I can honestly say that I am clueless about China. To me, it is a riddle wrapped inside an enigma.
But I have some thoughts.
There are clear inflationary pressures. So what, they come and go, but I don't think they detract from the main theme which is that there is an enormous amount of growth taking place as a result of infrastructure improvements. This is important to note and analyze for it is the building of modern that infrastructure creates a virtuous loop. Not only is the building of it economically positive in the short term but the gains to productivity it creates linger on for decades, e.g., how many times over do you think the Brooklyn Bridge has paid for itself since built?
China seems to have the funds necessary to finance a very substantial infrastructure program. Ultimately, modernized infrastructure will create more wealth than the export game China played (plays?) for that is a low margin, low wage, high risk way of doing things though of course it allows for an accumulation of capital with which to finance infrastructure projects.
Although I have not studied it, I am willing to bet that increased commodity demand of all sorts goes hand in hand with developing infrastructure. Copper, aluminum, iron, coal, you name it, should do well.
I especially like copper in this regard.
I buy gold in USD but not for the reasons I have mentioned but because since Volcker retired, we have managed to select idiots as heads of the Fed. Plus, the banks have captured Congress. Their appetite for risk is immense, esp. if they know they will be bailed out if things go awry.
And the debt bubble will ultimately result in downgrades to our sovereign debt instruments. It's amazing that policy makers can't see this. Perhaps they do, but don't care or cannot do anything about it on account of their links to corrupt private finance.
How the threat of our sovereign default will affect the globe I cannot predict. It cannot be a good thing for anyone. So I buy gold on that account.
A very incisive piece in this regard. I've linked it before but it deserves to go viral:
youtube.com |
