BY SHONDELL SABAD, SENIOR STRATEGIC ADVISOR AT THE ALBERTA ENTERPRISE GROUP

In 2009, economists Carmen Reinhart and Kenneth Rogoff published This Time Is Different, a sweeping study of 800 years of financial crises.  Their central insight?  When governments believe they can defy economic gravity, the results are always the same.  The crisis may look different, but the outcomes are not.

The warning signs of a pending crisis are flashing here at home:

• Canada’s debt-to-GDP has now surpassed 106%, with IMF forecasts pushing it past 112% by 2025
• GDP per capita is falling, meaning individual Canadians are getting poorer
• Productivity is stagnating, despite massive government spending
• And all of this is occurring while interest payments and deficits continue to climb

These are not just data points, they are red flags.  Reinhart and Rogoff’s work shows that crossing the 90% debt-to-GDP threshold consistently leads to slower growth, inflation, and painful corrections.  And yet, we keep spending, believing this time is different.  History is clear, this time will not be different. 

John Mauldin’s recent Thoughts from the Frontline echoes this: governments are not the solution, they are the problem.  Intervention, distortion, and overreach are compounding the risks.

So, what’s the answer?

It’s not more stimulus.  It’s not more bureaucracy.  The answer is getting back to work.  Supporting the thousands of entrepreneurs and business owners who generate value.  Who hire people, train apprentices, build products, export services, and invest in communities.  At AEG, we know real prosperity is built from the ground up, not printed, borrowed, or subsidized.  Prosperity starts with action. Join the business leaders who are shaping Alberta’s future – Become A Member – Alberta Enterprise Group.

This time will only be different if we act differently.  To dig deeper see these references:

This Time Is Different – Reinhart & Rogoff – This Time Is Different: Eight Centuries Of Financial Folly Book By Carmen M Reinhart,kenneth S Rogoff, (Paperback) | Indigo
John Mauldin – Thoughts from the Frontline – Read Mauldin’s full article here.