Some Stunning Perspective: China Money Creation Blows US And Japan Out Of The Water

Tyler Durden's picture

With private sector loan creation in the US and Japan virtually unchanged since Lehman levels (and the US in danger of posting a negative comp in a very months) and Europe loan creation contracting at a record pace, it falls upon the Fed and Bank of Japan (and possibly the ECB soon) to inject the much needed credit-money liquidity into the system. And, as everyone knows, month after month the Fed and the BOJ diligently create $85 billion and $75 billion in new outside money out of thin air (that this "credit" ends up in the stock market is a different topic).

So to help readers get a sense of perspective how the US and Japan compare when matched to China, below we present a chart showing the fixed monthly "money" creation by the Fed and the BOJ compared to the most comprehensive money supply aggregate available in China - the Total Social Financing - for the month of November. The chart speaks for itself.

Basically, while everyone focuses on the breakneck money creation by the Fed and the BOJ, what happened in the past month is that China quietly created some 20% more money. Perhaps most impotantly, between these three entities, nearly $400 billion in liquidity was created de novo in one month! Because when the entire world is a credit-fueled ponzi scheme, these are the kind of numbers that matter.

For those curious, here is a more detailed breakdown of the Chinese numbers from Bank of America.

New bank loans and TSF rebounded notably in November

Despite higher and volatile interbank rates and rising bond yields, credit growth remained quite robust towards year-end. Two most watched data points, new bank loans and Total Social Financing (TSF), rebounded notably to RMB625bn and RMB1230bn respectively in November from RMB506bn and RMB856bn in October. YoY bank loan growth remained unchanged at 14.2%, while yoy outstanding TSF growth moderated to 19.5% from 19.7%. Today’s money & credit data should be positive for markets which have been worried that the PBoC could tighten credit supply to reduce leverage by citing rising bond yields and interbank rates.

Details of TSF: All financing activities accelerated

  • New entrusted loans rebounded notably to RMB270bn in November from RMB183bn in October, while new trust loans increased to RMB102bn from RMB40bn.
  • New corporate bond rose to RMB138bn in November from RMB107bn in October. We note that government and coporates delayed their bond issuance or scaled down the size after bond yield soared, but the net corporate bond issuance in TSF still rebounded due to a smaller amount of expiry in November from October.
  • New FX loan edged up to RMB12bn in November from RMB5bn in October.
  • Non-discounted bankers acceptance (BA) increased by RMB6bn in November after falling RMB40bn in October. We think the monthly numbers are particularly volatile, and there is no need to overly-interpret it (This is also the reason why we exclude it from calculating our revised TSF growth.)

Loan details: demand for working capital remained decent

  • New MLT corporate loans fell to RMB86bn in November from RMB144bn in October. Concerning seasonality, the number is not low. Note that it dropped to –RMB3bn in November 2012 from RMB169bn in October 2012 despite supportive policies and recovering growth momentum then. We believe policies would remain relative neutral in coming months and there could be no sudden reversal of policies.
  • New short-term corporate loans rose to RMB241bn in November from RMB215bn in October. Meanwhile, discounted bills also increased by RMB19bn after falling RMB71bn. It suggests loan demand for working capital remained decent.
  • New MLT loans to household (mainly mortgage loans) rebounded to RMB182bn in November from RMB154bn in October, supported by strong home sales momentum in previous months. New short-term loans to households rose to RMB80bn in November from RMB51bn in October, reflecting that SME loans could remain supported.

* * *

So how long before the developed and developing world "have" to create $1 trillion or more in money supply each month to keep the house of cards from toppling?

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SheepDog-One's picture

They're making sure money ends up being worthless. Pretty scary stuff.

NoDebt's picture

Good thing the Yuan/Renminbi is tightly pegged to the dollar or this might be a problem in the FX markets.

LawsofPhysics's picture

Yes, but who's got all the gold?  Counterparty risk on paper promises can be a bitch.  History is very clear on that.  Eventually people don't give a shit about "mark to fantasy" accounting and they want to see the underlying collateral.

Skateboarder's picture

Chinese will gladly barter with gold. Unless mass gold confiscation occurs... but that will result in a civil war, even in the land of 'what dissent?'

TeamDepends's picture

"Perhaps most impotantly".  Love it, Tyler.  This is Fight Club!

SafelyGraze's picture

fr: our cash buys govdebt and mbs
pboc: our cash buys serfdom

fr: our cash buys govdebt and mbs *and* serfdom
pboc: our cash buys serfdom and warmachines

fr: ourcash byys govdebt and mbs and serfdom and warmachines and devalues the unit
pboc: our cash buys serfdom and warmachines and emptycities and gold

usfr: assholes 

The Limerick King's picture



The race to the bottom is on

The Dollar, Yen, Euro, and Yuan

But I do not care

I'm a smart perma-bear

I'll have gold when all fiat is gone

PT's picture

Yes, yes, globalisation, free trade - what could possibly go wrong?

TruthInSunshine's picture

China is winning the global war of chess and will soon own the ENTIRE WORLD!

Ying-Yang's picture

is this the plan? Every central bank print fiat until there is global hyperinflation?

