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Except that they're selling cash. China doesn't sell you USD, they keep the USD in their safe and give you their own currency in exchange. That hidden money is

Except that they're selling cash. China doesn't sell you USD, they keep the USD in their safe and give you their own currency in exchange. That hidden money is overly leveraged, ie debt, and you'll never know if tomorrow you'll get your original value back. China is the most indebted country in history. How do you know that for each $1 hiding in accounting magic is not being resold twice? We don't, because of what the article says.

henry2023 3y ago
>>> China is the most indebted country in history. Last time I checked China was ~23T in debt vs USA’s ~32T. They also have a population almost 5 times larger.
- frankreyes 3y ago
  That's external debt. I'm talking about total private credit. Private credit is what brought the 2008 crisis in the USA. The public debt wasn't the problem before, but it was after: using public debt to pay private debt from banks. And that's what the article is also talking about: China keeps the USD in their own banks and prints CNY to spend, but how many USD for how many CNY is not clear. It's pretty much a Ponzi. As long as people don't ask their USD back from their CNY it's all good. Good luck when people starts asking USD from China. China TOTAL private credit in CNY is available here: https://zeihan.com/wp-content/uploads/2022/05/total-private-credit.jpeg https://zeihan.com/wp-content/uploads/2022/05/total-private-... You can also see how much money they printed here: https://zeihan.com/wp-content/uploads/2022/04/global-money-supplies-01.jpg https://zeihan.com/wp-content/uploads/2022/04/global-money-s...
  - cthalupa 3y ago
    While not explicitly arguing against this point, I would note that these graphs are from Peter Zeihan, who has explicit financial incentive in convincing people China is on the road to economic ruin. He makes his living as geopolitical analyst and has been predicting the imminent downfall of China since decades ago at Stratfor - if people come to disbelieve his predictions have value, he loses money. Which doesn't mean he's wrong, but I do think it is important to consider incentives whenever someone is attempting to convince you of something.
    - frankreyes 3y ago
      Zeihan is just showing us the data. Do you have any data to back up any counter argument?
      - cthalupa 3y ago
        Again, I am not making a counter argument. I am pointing out Zeihan has explicit incentive to show a specific narrative - it's perhaps the single largest and oldest tentpole of his career. Is the data the whole story? Are there mitigating factors? Does it need mitigating factors to begin with? I don't know. I even explicitly mentioned he could be totally right on this specific point. I'm simply stating that there is a caveat around the source of those graphs that interested parties should take note of, for the same reasons we ask scientists, journalists, etc., to disclaim any potential conflicts of interest they have.
        frankreyes 3y ago
        I have a personal bias because I'm from Argentina and I see the world becoming more like my country. Countries printing money like there's no consequences or tomorrow. Argentina's public debt has been pretty stable and on GDP terms it was quite low. But even then, on low public debt, a country can totally wreck the whole economy. Because we print pesos, ARS, like there's no tomorrow and then people get surprised when we get inflation and a total wreched economy. Then populists start blaming the usual suspects: IMF, USA, EU, the f weather. People confuse public debt with private credit. The general idea in Argentina, including Ministers of Finance and Central Bank officials, say that ARS credit is not real debt. Move forward 20 years and you get Argentina. Edit In Argentina, private credit ARS bonds are called LEBAC and LELIQ for those who are interested.
      - dirtyid 3y ago
        Zeihan never shows "just" data. Otherwise he would show PRC has significantly more navigable rivers kms and better port capacity than US. Instead he'll talk US being blessed with more rivers, and deeper coasts for ports. When geopolitics makes US look bad, he'll cherry pick the geo, or the politics to make competitors look worse. Per the graphs, you're falling for unsubstantiated (borderline retarded) Zeihan visualization/narrative, this time by scaling to 2000 baseline and annotating Zeihan TM wild claims. PRC debt is ~2900% of 2000 baseline, GDP (and per capita) is ~1500% of 2000 baseline. All the graph is reflecting is PRC has built 2-3x debt in 20 years during it's most explosive and condensed development phase where urbanization (and home ownership) increased from 30-65%, i.e no country has been abel to modernize this fast. EVER. For reference, 2020 PRC national debt was ~55% (+20% in 10 years) of GDP vs US was ~140% (+40% in 10 years), total aggregate debt (the #s Zeihan is meming about) PRC ~270% vs US ~800% in 2020. I don't know what the money "printed" graph data comes from, but PRC covid stimulus/money printing so far retraint vs US 13T. There's reason global economists was hoping PRC would spam the money printing brrrt button to uplift global economy. Meanwhile PRC Q1 inflation rate was ~1%, lowest amoung major economies. Again, that's not remotely reflective of actual Argentina ponzi economy, to the point of being diametrically opposite. Also this is USD used for reserve, it's USD PRC hoovered up from massive trade surpluses in the first place. PRC exports has increased so spectacularly in the past few years (export value grew from 2.5T in 2019 to 3.6T in 2022). PRC exports grew as much in last 4 years (~1T) as it did in decade between 2008-2018 (1.4T-2.4T). So she's holding a lot of dollars, even if she wants to hold less. Hence trying to increase rmb settlement. In the meantime globe is still shovelling money at PRC, the problem isn't getting it, it's getting rid of it.

