China’s plan will fail for the same reason that its previous efforts failed. 
Other than exports, no country wants to be like China.
Facing Trump Tariffs, China Outlines Plan to Bolster the Economy
The New York Times reports Facing Trump Tariffs, China Outlines Plan to Bolster the Economy That’s a free link.
The Chinese government and the Communist Party jointly issued a lengthy list of planned initiatives on Sunday to encourage people to spend more, in yet another move by Beijing to offset potential harm from its escalating economic warfare with Washington.
Their road map for economic stimulus included larger pensions, better medical benefits and higher wages — measures that could bolster China’s lagging domestic consumption. But it assigned many of these tasks to the country’s local governments, a large number of which are struggling under enormous debts and plummeting revenues from a decline in the sale of state land.
Part of the document released on Sunday seemed aimed at reassuring the Chinese public that their investments were safe, so that they would start spending money again. The authorities promised to undertake “multiple measures to stabilize the stock market” and to underpin the real estate market, which has been marred by falling property prices.
A housing market crash in the past three years has wiped out much of the savings of China’s middle class. Chinese households have responded by curtailing their spending on hotels, restaurants and other services and putting their savings into bank accounts, despite earning very little interest.
Data released by China’s National Bureau of Statistics on Monday confirmed the trend, showing that consumer spending remains weak while manufacturing, which produces goods in large part for export to foreign markets, stayed strong.
The “Special Action Plan to Boost Consumption” was issued in the name of two of the highest organs of power in China: the General Office of the cabinet and the General Office of the Central Committee of the Communist Party. The unusual step showed that Beijing’s leaders want to signal that they are serious about addressing lackluster domestic spending.
Seriously Wrong Approach
China may be serious, but the approach is seriously wrong.
China needs to write of bad debts in housing, write off bad debts in State Owned Enterprises (SOEs), and stop ridiculous export subsides that benefit US consumers at the expense of Chinese consumers.
But the political class does not want to take a hit in SOEs, and consumers are angry enough over housing already.
So China is doing the only thing it knows how to do, boost exports and make announcements that do little.
Michael Pettis addresses this in a 12-Point Thread on X.
Pettis 12 Points
- Good article by @KeithBradsher: ” The Chinese government and the Communist Party jointly issued a lengthy list of planned initiatives on Sunday to get people to spend more, including larger pensions, better medical benefits and higher wages.”
- “But,” he continues, “it assigned many of these tasks to the country’s local governments, many of which are struggling under enormous debts and plummeting revenues from the sale of state land.” This is the problem with every attempt to boost the consumption share of GDP.
- The sustainable way to do it is to increase the share of GDP retained by households. But increasing their share requires explicit or implicit transfers from either businesses or government. If the household share rises, after all, someone else’s share must decline.
- Beijing clearly wants local governments to absorb the transfers, but given their precarious cashflow positions, for now they can do so mainly by placing new burdens on households or businesses, e.g. through taxes, layoffs, fees, or cutbacks on existing services.
- In that case, the net impact on households is reduced, and the remaining costs absorbed by businesses. The former doesn’t help boost consumption, and the latter, by indirectly forcing businesses to absorb the costs, is bad for the economy.
- The only other way to do so involves forcing local governments either to transfer to households a large part of the substantial assets they control, or to liquidate those assets in order directly or indirectly pay for higher household income.
- This of course implies a radical transformation of the relationship between Beijing and local governments and between local governments and the households and businesses in their jurisdiction, and given the sheer extent of the needed transfers, it will be very difficult.
- This is why, for all years of promising to boost consumption, it has been so hard for China to make much progress. It has to raise the household share of GDP by ten percentage points at the very least, which of course means an equivalent reduction of someone else’s share.
- Many analysts insist that China will choose to avoid rebalancing altogether, but they miss the point. These levels of imbalance simply cannot be sustained if neither China nor the rest of the world can absorb the growing gap between consumption and production.
