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Next Up: China Will Be Joining The Global Currency Wars
Japan and the Eurozone have already (re-) discovered the power-button of their printing presses, but these countries might soon be joined by China. China’s prime minister has announced on Sunday he thinks it will be very difficult for China to keep its economic growth rate at the expected 7% level. That could result in some more worries on the financial market as the 7% level is already a guidance wich was revised downward from the previous expectations of an economic growth of 7.4%. Keep in mind the 7% growth rate would be the lowest economic expansion in approximately 25 years for the Asian country.
China’s prime minister Source
The situation might get worse before it gets better as for instance investment, consumption ànd production growth levels have fallen to multi-year lows which is obviously an extremely bad sign. A slowing growth rate of the Chinese economy will have an impact that will be felt all over the world despite the prime minister trying to shrug it off saying he’s more interested in a quality growth instead of hard numbers and continues to make more excuses.
It’s however unlikely the Chinese government will allow the economy to grow at a much slower rate than the eyed 7% and it will definitely use all possibilities to make sure it meets its reduced target. The Chinese are already flexing their muscles and have patted themselves on the back they haven’t used their monetary bazooka since the global financial crisis.
If you read between the lines, China will very likely ease its monetary policy once again strengthened by the lower than expected inflation rate which was just 1.4% and thus much lower than the eyed 3%. The main question will now be how China expects to inject more money into its system and we are widely expecting a reduced interest rate and, why not, a new round of printing money to expand the money supply in the system.
This will have important repercussions. Japan and the Eurozone have already started to print money and now China is looking into adding more liquidity in its financial system to boost the economic growth, all eyes will be focusing on the Federal Reserve and Janet Yellen’s decisions this year. If everyone else in the world is trying to boost exports by reducing the value of its currency, it would be economical suicide for the USA to increase its interest rates and make the US Dollar more appealing to foreign investors.
If you just take one step back and keep your perspective focused on the global situation, you’ll see that increasing the interest rates might very well be the worst thing the Federal Reserve could decide to do later this year. This basically means the Fed is trapped in a global game where all other players seem to be holding the right cards, basically forcing the USA to follow them or to accept a serious deterioration of its position in the world economy.
The Federal Reserve has lost its driver’s seat and it will be interesting if Yellen could get used to this new reality.
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After currency wars come the real wars: China/Russia VS USA/EU
http://plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=260
Look at the sky in that pic. Everyone's talking about growth rates of pretend money, while the real story is that China is slowly suffocating itself.
It is comical to watch China because it is the far eastern squirm of western economies is all.
Link all the countries economies under free trade become that global trader oooops! You got nobody to trade with but yourself when the only growth for most traders is MAKING AN INCOME OFF SOMEBODY ELSE.
The west is broke and cannot buy those Chinese goodies and that IS THE SAME AS BECOMING A SINGLKE TRADER WITH NOBODY TO TRADE WITH.
Production maxed, anybody short of anything? No? Didn't think so! So no new avenue to exploit to make a return only compete with existiing that with over production in an area collapses the price.
The real question is under such global trading system how long can they keep it going for?
I thought China must have higher debt, but can only guess by open Credit Liability.
"official data; data cover both central government debt and local government debt, which China's National Audit Office estimated at RMB 10.72 trillion (approximately US$1.66 trillion) in 2011; data exclude policy bank bonds, Ministry of Railway debt, China Asset Management Company debt, and non-performing loans"
China's GDP must be around $10 Trillion USD. They had like 22% Debt to GDP in 2011 (I think). Government Budget is over $1 Trillion.
But Money Supply Total Debts, Credit, Loans... that must be where the Data starts to look bad.
Total international Trade $3.8 Trillion, Retail Trade $3.2 Trillion...
http://www.bis.org/publ/qtrpdf/r_qt1109f.pdf
Total Credit in 2009 for China as per BIS for Non Financial Private Sector is $8.4 Trillion (page 4) Whole Euro Zone is $21.9 Trillion.
So, by BIS Data in 2015 China must have open Credit/Liability of Non Financial Private Business of over $10 Trillion Easy.
Yep - keep on arrowing those words of wisdom.
Then go crying to mamma about those big stupid central bankers. Boo hoo And I should have bought a Vanguard fund instead of wasting my time bitching on ZH about stupid bankers boo fucking hoo
Open your eyes and see how you are missing the Big Picture - or keep on arrowing that comment down and sobbing (I can play the violin if you'd like?)
Your namesake was as lucky as he was willfully, blindly foolish.
How long do you think that will last for you Mr. M?
Of course the moron brigade pours onto Zero Hedge screaming 'the Chinese must be stupid - like the Fed - like the ECB - like the BOJ!!!'
