A dotted line there marked GFC. That’s August, which is when the crisis began. So the fall in-house prices and therefore the deceleration of mortgage preceded the crisis itself. So the acceleration will turn faster than velocity does. So you get the fact that the actual cause of the crisis was a deceleration of mortgage debt. It caused the crisis because of the level itself debt, in general, is so high. So what you had, which is the next chart coming up onscreen, I think it’ll take a couple of seconds to turn up there.Ryan, Can I just ask? What did mortgage debt decelerate in America to then cause that crash?Steve Well.
the only way you can not decelerate is if debt continues rising faster than income forever. Okay?Ryan Okay. Which doesn’t sound feasible?Steve Which isn’t feasible. So if you want to just to get a rough sort of stylized view what can happen, imagine you’ve got a minimum level – let’s say it’s % of GDP. And let us say a maximum of even % of GDP, which is far bigger than the level they’ve actually reached. If you draw a line between the two or a curve between.
them, what you can get like an extended S-shaped curve. The maximum rate of change of that debt is where you get the inflection point in the S. And then, how many property valuations should I get the acceleration is going to be before that point.So, simply the fact that coming from a minimum level to a maximum level, you’re going to reach a maximum velocity in the middle between the two and then slow down.Ryan Okay, yeah. You’re slowing down towards the maximum point. It’s like the kind of.
if you throw a ball up in the air, it’s decelerating. Before it hits its peak, it’s already decelerating-because of gravity.Steve Exactly, exactly. So and like if you throw it from at equals maximum acceleration is from the point you actually hurl it. But in the case of something like in a car and you floor the accelerator in a car. Then, for a while, you’re going faster more quickly.Then you reach yours.