- China will rebalance one way or another. The important question is how it rebalances: whether an increase in the household share of GDP will occur in the form of a debt crisis and a sharp contraction in GDP, as occurred in the US in the early 1930s, or of many years of…
- stable consumption growth and much lower GDP growth, as occurred in Japan after 1990, or of a surge in consumption that keeps GDP growth stable (which would be historically unprecedented). These are arithmetically the only three ways to rebalance.
The Japanification of China
Like Japan, China is refusing to write down unproductive assets and take losses on bad debt.
China’s setup is a little different than Japan due to SOEs, but the path looks similar.
How many bridges to nowhere did Japan build? And how many SOEs and housing developments in China are bankrupt?
China desperately needs to kill export subsidies (paid for by Chinese consumers). That’s the place to start.
Instead, China is doubling down on EVs and solar panels that the EU doesn’t want and Trump vows to never let happen.
The Pettis Paradigm and the Second China Shock
Noahpinion has a great article covering some aspects of this discussion in his January 16 2025 post The Pettis Paradigm and the Second China Shock
Noah covers reasons why Pettis may right and may be wrong. This was not in relation to the above 12 points (which I think are flawless but Noah hasn’t stated).
In general, I tend to side with Pettis on matters. He taught me most of what I know about trade.
However, I disagree with the savings glut theory that Pettis mostly espouses although he calls it a savings imbalance.
Savings = Production – Consumption.
And crumbling housing is China is savings destroyed even if there are many billionaires made in process.
China takes credit for GDP that is now worthless. And in the US, government spending adds to GDP as well.
Whether the Government spends $20 billion building a road or $200 billion for the same road, the production is the road, not the dollars printed. The difference between the two is an extra $180 billion that’s sloshing around in someone’s bank account, mistakenly referred to as “savings”.
I have had email exchanges with Pettis and I believe he agrees with what I just stated, but that point is often missing in his articles.
That aside, I tend to agree with Noah that “Pettis needs to think harder about the downsides of tariffs.“
Trump’s Reaction
If we are going to have tariffs, a more much more sensible approach would be coordinated efforts against China rather than starting out with 25 percent tariffs on Canada and Mexico.
This is more difficult than it sounds because China has circumvented tariffs with methods that make it appear the imports are from Vietnam, Mexico, or elsewhere.
US importers try to do the same.
Years of Repeat Central Planning Mistakes Have Doomed China’s Economy
On January 1, I commented Years of Repeat Central Planning Mistakes Have Doomed China’s Economy.
For decades, China depended on property bubbles for growth. With building now crumbling, all of that growth was a mirage.
I have been writing about China’s “ghost cities” where no one lives for a decade. They are a result of malinvestment.
Building those cities added to GDP, but it was really 100 percent waste.
China now has a debt to GDP ratio of nearly 300 percent. So where the heck is the net saving either in China or here?
Do we have a savings glut, an imbalance, or a pile of debt that is destroying the middle class and any savings it once had?
Regardless of what one calls the result, the rich are getting richer while the poor and middle class is shrinking.
Massive Printing Ponzi Scheme
Inflation benefits those with first access to money: The banks, the already wealthy, the asset holders, politicians, and the politically connected.
So, it’s no wonder China wants to hide the insolvencies in SOEs.
Step back. What’s going on is a massive printing Ponzi scheme to protect the banks, and the politically connected.
The only way interest is paid on debt is by printing more money and issuing still more debt.
People confuse this monetary printing with savings.
How Can Tariffs Fix This?
Since what’s going on is a massive printing Ponzi scheme to protect the banks and the politically connected, someone please tell me how the H tariffs are going to fix anything.
Tariffs will not stop printing in the US, China, or EU now that it has a newfound love of debt and military spending.
Forget about EU debt brakes until the whole thing blows up.
No Constraints on Spending
There are no practical constraints on government spending and there hasn’t been ever since Nixon ended gold convertibility in August of 1971.
This is what enabled China’s and Germany’s export mercantilism.
Prior to 1971, a country that spent too much lost its gold or needed to jack up interest rates enough to keep it.
Now, every nation on the planet has discovered they can print at will, especially the US, because dollars are always in demand.
