Canada Household Credit from February 1982 to February 2024 has witnessed fluctuations akin to the ebb and flow of a monetary tide. However, one notable trend emerged throughout this extensive timeline: a persistent weakness in credit growth. Despite various economic cycles and policy interventions, credit expansion within Canadian households has remained tepid, failing to surge to the levels economists and policymakers anticipate.

What is the Monetary Wave?

The Monetary Wave, often associated with Kondratieff’s theories, describes a cycle where the cost of borrowing money decreases, creating a false sense of wealth accumulation. This apparent wealth isn’t generated from productive investments but rather from inflation and the availability of cheap credit. However, this situation is unsustainable. Eventually, the inflationary phase shifts to deflationary, leading to a debt-deflation scenario where the previously accumulated wealth diminishes rapidly. This cycle often culminates in a banking crisis.