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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (75837)12/16/2006 5:39:38 PM
From: kris b  Read Replies (1) of 110194
 
I heard numerous references to the "great inflation" while in China.

Again I see two inflations. One, consumer inflation has been kept low because of the massive industrial over capacity/competition, which keeps the prices of the consumer goods suppressed. Another input element that keeps the CPI low is huge pool of cheap labour which keeps cost production low.

All the credit they created over the last several years went into massive asset inflation (they aren't different then the rest of the world) and development of the industrial over-capacity.

But my question was does it matter to the Bank of China whether they create credit against $ US or out of thin air? This will determine whether loses on $ US holdings have any bearing on their monetary policy.

They were creating credit at the rate of 30% per annum around 92-93 long before they had huge $ US reserves.
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