Q: Why are dollars in demand?
A: US consumers are the global consumers of last resort. That the reserve currency curse. Everyone want to sell to the US and exporter will willingly take dollars in return, converted into local currencies by foreign central banks.
The result isn’t a glut of savings, but rather a glut of dollars, yen, yuan, and euros.
Trump wants to end this via tariffs, but tariffs cannot fix a problem caused by a lack of an enforcement mechanism.
That enforcement mechanism has always been gold. There has been no constraints on monetary spending since August of 1971.
Trump Wants a Weak Dollar But Needs a Strong One
Fore more discussion of the Reserve Currency Curse, the BRICS nations, and Trump’s very conflicting economic goals, please see Trump Wants a Weak Dollar But Needs a Strong One.
Trump wants the Fed to cut interest rates to weaken the dollar and boost exports. But that’s not what helped him get elected.
Does TEMU Signal Imminent Systemic Failure?Selling stuff below cost to delay collapse
https://fasteddynz.substack.com/p/does-temu-signal-imminent-systemic
You’ll have heard about the Indonesian stock market tanking this morning…
Major red flags…
+ halting trading, means that you know you’re in trouble.
+ sending out mixed messages about interest rates, means you are advertising that you’re clueless
+ trying to scapegoat the finance minister, and getting stung publically, means you know that there’s a big problem, and so does everyone now.
What’s next? The interest rate decision tomorrow… nervous times… when do they reopen markets? what happens if they tank again?!
China is relevant to this, China has been dumping cheap tat in SEAsia via retailers like Lazada, and places like Indonesia have thrown up tariffs, but nothing has been able to shield them from increasing numbers of lay-offs and a contracting middle-class, it’s a country in deep doo doo, due to endemic corruption, and general perceived riskiness… yields are climbing back above 7%, whilst real deflation is happening with CPI dipping under 0%, and the central bank there doesn’t know what to do… rates are well below yields, and they have been following the cutting trend, but now they’re like a deer in the headlights after today, what to do? Stick or twist?
I aksed this elsewhere
“I have some questions.
1) I have heard that all wars are economic. Whether that is true or not, how does war factor into the economic situation in the world today?
2) While I agree that tariffs stifle global trade (I believe have read @Mish that global trade is good). Is all trade actually good? If a country is willing to trap it’s citizenry in poverty to gain leverage with global trade is that actually good? I agree that if one country grows corn and another mines steel that trade helps them both – bit if country A produces “omniwidgets” using impoverished slave labor and another country B tries to offer a living wage for their citizenry then minus some incentive from the Govt, either B impoverishes their citizenry or loses their ability to produce “omniwidgets” locally (IMHO this is a big reason that the US defense is so expensive, they try to produce everything in the US (for security reasons) and much of the infrastructure for that is only to support the military which makes it expensive. Wouldn’t it make more sense to compete by making country A’s discounted labor cost equal to if they were making a living wage for their citizens?
I am really interested in your response. I am want to know what angle I am missing (and am guessing that I didn’t do a very good job of expressing my queries.”
Nations don’t trade, Individuals trade
For two individuals to trade (or a company on behalf of individual consumers) both sides have to agree that it is a good deal or there is no deal.
If China is subsidizing exporters, then Chinese consumers pay that tax and it is to the benefit of millions of US consumers who like a good deal.
Tariffs tell US consumers they can’t have a good deal. Tariffs are a tax on consumers.
It is idiotic to believe China pays the tax. Either the US importer eats the tariff (less profit), or consumers pay the tax, or a combination.
It is also possible there is tariff avoidance or the dollar appreciates.
A combination of all 4 happened in Trump I. Avoidance and dollar appreciation are not as likely under Trump II. So who pays the tax?
If there was a genuine national emergency then tariffs might be a good idea. But there isn’t. And even stupider, we are putting more tariffs on allies than enemies.
Thanks for responding.
