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I think of China as epicenter of a gargantuine deflationary hurricane. The cycle goes something like this: 1. Chinese economy slows down. 2. Chinese leadershi
by apo 8y ago
I think of China as epicenter of a gargantuine deflationary hurricane. The cycle goes something like this:
1. Chinese economy slows down.
2. Chinese leadership realizes it's only one real recession away from existential threat.
3. Chinese government floods the market with fake money.
4. Chinese factories expand and export still more goods, despite weak demand.
5. World inventories pile up, depressing prices across the board.
6. Factory orders dry up around the world, sending host economies downward.
7. GOTO 1.
- snaky 8y ago> Chinese leadership realizes it's only one real recession away from existential threat. That's true for at least 30 years now.
- apo 8y agoAccording to Bloomberg, the last Chinese recession was 25 years ago: https://www.bloomberg.com/opinion/articles/2018-07-19/china-s-economy-is-different-no-recessions-in-a-quarter-century https://www.bloomberg.com/opinion/articles/2018-07-19/china-... When the inevitable happens, it's going to be catastrophic. The entire population of young adults in a country of over 1 billion has never experienced a recession.
- deleted 8y ago[deleted]
- the_duke 8y agoThe US and the EU have been flooding the markets with money ever since the recession too, though, with low to negative interest rates and bond buys. The EU is in a worse state than the US with an interest rate of 0.0 and therefore no room to maneuver in case of a new downturn. For either three of those markets, the flooding can't continue indefinitely.
- konschubert 8y agoThe problem seems to be they flooding the markets with money and giving money to consumers are two different things.