Fema Employment
China and financial world risk?? US debts?
The Chinese Communist Party has a tiger by the tail: a 17% per annum increase in the M-2 money supply, and a need to provide employment for 1.5 million new arrivals every month in Chinese cities. The Chinese economy is now dependent on long-term monetary inflation higher than anything ever seen in a major nation in peacetime. The bust side of the monetary boom-bust cycle now threatens the legitimacy of the rulers of China. They dare not let it happen. But if the central bank slows the rate of monetary inflation to a single-digit rate for a year, it will happen. The basic infrastructure needed to accommodate 1.5 million arrivals each month must consume vast new quantities of commodities. This is the real world. These are real people who want real roofs over their heads. Their employers require oil, electricity, and cement. The invisible digital economy eventually affects the see-touch-feel economy. Nowhere is this connection more politically explosive than in China. The Chinese central bank is trapped. It will try to walk the tightrope between exports and domestic price inflation. How? By means of a 17% year-to-year increase in M-2 and a 23% year-to-year increase in the monetary base. If the bureaucrats fall off, taking the domestic economy into depression, the economic fallout will be international. In any case, if the central bank moves to the new mercantilism and away from Bretton Woods mercantilism, the days of low interest rates will end in the United States. If Uncle Wong decides that Uncle Sam’s promises to pay cannot be trusted, and therefore cement is a better deal, the U.S. government’s fiscal policy will soon have feet in cement. If this happens, the U.S. debt-driven economy will face the problem faced by Luca Brassi in The Godfather. He sleeps with the fishes. *// Want to know about China and world financial risk : read this : http://www.lewrockwell.com/north/north551.html Gary North
Public Comments
- I've been saying Asia has been very generous buying Treasury bonds to prop up debt, but "learned" economists on this board claim otherwise. What you and I might call deficit spending, the US government calls it a "tax cut" for economic stimulus. Thanks for the link.
