What I do know with certainty, as an economist. is that we have an output gap of
5.5% of GDP, or the equivalent of $750 billion of excess supply, whether that be
in the retail space. housing, credit or idle labour resources. This is why overall
inflation is so low and a primary reason why risk-free rates are as low as they
are. We may have had tremendous fiscal and monetary stimulus in the system.
but it is bumped against these lingering headwinds from home price deflation
and the ongoing destruction of bad mortgage debt as this deleveraging cycle, it
would seem to me, is perhaps only 40% done and that means another three or
four years of very sluggish growth.