http://www.rgemonitor.com/blog/setser/195387/
Brad, The Chinese economy is the recipient of an extremely loose monetary regime under the Bernanke Federal Reserve. While statistics to the general public by the Fed have been discontinued, broad M-3 money supply growth is estimated to be exploding at an annualized rate of 12 percent. Until I stop receiving an average of 3 credit card offers at zero percent interest in the mail each and every day, it is very hard to otherwise argue that money isn't "cheap". The US Economist community to date, has refused to acknowledge that the Federal Reserve bears primary responsibility for the numerous asset bubbles in the United States which has massively misallocated capital in the US Economy. Instead we are told an almost laughable narrative that the Chinese PBoC has somehow forced Americans to overconsume on gas-guzzler SUVs' and million dollar McMansions from coast to coast. The Chinese PBoC has been trying with some success to mop up excess US dollar liquidity without any cooperation from irresponsible US monetary authorities. The Federal Reserve writes Economist Stephen Roach is a "serial asset bubble machine". Simply stated, the loss of US global competitiveness from massive capital misallocation is certainly not the fault of the Chinese. Why should Chinese exports to the rest of the world be penalized with a higher yuan exchange rate for gross economic mismanagement decisions by the Federal Reserve. Written by Dave Chiang on 2007-05-20 09:59:22
The Chinese economy is the recipient of an extremely loose monetary regime under the Bernanke Federal Reserve. While statistics to the general public by the Fed have been discontinued, broad M-3 money supply growth is estimated to be exploding at an annualized rate of 12 percent. Until I stop receiving an average of 3 credit card offers at zero percent interest in the mail each and every day, it is very hard to otherwise argue that money isn't "cheap". The US Economist community to date, has refused to acknowledge that the Federal Reserve bears primary responsibility for the numerous asset bubbles in the United States which has massively misallocated capital in the US Economy. Instead we are told an almost laughable narrative that the Chinese PBoC has somehow forced Americans to overconsume on gas-guzzler SUVs' and million dollar McMansions from coast to coast. The Chinese PBoC has been trying with some success to mop up excess US dollar liquidity without any cooperation from irresponsible US monetary authorities. The Federal Reserve writes Economist Stephen Roach is a "serial asset bubble machine". Simply stated, the loss of US global competitiveness from massive capital misallocation is certainly not the fault of the Chinese. Why should Chinese exports to the rest of the world be penalized with a higher yuan exchange rate for gross economic mismanagement decisions by the Federal Reserve.
Written by Dave Chiang on 2007-05-20 09:59:22
Reliance on huge cash flows (or even better, big growth of the cash flows) is a classical sign of economy "overheating". Overheating is a synonymous term to "bubbling", with the following difference I can distinguish: The term "overheating" is used by IMF and other institutions to recongize empirical signs of financial trouble - the implication being that "overheating" is a cyclical or "natural" phenomenon of how financial things go. While "bubbling" is used by "leftish" critics of the current libertarian frenzy, with an implication of deliberate human or institutional contribution.
Or should we just recognize a strong Ponzi scheme in the modern economy? Borrowers need increasingly more money to borrow, investors need increasingly more money to lend...
