Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (75837)	12/16/2006 5:39:38 PM
From: kris b	Read Replies (1) \| Respond to 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.

To: russwinter who wrote (75837)	12/16/2006 5:45:56 PM
From: benwood	Respond to of 110194

I would assume that many of the lessons of the 20s and 30s in China will have to be relearned, same as our own lessons of that era. Those that remember first hand are gone, and protections dismantled. Yes, China will regret the way they raped their own environment in order to accrue a huge industrial base in one generation if their piles of IOUs to the US devalue rapidly. But surely they know they are simply gambling that they can get rid of their pile of old maid cards in time? And at some point, doesn't the pile become so large that it must be allowed to grow simply because it's known by everybody to be unstable? Much like a drug addict robbing convenient stores to maintain his/her drug supply -- the robber knows it's extremely dangerous, but still feels s/he must.

To: russwinter who wrote (75837)	12/16/2006 7:39:51 PM
From: TobagoJack	Read Replies (1) \| Respond to of 110194

<<the middle and rural gentry>> ... that in any case only constituted 1% of the entire population, which the commies mostly executed after taking power with popular support so, the great inflation wiped out a then already small and urban middle class, leaving the arena ready for political radicalism wiping out the middle class is never a good idea, per russia, germany, argentina, zimbabwe, ... and now, soon, ... well, maybe there is still time for electorate-enabled and clear-headed leadership engineered last minute save