Everyone is stupid -- EXCEPT - the geniuses who inhabit Zero Hedge. Everyone here knows that we are in this position because of stupidity and corruption at the highest levels.
Not only in America - everywhere.
Now if ZHers were so fucking smart why have they been screaming that it is impossible to make money --- that the markets are rigged?
Duh - if you had any brains at all you would have understood the markets are rigged and you would have just dumped your cash into an index fund and run up double digit gains for the past 7 years. With absolutely NO RISK!!!
Bernanke as much as told you this --- here's the easy ride money for nothing chicks for free solution offered up on a silver platter but nope --- you bitch and gripe and say 'I can't make money in these markets'
Well you are not alone --- look at all these stupid fucking hedge fund managers who have been fighting the Fed for years --- look at Hugh Hendry -- so smart it took him nearly 6 years to understand the deal.
All the world's central bankers are NOT stupid -- the are doing EXACTLY what they should do to delay a total collapse caused by the end of easy to extract oil. Without them printing these trillions we all be DEAD by now.
Because this is the real problem:
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
Premier Tsipras van Griekenland en bondskanselier Merkel van Duitsland gaan het scenario (van netwerk Juncker?!?!?) bespreken over hoe het SCHULD=H00P-principe het snelste kan worden ingeruild voor het GELD=ZUURSTOF-paradigma.
http://nos.nl/artikel/2026434-tsipras-komt-ruzie-bijleggen-in-berlijn.html
De @CP_sME van Merkel verwacht echter dat vandaag de blauwdruk van het systeem 'Leven en Laten Leven' nog niet in de openbaarheid zal worden besproken. De bilaterale gesprekken gaan o.a. over het feit dat de Griekse banken failliet zijn en dat de Duitse banken wel in dit gat willen springen. Dit zijn echter niet de hervormingen die Tsipras voor ogen had. Griekenland wil namelijk dat per direct de normen (recht op waarheid, recht op uniciteit en recht op vrijheid) van het systeem 'Leven en Laten Leven' gaan gelden. Natuurlijk wordt 'de verstoorde relatie tussen Griekenland en Duitsland' geregisseerd door netwerk WitteGejT. Vorige week mocht de Minister van Financiën Schäuble nog verkondigen dat de Griekse regering 'onbetrouwbaar is' en 'alles doet om het opgebouwde vertrouwen te vernietigen'. Schäuble heeft zijn Griekse collega Varoufakis zelfs naïef en dom genoemd, omdat hij het RENTE=BELASTING-plan van Stichting Intuïtie Trainen wil invoeren.
In Nederland beginnen ook al Kamerleden te beseffen dat bedrijfsonderzoeker Pieter Lakeman in feite bezig is om het SCHULD=H00P-paradigma 'frauduleus' te noemen. Hij heeft zelfs een tuchtklacht ingediend tegen de accountant van ABN AMRO. De betrokken accountant van KPMG heeft het jaarverslag van de bank volgens Lakeman 'ten onrechte goedgekeurd', omdat ze hadden moeten weten dat met de 'stille' invoering van het GELD=ZUURSTOF-paradigma een 'zekere financiële impact' heeft op de activiteiten van de nieuwe bankenunie. Lakeman stelt dat de accountant 'onvoldoende onderzoek' naar de 3e SpinozaGolf heeft gedaan en zich bovendien 'heeft laten overtuigen door juristen van ABN AMRO zelf' dat de politiek het systeem 'Leven en Laten Leven' nooit zullen accepteren.
http://www.trouw.nl/tr/nl/4496/Buitenland/article/detail/3922149/2015/03...
Garri Kasparov meent dat Poetin 'iedere dag een tikje gekker wordt', maar dit past in het wereldwijde ParadigmaConflict die nu steeds meer in de openbaarheid komt.
http://www.trouw.nl/tr/nl/8284/Film/article/detail/3915684/2015/03/21/Wa...
Sinds 2001 mogen de VS van zichzelf overal ter wereld ten strijde trekken, ook op plekken waar de oorlog niet officieel is uitgeroepen, zoals in Rusland, Pakistan of Jemen. De wereld is een slagveld geworden. De aanvallen vinden plaats op basis van geheime opdrachten (goedgekeurd door de president).
If you understood this website, you would not emphasize extracting fiat.
At its core, this is a political and philosophical discussion. You cannot free yourself from worship of the State until you free yourself from worship of its currency.
Correct, and soon enough, consumable calories will be the only currency that matters...
They have said it mildly in not going for growth. They know it is no longer sustainable for any more massive piling up of hard infrastructure.
They have no chice but to ease with credit directed to even defunct projects to maintain employment while engineering a LONG Landing. A delicate balance filled with uncertainties and risks. Otherwise, there will be widespread social upheavals that cannot be managed when the Party is at a low point in its credibility with the People.
