Insolvencies Tell the Tale

Households, Businesses Succumb to Debt amid Inflation

This is Chapter 1 of Financial Sovereignty for Canadians: Untether Yourself from the Ottawa Leviathan.

What cannot happen will not happen. If incomes and profits are stagnant or declining while taxes, prices, and interest rates rise, people will fail to pay their debts—as do 123,000 Canadians every year. The long-term build up of urban house prices made people financially vulnerable; then COVID-19 lockdowns ushered in record business and consumer insolvencies.

I sounded the alarm about Canadian indebtedness and insolvencies in early 2019, prior to COVID-19. Since then the situation has worsened dramatically. A quarter of Canadians fell behind on their bills during the COVID-19 spread, and one-fifth borrowed from family or friends.

The key message I would like to convey in this chapter is the severity of Canada’s self-inflicted economic rot, of which escalating debts and insolvencies are symptoms. Canada is overtaxed, under-housed, miseducated, and becoming unfriendly to investment. From inflation and deficits to investment and wages, everything that should be up is down, and everything that should be down is up.

The Wreckage in Numbers