Re: Delusions and Dreams. An Economic Know-Nothings in the FT
It will be in no ones interest to let them fall.
It is in no-one's interest to splatter oneself on the pavement once the jump out of the window has been committed.
The fact that it's in no-one's interest is of no relevance.
In spite of all the crud we are taking from central planners, central bankers, lefties and Krugman or Rupert Murdoch types, the Economy is not subject to direction by fiat, in particular not by direction via money printing or acausal manipulation of metrics pulled out of one's arse.
It is a system that can be described and for which future developments can be roughly extrapolated. It has its laws. These laws WILL now develop.
More on this:
Bingo! Premier Li Keqiang Punctures The Excess Savings Myth
For two decades now mainstream Keynesian economists have been gumming about China’s remarkable economic boom and its accumulation of unprecedented foreign exchange reserves. The latter hoard has now actually crossed the $4 trillion mark.
But this whole narrative is PhD jabberwocky with a Wall Street accent. What the People’s Printing Press of China has been doing is simply passing the hot potato by converting the vast inflow of dollars, euros and yen emitted by DM (developed market) central banks into a fantastic flood of RMB. This massive expansion of the domestic monetary system, in turn, enabled the greatest credit bubble in world history.
Stated differently, China’s total credit market debt outstanding did not explode from $1 trillion to $25 trillion in just the last 14 years because the sons and daughters of rice farmers working in export factories went on a savings binge, thereby enabling a healthy expansion of debt-financed investment.
The giant issue facing China, however, is that it is at the end of the money-printing chorus line. It has now absorbed so much excess debt from the West and thereby inflated its credit Ponzi to such an insensible extent, that even its current rulers can see the hand-writing on the wall.
In a recent speech, in fact, Premier Li let the cat out of the bag, calling China’s massive hoard of foreign exchange for what it is—-a vendor loan to foreign customers who buy but do not sell; who consume but do not produce. Suddenly, what has been ballyhooed for two decades as evidence of the Chinese miracle is officially labeled a “big burden”.
Actually, it has been a burden all along. The comrades have presided over the erection of a Ponzi of such immense and convoluted magnitude that they have no hope of unwinding it without a thunderous “hard landing”