henry2023 3y ago

>>> China is the most indebted country in history. Last time I checked China was ~23T in debt vs USA’s ~32T. They also have a population almost 5 times larger.

frankreyes 3y ago
That's external debt. I'm talking about total private credit. Private credit is what brought the 2008 crisis in the USA. The public debt wasn't the problem before, but it was after: using public debt to pay private debt from banks. And that's what the article is also talking about: China keeps the USD in their own banks and prints CNY to spend, but how many USD for how many CNY is not clear. It's pretty much a Ponzi. As long as people don't ask their USD back from their CNY it's all good. Good luck when people starts asking USD from China. China TOTAL private credit in CNY is available here: https://zeihan.com/wp-content/uploads/2022/05/total-private-credit.jpeg https://zeihan.com/wp-content/uploads/2022/05/total-private-... You can also see how much money they printed here: https://zeihan.com/wp-content/uploads/2022/04/global-money-supplies-01.jpg https://zeihan.com/wp-content/uploads/2022/04/global-money-s...
- cthalupa 3y ago
  While not explicitly arguing against this point, I would note that these graphs are from Peter Zeihan, who has explicit financial incentive in convincing people China is on the road to economic ruin. He makes his living as geopolitical analyst and has been predicting the imminent downfall of China since decades ago at Stratfor - if people come to disbelieve his predictions have value, he loses money. Which doesn't mean he's wrong, but I do think it is important to consider incentives whenever someone is attempting to convince you of something.
  - frankreyes 3y ago
    Zeihan is just showing us the data. Do you have any data to back up any counter argument?
    - cthalupa 3y ago
      Again, I am not making a counter argument. I am pointing out Zeihan has explicit incentive to show a specific narrative - it's perhaps the single largest and oldest tentpole of his career. Is the data the whole story? Are there mitigating factors? Does it need mitigating factors to begin with? I don't know. I even explicitly mentioned he could be totally right on this specific point. I'm simply stating that there is a caveat around the source of those graphs that interested parties should take note of, for the same reasons we ask scientists, journalists, etc., to disclaim any potential conflicts of interest they have.
      - frankreyes 3y ago
        I have a personal bias because I'm from Argentina and I see the world becoming more like my country. Countries printing money like there's no consequences or tomorrow. Argentina's public debt has been pretty stable and on GDP terms it was quite low. But even then, on low public debt, a country can totally wreck the whole economy. Because we print pesos, ARS, like there's no tomorrow and then people get surprised when we get inflation and a total wreched economy. Then populists start blaming the usual suspects: IMF, USA, EU, the f weather. People confuse public debt with private credit. The general idea in Argentina, including Ministers of Finance and Central Bank officials, say that ARS credit is not real debt. Move forward 20 years and you get Argentina. Edit In Argentina, private credit ARS bonds are called LEBAC and LELIQ for those who are interested.
    - dirtyid 3y ago
      Zeihan never shows "just" data. Otherwise he would show PRC has significantly more navigable rivers kms and better port capacity than US. Instead he'll talk US being blessed with more rivers, and deeper coasts for ports. When geopolitics makes US look bad, he'll cherry pick the geo, or the politics to make competitors look worse. Per the graphs, you're falling for unsubstantiated (borderline retarded) Zeihan visualization/narrative, this time by scaling to 2000 baseline and annotating Zeihan TM wild claims. PRC debt is ~2900% of 2000 baseline, GDP (and per capita) is ~1500% of 2000 baseline. All the graph is reflecting is PRC has built 2-3x debt in 20 years during it's most explosive and condensed development phase where urbanization (and home ownership) increased from 30-65%, i.e no country has been abel to modernize this fast. EVER. For reference, 2020 PRC national debt was ~55% (+20% in 10 years) of GDP vs US was ~140% (+40% in 10 years), total aggregate debt (the #s Zeihan is meming about) PRC ~270% vs US ~800% in 2020. I don't know what the money "printed" graph data comes from, but PRC covid stimulus/money printing so far retraint vs US 13T. There's reason global economists was hoping PRC would spam the money printing brrrt button to uplift global economy. Meanwhile PRC Q1 inflation rate was ~1%, lowest amoung major economies. Again, that's not remotely reflective of actual Argentina ponzi economy, to the point of being diametrically opposite. Also this is USD used for reserve, it's USD PRC hoovered up from massive trade surpluses in the first place. PRC exports has increased so spectacularly in the past few years (export value grew from 2.5T in 2019 to 3.6T in 2022). PRC exports grew as much in last 4 years (~1T) as it did in decade between 2008-2018 (1.4T-2.4T). So she's holding a lot of dollars, even if she wants to hold less. Hence trying to increase rmb settlement. In the meantime globe is still shovelling money at PRC, the problem isn't getting it, it's getting rid of it.