Will the New World Order replace existing central banks with one NWO currency and one NWO central bank?

Can the elites pull this off?

Seems to me if this is the plan then those that own food and energy control everyone else.

PT's picture

... and so far it has all been with the rest of the world's blessing.

"Yes, yes, don't worry.  You can have our production.  You can have our land.  What do we need that for?  I'm always amazed at how rich you guys are.  Our peasants are so poor, they can't afford to bid up the price of anything.  They must be lazy ..." 

Bananamerican's picture


perhaps there's a way to make Stocks, Bonds, Lamborghinis, pricey Florida condos, Malibu mansions and politicians worthless instead?...

SRSrocco's picture

Someone brought this to my attention.  No wonder the Chinese can mine gold at $2,000-$2,500 an ounce, and the reason why we can continue the Shale Energy Ponzi in the U.S.


SILVER: Inflation Hedge, Store of Value or Great Investment
OneTinSoldier66's picture

"They're making sure money ends up being worthless. Pretty scary stuff."


You're leaving something out though that I think is pretty important to point out. They're making it worthless for the little people. Not for the people that can create it and their buddies. It's a big club, and you and I aren't in it.

LawsofPhysics's picture

"Chinese will gladly barter with gold."  - I welcome this, and will be more than happy to accept their gold in exchange for my soybeans.  Sounds great!

CheapBastard's picture

It's no surprise [at least to me] that the Chinese are using that massive flood of money to buy every commerical and residential piece of RE in the world as well as stacking PMs to the sky.

Hard Assets for paper fiat.

They ain't Dumb.

oak's picture

the cny has not been  pegged us$ for a while now. it is misleading on peg. china is doing something differently. hope some one knows.

NoDebt's picture

No, it's not hard-pegged.  It's a managed float in a tight range around a peg.

"The RMB is now moved to a managed floating exchange rate based on market supply and demand with reference to a basket of foreign currencies. The daily trading price of the U.S. dollar against the RMB in the inter-bank foreign exchange market would be allowed to float within a narrow band of 0.3% around the central parity published by the People's Bank of China; in a later announcement published on May 18, 2007, the band was extended to 0.5%.[55] On April 14, 2012, the band was extended to 1.0%.[56] China has stated that the basket is dominated by the United States dollar, Euro, Japanese yen and South Korean won, with a smaller proportion made up of the British pound, Thai baht, Russian ruble, Australian dollar, Canadian dollar and Singapore dollar.[57]"

oak's picture

no offense, nd. therefore, china has a cny index similar to us$ index and does not peg to us$ only. us$ index does not include cny, very interesting. it appears cyn index includes china's major trading partners.

donsluck's picture

Lack of punctuation makes for a hard read. There are good reasons why language evolved the way it did.

Atlasshruggedme's picture

Remember they are buying gold like crazy! So the money they are printing is backed by something.

If you are going to print money and have it backed by Gold. China might be printing money like crazy, but they are buying gold like crazy. Everything is backed. Why not increase your money supply like crazy, when they are suppressing gold prices?

ArkansasAngie's picture

So much for a race to the bottom.

My devaluation is bigger than yours ... nana booboo

And poor lilttle ole Europe is left with a the strongest currency?

Currency wars are here.

TheFourthStooge-ing's picture


They're making sure money ends up being worthless. Pretty scary stuff.

In Chinese citizenism monetarist blobbing up, the numbers are the mattering thing.

emersonreturn's picture

it appears there is a slight difference, in that some small portion of the phantom money actually reaches the sheeple.  if even a small percentage reached small business and individuals here it would make a huge difference.  clearly tptb do not intend for the sheeple to recover.

Kirk2NCC1701's picture

“The greatest shortcoming of the human race is our inability to understand the exponential function.” – Dr. Albert Barltett (U of Colorado)  I'm gonna go out on a ZH-limb here, to provoke a lively intellectual debate...

"The greatest shortcoming of ZH readers is their inability to understand the exponential function" and how TPTB can use/abuse it to their advantage.

TPTB can simply keep creating more Currency (that they call Money), if they switch to a LOG function.  Then the vast 'money' (currency!) creation looks linear again.  And humans love to think in linear terms.  It is SO easy to manipulate the human brain, given that 95% of them either suck at math, or are slaves to their ingrained Paradigms (mental models).

TPTB can, and probably will do exactly this: Keep inflating, then switch to a Log function/graph.  The MSM will play alongAnd, as long as the CBs of the G10 keep inflating in synch, (a) the other CBs have to follow and (b) no absolute advantage is realized.  The game of Liars Poker continues.  Admittedly, this is not something that libertarians/Libertarians will relish, as they keep hoping for their Golden "Ship to come in"**.

The only TRUE winner in this game, is the currency with the GRC status:  the USD/Petro-Dollar.  The petro-dollar can force the rest of the world to accept their glorified Confetti, in exchange for real labor and services.  No foreign CB has yet had the "balls" to repudiate the USD. 

If the "hated" Fed reverted to 'real' money, Americans could hardly afford their mamby, pamby lifestyles (cheap oil, cheap offshore labor and wares).  