Reforms towards a consumption based economy need to take the back seat. The soft infrastructure is not in place for the transition. (Political Stability is the overriding consideration).
China's challenging struggle with deflation shall richochet in the global commodity space and the EM countries of Asia (in particular). About time that the snake oils sold (still being sold) on the glorious future of the Asian peripheral economies be seen as potent poisons. Make money through the greater meltdown that is not at the center (China) at this phase of the game.
If you look at electrical usage or freight rates in China right now their GDP growth rates are running about 4% not official 7%. The govt does have the capability of deflating their economy without resorting to printing which incidentally is what the US wants...by printing they ultimately discourage the Yuan becoming the new fiat reserve....by holding the money supply sable they encourage its use in global trade.....something the West is death afraid of because they are currently locked out of future trade denominated in US dollars...
A deflationary shock in China will carrry over demand in other asian countries that will likely cause more currency devaluations thus a higher dollar...A higher US dollar will be the death of US prosperity and encourage massive treasury selling to remit whatever value left they can extract.....
Defacto the Fed no longer controls the shots in the fiat money hamster wheel.
If you look at electrical usage or freight rates in China right now their GDP growth rates are running about 4% not official 7%. The govt does have the capability of deflating their economy without resorting to printing which incidentally is what the US wants...by printing they ultimately discourage the Yuan becoming the new fiat reserve....by holding the money supply sable they encourage its use in global trade.....something the West is death afraid of because they are currently locked out of future trade denominated in US dollars...
A deflationary shock in China will carrry over demand in other asian countries that will likely cause more currency devaluations thus a higher dollar...A higher US dollar will be the death of US prosperity and encourage massive treasury selling to remit whatever value left they can extract.....
Defacto the Fed no longer controls the shots in the fiat money hamster wheel.
"Next Up: China Will Be Joining The Global Currency Wars"
Don't you read Zero Hedge?!
China's funding at least one (and probably more) of the new dedollarized banks... You're way late to that subject.
Go on...raise interest rates. ...make my day!
before anyone jumps on the china skyrocket, keep in mind 3-4 percent real growth is not sustainable w/o a recession. looking closer and seeing the debt reveals another fiat disaster in the making. but wtf, they all are in lockstep to debt saturation until some sort of a reset, and or debt repudiation...
It has been said that the Fed has no intention of raising interest rates....just jawboning to maintain the illusion of a 'recovery'. Given US debt and the too high $US I see no way that they could raise interest rates without shooting themselves in the foot.....but, hey, they have two of them.
apparently the thought of using COMPOUNDING has been forgotten, along with several other metrics that give a much better view, and Note the Average Savings Rate in China is above 50%, and I'm using a UK link
http://www.theguardian.com/news/datablog/2012/mar/23/china-gdp-since-1980 Main indicators 1980 --1990 --2000 --2011 --2016 Gross domestic product per capita, current prices (US$) 205.12 ---341.35-- 945.6 --5183.86 --8522.86 Population, millions 987.05 1143.33 1267.43 1348.12 1382.16 [ Note: GDP above is per capita and factor-in a 50% Increase in Population, yet still a 4,157% Increase in GDP, not including the over 75-fold or 7,500% Increase in PPP] Gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP (Current international dollar, billions) 247.89 910.93 3015.43 11316.22 18667.27 Annual GDP growthBefore the Chinese government introduced several economic growth reforms in 1979, the average annual real GDP growth rate in China was estimated at 5.3% (from 1960-1978) according to the Congressional Research Service. In 2010 the annual growth rate stood at 10.4%. As the chart above shows there have been some steep inclines and drops in China's GDP growth rate with the effect of the global recession showing in 2008 when the annual rate dropped to 9.6% compared to 14.2% during the previous year.
The IMF estimated China's GDP at purchasing power parity at $11.3tn for 2011., the given amount is $6.9tn, so PPP is 60% More
China's checkbook diplomacy is coming of age http://www.businessinsider.com/r-how-europe-and-us-stumbled-into-spat-ov...
"The joining of Germany, France, Italy as well as Britain, the AIIB's maiden G7 member and a seasoned ally, has opened a decisive crack in the anti-AIIB front forged by America," it said in a commentary.
"Sour grapes over the AIIB makes America look isolated and hypocritical," it said.
The world will be just fine when the Federal Reserve shuts its doors on its Monopoly.
FREE the SLAVES !
China purposely undervaluing their currency for 40 years in order to sell cheap trinkets to the west is not a currency war?
They just have to learn how to lie about economic stats like everybody else.
They have been lying all along so far. They had good Teachers from Wall Street showing them how it's done.
Those were Texas Teachers showin um.