I was in China several times for a few months each visit (2006,7,8,9,11, and 13). What I was was a destitute population living under a oppressive regime and they made the best of the conditions – but clearly they were sold on the world market via a currency devaluation (side note: I recall during my first visit the yuan felt like Monopoly {the game} money. It was insane … a low cost meal in the US cost around 8USD at that time and in China I could get a low cost Chinese meal for around 8CNY {and the exchange rate was 8CNY for 1USD) so the meal in China was so depreciated {and restaurants failed incredibly fast.} I called it “Commanipulatism”. It has communism, capitalism and manipulation all bound together.
For me, the Chinese Govt devalued it’s currency and by proxy it’s citizenry/labor and that attracted business to move there and try to take advantage of the cheap labor.
For me, this clearly was not the effect of trade between individuals – this was a Govt currency devaluation (which still exists) to make it’s labor incredibly cheap. Can you please help me see how this effect is between individuals?
Your depiction of tariffs is way too simplistic, and it would be generous to call it disingenuous.
Trade is not a monolith, where all of the things are equally available to all at all times, as you surely know… you can’t compare socks with unique precision engineering products, which is why, for example, semiconductor trade restrictions are an example of not all traded goods and services are equal.
You seem to think you’ve aced this argument, but your argument is bolox, and suggests to me that you’ve never been to Asia.
Tariffs on iphones won’t stop them being desireable in the developing world as status symbols. I’ve been in Vietnam where people live in pretty derelict conditions, but have amazing expensive mopeds, phones, and clothes. They just prioritise differently, because they don’t live in a world of 401ks and mortgages and savings and investment plans, it’s very different there.
I remember being in China when the first mobile phones and Jeep Cherokees were everywhere in Peking as status symbols, for very obvious cultural reasons, like the “event” of going to a KFC as a treat, tariffs will not stop people in those places from having demand for certain specific types of goods if they can get them (real or copied). US consumers do not get the “tax” that consumers in Asia pay for those goods. I don’t know why you think that. Most of them aren’t even manufactured there. You can go to the border of Cambodia and Thailand and see all the textiles being churned out, that will end up in your Fruit of the Loom stores in New England.
You can’t substitute everyhing, and countries that try that, fall behind due to lack of access to things needed for innovation. What many of these countries do have is natural resources, and tourism offerings, and they will do their best to ramp those prices up to claw something back.
I think you need to try a bit harder with your tariffs argument to flesh out the detail, and step away from this oversimplified trite and distorted version you keep pushing as a kind of soundbite. It’s not really like that. SOME tariffs are a tax on consumers, sure, but only when they have no altenrative or where the demand for that thing overwhelms the cost, such as Crapple products. Some costs will be absobed through tech, and some through offshoring some parts of a business to get lower wages, such as Google building server warehouses in Indonesia.
There are also some products that are controlled by SOEs, and hence they are “nations trading” really, not everything is individuals trading.
Basically, your argument falls apart because you try to make everything a monolith where all of one thing is like this, and and all of another thing is like that, and it just isn’t true.
What is China attempting to achieve? China wants to have its citizens share the standard of living of westerners. It also wants to achieve a level of industriousness that it can defend itself from Western coercion. In order to achieve these things it must massively upscale the quality of Chinese labor, as well as improve its technology up to Western standards. In order to do this, it invests in export industries and uses the income to import technological know-how (by forcing western companies to share IP, sending Chinese students to Western universities, etc…). An important part of this process is to be highly competitive on world markets, which is where keeping the value of Yuan low comes in.
The problem, which you allude to, is that as companies move their production, IP, processes and skills to China, they quickly become lost in their former countries. You do have winners and losers. The rise of Trump and populism in the West is driven by that: those who at one time had valuable, marketable skills, suddenly find themselves in low-skill, low-income positions with no hope. They’re not competing with some similar nice guy in China, they’re competing against the entire PRC.