** In the interest of full disclosure, I will admit to hedging my bets in this Gold vs Fiat war-game, by holding some of each. Unlike many here (alas!), I do NOT 'expect' gold to become the Golden (Lotto) Ticket for a "get rich quick" scheme.  Rather, I'm hedging that holding some % of my family's portfolio in PM bullion (in  own possession!), that it will retain its value in the coming years and decades -- even if it keeps its present official status as a 'Precious Commodity/Resource'.  After all, the supply is VERY limited, and the ore concentrations keep going down, down, down (peak gold).  I don't care if I wait 5 yrs or 25 yrs for global production of PM to fall.  At some point even its 'commodity' value will increase, and thus retain its "store of value". 

And since I'm not a zealot or "one size fits all" type of guy, this will not stop me from using fiat and cyber currencies to diversify our holdings into select global stocks and productive real estate -- to grow wealth, maintain flexibility and mitigate risk.

matrix2012's picture

Thank you Kirk2NCC1701 for sharing your practical thought. It's enlightening!


Exponere Mendaces's picture

Wonder how that actually breaks down in "Credit Creation Per Capita". Probably not as horrible as the USA.

jkjacksonhole's picture

This is stunning. Why have we not heard this before?

NoDebt's picture

We did.  On ZH.  About a week or two ago.

Still pretty recent and I'm still not sure we're getting the whole picture here, but it is, as Joe Biden would say, a big f'ing deal.

Obadiah's picture

you know now that you mention it... i bought all the "numbers" on money creation too.  WTF I am sheep.  Thes fuckers are prolly running the presses double what they say... right into thier physical asset of choice.



get ready folks

DeadFred's picture

If you're going to take over the position of world reserve currency you need an adequate supply to work with.

Vendetta's picture

If you're going to take over the position of the world's leading toilet paper dispenser you need an adequate supply to work with.   There fixed it for ya.

PT's picture

jkjacksonhole re "..Why have we not heard this before?"

Best comment.  +++++++ 

Ham-bone's picture

Why have we not heard this before?

Seems this info that China is newest, latest, greatest credit bubble in history doesn't fit with the narrative of the dollar about to die...that the "strong" Chinese will be the new reserve currency is ludicrous.  There is just no truth that some nation would hold the US accountable for our own profligacy.  Japan is the debt bomb now (but they were going to be the new rulerz of the world) and China with it's credit bubble will collapse terribly.  Neither of our primary creditors are anything but massively weak, incapable ,and unwilling to slow down or change the dollar centric game.  Neither have dumped the dollar and both are at record holdings of US Treasury debt and US $ foreign reserves. 

The game is far more convoluted and collusive than folks want to admit.  Yes, seems all nations w/ a CB have held hands and agreed to print money forever...Maybe the more proper narrative should be that all nations are collapsing to benefit .001% of the worlds population.

mkkby's picture

We may not have heard this specific news before.  But did you really think they were building all those empty cities with a hard currency backed by a magical trade surplus? 

China has obviously been fucked up on a grand scale for at least a decade.  The western political class uses fake debt induced GDP to keep their pitiful government jobs.  China does it to keep a few billion starving peasants from slaughtering them...  much more pressing need.

Notarocketscientist's picture

You mean why has the MSM not reported this before?


it's of course old news here on ZH:

Jason T's picture

meanwhile, China's currency is getting stronger and stronger completely unnoticed.


Declining West, Rising East.

LawsofPhysics's picture

"Declining West, Rising East." -  Bullshit, everyone is using "mark to fantasy" accounting.  Show me the underlying collateral, until then I remain unimpressed.

Jason T's picture[1][id]=CHNGFCFADSMEI


20 million cars sold in China this year?  Few more completed high speed rails? 


LawsofPhysics's picture

Unless those cars and trains are running on solar power or some new fancy fusion reactor, I remain unimpressed.  What I do see, is many chinese customers and I will happily accept gold.

El Vaquero's picture

What is impressive is that China appears to be trying to position itself so that it gets the lion's share of the remaining oil for cheaper than everybody else, and it may very well be successful at that.  I agree, it's not a long term solution to the world's energy problem, but it very well may hurt us before it hurts them. 

Kirk2NCC1701's picture

European train companies are doing booming bithness in China.

No bitches for those bithnessmen.  Just Happy Endings after haircuts and massages.

Calmyourself's picture

Chinese collateral hmm lets see..  20-30 million excess males, most of East Africa, moar gold than us and yeah deliverable nukes that ought to do it..

LawsofPhysics's picture

Many have deliverable nukes, so what?  So you are saying that China is to the 21st century, what Germany was to the 20th?  thanks for confirming what many already knew.  Now how did that turn out?

El Vaquero's picture


Now how did that turn out?

Not as bad as it would turn out today.  Problem is, we'd nuke back.  The other issue is that China would have a helluva time delivering all of those troops to invade the US should more conventional means be chosen.  We may be broken and fucked up, but we do have some serious naval hardware, and the logistics of getting a huge army over the Pacific is no joke. 

WarPony's picture

sleeper cells embedded yesterday

Ghordius's picture

"Now how did that turn out?" hmmm... the winners were on the side Russia was on?