The credit creation required to maintain a discounted ¥RMB to US$ exchange rate has been an important part of the credit creation that has been papering over the fading income-generating capacity of the post-WWII Growth Economy.

It seems that another, larger portion of recent credit creation was that created during the real estate bubble.  The only real benefit from this bogus credit was  the money extracted for consumption from the bogus increase in value of that real estate. The drop in real estate values that has occurred in the US is inherently deflationary and the debt based money that has been created to replace the lost counterfeit wealth has been of limited effectiveness in restoring the economy because it has not gone to productive uses. Instead, it has been used to paper over the losses of the TBTFs on their fraud and bad bets. It has been used to hide the problems rather than to resolve the problems. Too many people understand this for there to be any real confidence in the existing system.

"It is not necessary to have hope in order to persevere."