow banking phenomenon.”
Shadow banking refers to financial activities that perform functions similar to traditional banking, such as lending and credit provision, but occur outside the regulated banking sector. These activities are often conducted by non-bank financial institutions and are sometimes called non-bank financial intermediation or market-based finance. According to Forbes, the 2008 financial crisis was triggered by a run on the shadow banking system.
Although it’s hard to predict what how the Federal Reserve would respond and what would happen as a result, we could see regional bank consolidation, with big banks getting bigger as the Federal Reserve forces mergers, as they did during the 2008 financial crisis, and this could pave the way for the introduction of a central bank digital currency.
“If you want to introduce a central bank digital currency, it’s much easier to do when there are fewer banks,” Dowd said. “We’re not calling for a systemic crisis [like in 2008], but bank stocks won’t do well. There’ll be a scare. And if there is a systemic crisis, well, Katy bar the door because last time the central banks were the backstop. Who’s going to backstop central banks if there’s a systemic crisis?”
Central Bank Digital Currencies
137 countries and currency unions, representing 98% of global GDP, are exploring a central bank digital currency (“CBDC”). Some have made progress in setting up the necessary infrastructure, including the use of blockchain technology.
“In an economic crisis, which we believe will be global, there’ll be a lot of fear, a lot of panic, and that’s the idea, and then you have bank consolidation. That would be the time to roll [CBDCs] out,” Dowd said.
The Bank for International Settlements and the International Monetary Fund have been clear and spoken about their vision for a CBDC. They have been preparing for its implementation for a long time.
A CBDC would give bankers control over the velocity of money, allowing them to dictate how quickly money is spent, and this level of control is a key aspect of their vision for the monetary system. The potential for a CBDC to control people’s behaviour, such as imposing quotas on meat consumption to mitigate “climate change,” is a concerning aspect and highlights the potential for abuse of power.
Related:
- The Smart Money Nightmare: What Life Without Cash Could Mean for You
- IMF publishes multi-year plan to implement CBDCs; it may spell the end of our financial freedom and autonomy
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