The Denial Phase

Are we going into a depression? Are these the signs?

The denial phase is kind of like the calm before the storm. It’s quite possible we could skip the return to normal in some markets that were “insanely overvalued” like Toronto and Vancouver.

Look at Pheonix for example it’s hard to even see it but prices rebounded in the first year of declines. I hate it when people say “this time is different” however it factually is. The rate of tightening has been at a record pace this time.

Is this a sign it’s done? This is really depressionary level stuff. People cannot afford basics like food and energy in Canada during 2022. Is this a sign though that the bubble has been pushed to the limit?

Think about it and look at the above chart. Using the ShadowStats Alternate based on the 1980s CPI in the US inflation has been running around 10% for the past 10 years plus. That means the abysmal wage growth of 2%-3% per year has been 7-8% negative in real terms.

Over time that compounds and eventually you get a surge in inflation which we can clearly see and then what? It pushes people so far beyond what they cannot afford. They can’t meet their payment obligations anymore. They can’t afford basics like food.

Is this a sign we are in a depression or heading into one? What happens if the government inflates next year? Could that be the snowflake that starts the avalanche?

As we all know government stimulus has major unintended consequences like inflation which destroys the receipts of the stimulus even more and they are already broke. Enter depression

I will end with optimism. So many millionaires were created during the great depression. Many of those people were people who were careful and cautious during the roaring 20s or in our case as there is so much debt now the roaring 2021.

Thanks for all your support and for subscribing to this blog. I will post every now and then when I have time to write down my thoughts.

Take care and goodnight.

Luke