ddsmd,

You make some interesting points about the robustness of the US economy and the timing of stock market recovery versus the general economy.

But I think you missed something in the paragraph I copied and pasted below. When you have higher cost for food, oil and gas, etc. and reduced purchasing power, that is the definition of inflation. Yes, house prices may decline in the short term - in the US at least if only because house prices there have been higher than in Canada (in part because you can deduct your mortgage interest costs on your income tax) - but it will still cost more to replace your plumbing or wiring simply because copper costs much more. This principle will apply to all the materials in your house, or car, or ...

Stagflation - cost of materials increases but the economy remains stagnant and real wages do not increase.

Best regards,

" It appears we will probably have more of a deflation than inflation-->this has already started with the reduced purchasing power of the US dollar = higher cost for food, oil and gas and a significant rise in the value of metals-->which will tend to raise the value of the minerals that determine what our stocks are worth. Your house may not loose a lot of its dollar value but the amount of gold, platinum or Rhodium the equity your home can buy will/is going down significantly!"