11 Comments
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JD's avatar

Great piece

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David Johnson's avatar

Very interesting, great analysis.

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Lago Brian's avatar

Wow.

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Passant H's avatar

It is not about strengthening exports. Exports is high .. it isn’t about deleveraging either because most of the bubble assets already popped and any write off for banks would be suicidal .. China needs to increase its money supply growth rate and velocity .. to enhance domestic demand.. the question is does it have time since it already stepped into the deflation zone? It isn’t as mentioned a depression phase that is a normal part of the cycle.. deflation if not handled fast can easily spiral like in Japan .. China is already showing signs of spiraling .. they already did the deliberating by the government intervention of buying the bad debts similar to what the US did during the financial crisis so it is no longer a balance sheet problem .. it was late though .. now it is a deflation problem .. with the money supply not rising yoy enough .. they can’t compensate the 1.4 billion Chinese demand by exports where China is already the leader .. there isn’t much roam to expand beyond the world’s factory statue .. it isn’t a currency exchange issue .. the only benefit will be temporary inflation .. it isn’t like the 1929 deflation where the exchange rate helped getting out of deflation..

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Real Charts's avatar

Good piece, and aging well!

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judwoodworth's avatar

Fantastic article. Thank you.

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Meyrick Chapman's avatar

Great article Alex. Thanks. All of this will tend to increase pressure for tariffs on the US side. If the CA deficit increases the game continues and US asset prices remain favoured. If more radical measures ensue to halt upward pressure on the dollar and rise in indebtedness, all bets are off.

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mendo's avatar

it was a very timely contrarian signal 😊

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derek's avatar

Okie dokey, you have broken the ice and we can openly use the "D" word re Chinaland

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Miint's avatar

Thanks for this. Very tidy explanation that goes a long way to explain what we have seen with gold prices and Chinese gov bonds.

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Azmiboy's avatar

Good piece

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