Are we heading into Great Depression 2.0 as a result of the higher-for-longer interest rates, and the resulting bankruptcies of companies? Or will Central Bank money printing cause inflation but avoid depression?
The Chinese economy is in a potentially worse spot than the US economy - Michael Pettis says 1 unit (or UNIT) of nominal GDP growth in China requires 6-7 units of nominal debt.
China's economy is heavily dependent on exports to every country around the world.
If a severe global economic downturn ensues, the Chinese economy might suffer more than less export dependent economies. How will that affect Chinese gold buying and selling?
China's economic model hasn't changed from the old Opium War days - exports far more than it imports and hoards silver then, gold today.
Good points all round - of course all of the Silver hoarded back in the day 170+ years ago
was essentially stolen from them and repatriated back to London by our UK forefather's courtesy of managing to get the Chinese masses hooked on said - ' Opium ' .
Always a good interview with DK. You mentioned around 37:50 that commercial credit is contracting, and equities could face a 70% correction whilst the currency is also undergoing severe debasement. Is that not a mutually exclusive event? - i.e. in Weimar & Venezuela the stock markets inflated alongside the currencies? Or is it more just part of the process whereby in response to this potential bear market central banks extend credit in an attempt to re-inflate equities and keep the banking system solvent? (which I assume is what you meant at 40:34 regarding central bank credit being highly inflationary in an attempt to support the economy)
All fair comment , save for the fact that whilst the currency in Weimar Germany inflated alongside their stock market ( like Venezuela ) - it's purchasing power headed in the opposite direction at a far faster rate - hence it being cheaper to burn Papier-Marken on your fire at home than it was to use it to buy logs and coal .
Yes. I am Dostoevsky's idiot within finance, but I also thought that currency debasement would be associated with increase of all assets including stocks and Equities. But maybe if there is a credit sqeeze the demand for asstes is reduced. And therefor less demand preceeds lower values .
I think what AM is pointing out is that rising interest rates threaten financial asset values (equities) especially as commercial credit contracts & corporations face bankruptcy. A nominal 70-80% correction in equities is sure to cause financial chaos which will be responded to by central banks via credit expansion - which AM has pointed out is highly destructive to the currency. So in the end, I suspect everything does inflate alongside the currency (i.e. the currency collapse), its just that initially a rising interest rate environment will upset the financial apple cart so to speak.
In respect of the diverse views as regards the ongoing stability ( or otherwise ) of the Chinese economy whereby most pundits see it facing an even worse ( & not far off ) collapse than we've
all got pencilled in as a certainty for the USA - as opposed to a small number of other experts saying the opposite and that China is disguising and hiding the true data as to how well they are in fact actually doing ..etc - . From everything you've written & discussed , I'm sure I'm correct in thinking that your analysis of China and where it's going is far more positive than it is negative ..?? .
This said , below is a Link from a recent Report from JIM RICKARDS which is even more downbeat per the Chinese Economy than he's been in the past + he continues to say that the overwhelming size of the US Bond & Treasury Market's mitigate's against the Chinese being huge opposition any time soon.
I had thought ( please put me right if way adrift ) , that what with the BRICS moving forward a-pace and what with ' The Unit ' and ' M-Bridge ' being 40% backed by Gold - that this would effectively pull the rug out from under the ongoing viability and reliance by some on the US Treasury Bond Market and future of the USD . Your thoughts on Jim's piece ..??
Thank you for an excellent interview.
Are we heading into Great Depression 2.0 as a result of the higher-for-longer interest rates, and the resulting bankruptcies of companies? Or will Central Bank money printing cause inflation but avoid depression?
The Chinese economy is in a potentially worse spot than the US economy - Michael Pettis says 1 unit (or UNIT) of nominal GDP growth in China requires 6-7 units of nominal debt.
China's economy is heavily dependent on exports to every country around the world.
If a severe global economic downturn ensues, the Chinese economy might suffer more than less export dependent economies. How will that affect Chinese gold buying and selling?
China's economic model hasn't changed from the old Opium War days - exports far more than it imports and hoards silver then, gold today.
Good points all round - of course all of the Silver hoarded back in the day 170+ years ago
was essentially stolen from them and repatriated back to London by our UK forefather's courtesy of managing to get the Chinese masses hooked on said - ' Opium ' .
Lovely , kind-hearted people weren't they ...?? .
Always a good interview with DK. You mentioned around 37:50 that commercial credit is contracting, and equities could face a 70% correction whilst the currency is also undergoing severe debasement. Is that not a mutually exclusive event? - i.e. in Weimar & Venezuela the stock markets inflated alongside the currencies? Or is it more just part of the process whereby in response to this potential bear market central banks extend credit in an attempt to re-inflate equities and keep the banking system solvent? (which I assume is what you meant at 40:34 regarding central bank credit being highly inflationary in an attempt to support the economy)
All fair comment , save for the fact that whilst the currency in Weimar Germany inflated alongside their stock market ( like Venezuela ) - it's purchasing power headed in the opposite direction at a far faster rate - hence it being cheaper to burn Papier-Marken on your fire at home than it was to use it to buy logs and coal .
Yes. I am Dostoevsky's idiot within finance, but I also thought that currency debasement would be associated with increase of all assets including stocks and Equities. But maybe if there is a credit sqeeze the demand for asstes is reduced. And therefor less demand preceeds lower values .
I think what AM is pointing out is that rising interest rates threaten financial asset values (equities) especially as commercial credit contracts & corporations face bankruptcy. A nominal 70-80% correction in equities is sure to cause financial chaos which will be responded to by central banks via credit expansion - which AM has pointed out is highly destructive to the currency. So in the end, I suspect everything does inflate alongside the currency (i.e. the currency collapse), its just that initially a rising interest rate environment will upset the financial apple cart so to speak.
Yes, thanks, I am catching up slowly. Knowing Latin did not help me with anything except to pass Latin exams
Excellent Interview ( As Usual ) .
In respect of the diverse views as regards the ongoing stability ( or otherwise ) of the Chinese economy whereby most pundits see it facing an even worse ( & not far off ) collapse than we've
all got pencilled in as a certainty for the USA - as opposed to a small number of other experts saying the opposite and that China is disguising and hiding the true data as to how well they are in fact actually doing ..etc - . From everything you've written & discussed , I'm sure I'm correct in thinking that your analysis of China and where it's going is far more positive than it is negative ..?? .
This said , below is a Link from a recent Report from JIM RICKARDS which is even more downbeat per the Chinese Economy than he's been in the past + he continues to say that the overwhelming size of the US Bond & Treasury Market's mitigate's against the Chinese being huge opposition any time soon.
I had thought ( please put me right if way adrift ) , that what with the BRICS moving forward a-pace and what with ' The Unit ' and ' M-Bridge ' being 40% backed by Gold - that this would effectively pull the rug out from under the ongoing viability and reliance by some on the US Treasury Bond Market and future of the USD . Your thoughts on Jim's piece ..??
JIM RICKARDS : www.dailyreckoning.com/china-the-helpless-giant /
Excellent as always, thank you.