Content adapted from this Zerohedge.com article : Source
China might be a House of Cards that is proping up the economies of the world.
In 2017, China was the undisputed creator of debt causing an inflationary burst on a global scale.
According to Reuters, the credit boom has been fueled "by strong economic growth, a robust property market and a crackdown on riskier shadow lending, which has forced banks to shift some loans back onto their balance sheets." But mostly it has been forced by an implicit demand on Beijing to keep the global reflationary impulse strong at a time when the Fed is shrinking its balance sheet - a highly deflationary, if only for circulating monetary aggregates, exercise.
A positive is that household and corporate credit was strong indicating robust consumption and investment.
Last year China’s total new loans hit a record 13.53 trillion yuan, 7 percent more than the previous record in 2016.
While new loans to the real economy (excluding loans to non-bank financial institutions) and corporate financing increased to CNY2690bn and CNY119bn, respectively, from CNY2313bn and CNY-58bn a year ago, they were dwarfed by the slide in off-balance-sheet lending to CNY118bn from CNY1244bn last year.
The Chinese authorities are walking a fine line. Crackdowns on the off-balance sheet items is meant to stem riskier activities-but not too much. All central banks have this challenge when trying to manage the economy.
Meanwhile, with the fate of the US capital markets in the hands of the inflation/deflation debate, the real answer what happens next will not be found in the BLS seasonally adjusted average hourly earnings dataset or the Wednesday CPI print - these are merely measurements of the underlying credit dynamics - but half way across the world, in Beijing, which decides month after month, what is the proper level of new credit with which to lubricate not only China, but the rest of the world as well.
Non-adapted content of this Zerohedge.com article: Source
No wonder central banks and governments across the globe envy and idolize China so much. All this indirect monetary policy bullshit everyone else has to go through makes them pull their thinning hair out. Fiddling around with marginal interest rates and "QE" is so beneath their omnipotence. They want mainline, straight-to-the-vain adrenaline injections ON DEMAND like China's got.
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I'm not sure idolize is the right word. Remember the RMB is pegged to multiple other currencies and is not considered a key reserve currency (yet). Most of these loans are just going towards servicing other bad debt obligations from what I understand. The money isnt going towards creating more value.
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Just turning on the printing press to meet the addiction is rarely a good idea...especially when it is not tempered in any way.
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China is a real problem and a real threat to the world economy.
Their country is big and it is acceptable that they could have more debt than all of the countries, but they reached unbearable levels in the last years, and that's a red flag for the entire world.
18 days ago I posted this about the chinese economy:
https://steemit.com/world/@diogosantos/high-chinese-debt-is-pointed-as-main-threat-to-world-economy
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How much of Chinese debt, private/corporate/sovereign, is owned by non-Chinese entities? That is one thing to consider when thinking about the global impact.
Perhaps the biggest thing to consider is what China will do with their foreign debt.... sell it off? That would really hurt the US and any other nations who rely on debt financing as they wouldnt be able to raise more debt.
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China looks like it has found a way to bring down many capitalist economies whilst lifting their own faster than any country in history
Step 1- Borrow money like crazy(2.9t in a month can't be described as anything else)
Step 2 - Spend it all on infrastructure and housing for your people
Step 3- Build up massive gold reserves
Step 4 -Wait for the inevitable collapse
Step 5 - Back a new currency with your gold reserves
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The world economy is not as strong as the MSM preaches. There is still a huge amount of easing going on in spite of the Fed pulling back a few years ago. From what I understand, there is $200B a month in easing taking place. That is a lot of money being used to prop up the worldwide economy.
The US government is not reliable with their numbers which are pretty much a farce...China's numbers are an outright scam.
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The debt based fiat financial system used across the globe is so unsustainable it isn't even funny. Fuck their bullshit money and their debt slave system... there is now a better way!
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I have information that it has risen more than this, rising reserves for the eleventh straight month, and increased 20.2 billion in December to 3.14 trillion, the highest since September 2016, the monthly increase is the largest since July. November's increase was $ 10 billion. Analysts forecast in a Reuters poll that reserves will rise 6 billion to 3.125 trillion dollars. For the full year, reserves increased by 129.5 billion from 3.011 trillion at the end of 2016, marking the first annual increase since 2014.
The value of gold reserves increased to 76.47 billion dollars at the end of December from 75.833 billion at the end of November, according to data published on the website of the People's Bank of China
For the only solution Li-Qin block technology and decentralization. @zer0hedge
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See? SEE?? Now THAT is how you paper over a mountain of bad debt with more bad debt.
No wonder central banks and governments across the globe envy and idolize China so much. All this indirect monetary policy bullshit everyone else has to go through makes them pull their thinning hair out. Fiddling around with marginal interest rates and "QE" is so beneath their omnipotence. They want mainline, straight-to-the-vain adrenaline injections ON DEMAND like China's got.
thanks for share @zer0hedge
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Aaaah, there's nothing better to overcome debt than more debt! FIATISM at its best!
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Great analysis.
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China is a country that is very influential, it's no wonder if the world economy on hold by China
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@steemcleaners
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