“China Has Run Off The Cliff So Fast, People Seem To Think They’ll Make It To The Other Side”

Jon Alternative Media, Banking, Blogosphere, Economy, Government

Some perspectives on the fascinating economic experiment that is China from Eric Peters, CIO of One Asset Management, as told in his traditional third-person style.
Anecdote: ‘We’ve become anesthetized to the absurdity of Chinese growth,’ said the CIO.
The accelerating rate of credit expansion relative to GDP has no precedent. ‘They’ve run off the cliff so fast that people seem to think they’ll actually make it to the other side.’
China figured out the fiat currency game. ‘A government can monetize its debts, provided it avoids two extremes internal to its economy; inflation above the socially acceptable level of 5%, or deflation that leads to mass unemployment.’
So long as inflation remains within those bounds the Beijing Boys can stuff bad loans made to steel mills into the Great Wall Asset Management company, which is financed through a bond,
bought by some bank, guaranteed by the government.
The bad loan disappears in a monetary blur. This abuse of fiat currency has allowed China to grow in such an extraordinary and uninterrupted manner.

This post was published at Zero Hedge on Dec 6, 2016.