A market crash similar to the infamous Black Monday crash in 1987 — in which stocks around the world plummeted, and the Dow Jones Industrial Complex fell by more than 500 points — could be in the United States’ future, financial historian John Steele Gordon warned.
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“It probably will [happen] at some point,” he told FOX Business’ Neil Cavuto on “Cavuto: Coast to Coast.” “That could be 20, 30, 50 years from now. But it will happen again.”
Crashes occur for different reasons, but a primary factor typically is when the markets rise too high and must correct itself — which causes investors to panic. Since President Donald Trump’s November election, the markets have hit 50 record closes. And on Wednesday, the Dow has been in place to close above 23,000 for the first time ever.
In part, the rise is because of Trump’s newly proposed tax reform plan, which he’s said would reduce taxes for middle-class Americans and cut the corporate tax rate by 15 percentage points, decreasing it from 35% to 20%.
“I think the tax cuts is a big factor in it,” he said. And if the GOP fails to deliver on its promise to pass tax cuts by 2018, the markets could be affected.
“You’re going to get a correction of some sort,” he said.