The question is will tariffs fix this? Are American companies going to move production back to the US due to tariffs? The answer is simply some might. That doesn’t mean they will stop producing in China. They will produce in China for the world market, and in the US for the American market. And as you can imagine, the highly competitive world market will get the higher quality, lower-cost products. Secondly, there is a more interesting issue, one of execution! It can take a decade to bring a factory on-line. You have to get trained people, equipment, suppliers in line, etc… But Trump won’t be here by then. If he were serious about tariffs, it would be handled through the legislature creating laws that have to be followed regardless of who is President. But he is only doing it as executive fiat. Meaning the next guy can undo everything (see Biden on immigration). Is Trump doing that purposefully or out of ignorance?
I disagree. For me, I believe China wants to rule the world. They believe they are the supreme humans. The elite in China care very little about the “. . . standard of living of {anyone else}”.
I recall when one Chinese wholeheartedly asked “How can Jesus be God when he isn’t Chinese?”
If they thought they could achieve victory in war against the west – we would be at war right now.
For me, tariffs hasten war, and war is fought for economic reasons using aligned (often manufactured) ideologies to garner support from the masses.
Further for me, Trump’s road to staying in power is getting the US involved in a massive military operation (like WWWIII), declaring martial law and postponing any elections until …. never.
Well, I dunno about that, but they certainly have a sense of their place in history and their role in the world, but a lot of them very uneducated.
You have historical tropes like “the middle kingdom” and “heqi tribute”, but whilst these notions might motivate some of the more shrill aspects of society, and huge preponderance are just plan avaricious and willing to exploit anything and anyone for their own tacky tastes – like Americans.
It’s not “China” that’s trying to achieve anything, it’s the leadership of the CCP that is, for their window of tenure and some notion of legacy, but don’t imagine for a minute that Xi has much of a clue about how to do anything.
The solution for China is what happened in the US in the 1950’s: massive relative wage increases (in the US because of government support for collective bargaining). That will support consumer spending while allowing the reorientation of production towards the domestic market. China has reached capacity in its export growth. But Chinese culture is loath to increase the common people’s standard of living less the commoners expectations outgrow their station.
No, it’s simpler than that – they just can’t do it… they have too many people, and they can’t sell enough stuff to bring in enough money to share it out; and they definitely don’t want to open up to become a free market and liberal democracy.
The Shanghai stock market has been in a WAVE 4 triangle since 2007. It looks like WAVE 5 is starting, and should bring about huge gains, but only for a small amount of time. Maybe the wealth effect will stimulate the Chinese economy.
Doubt it. They are in terminal decline now. They will drag down the rest of Asia as they Japanify, population decline is all over NEAsia, and is present in Thailand in SEAsia, demographics is destinty, and deflation is where we and they are headed.
I wonder if this latest supposed China stimulus is the reason Copper is just about to pierce $5/lb (Comex, it is something per MT in London) for only the 4th week ever.. Hasnt yet and may not but is darned close with May at about 4.98 last
Maybe, but there is also a recognition of long-term supply issues. The last known high quality mines (Chile and Congo) can no longer meet demand, and there hasn’t been any big discoveries in decades.
“A housing market crash in the past three years has wiped out much of the savings of China’s middle class. Chinese households have responded by curtailing their spending on hotels, restaurants and other services and putting their savings into bank accounts, despite earning very little interest.”
We are lucky with the central banking cabal wise policy of keeping property prices in perpetual bubble. Besides, a property price crash is undemocratic.
The CCP can reach into those accounts and help themselves to magic money, the young of China thought they were living in an Asian capitalist Xanadu, but have been waking up to the reality that they live in declining totalitarian communist gulag.
If US GDP was 30 trillion in 2024 and the trade deficit with China 300 billion, should anyone really care?
Those numbers are probably way off the truth, if all was revealed.
The reason gold will not work is the same reason it did not work in Nixon’s day. Congress spent more dollars without adding more gold. So, gold goes higher outside of pegged markets. We all know what happens next, and so did Nixon.
Again, this is not a Fed problem; it’s Congress, and Congress has always been married to Keynesian economic theory, which is inaccurate because Keynes was misinterpreted. It’s closer to Marxism
The problem starts with congress overspending but the fed enables it more by “buying” (by debasing the dollar) us treasuries and mbs. If the fed didnt print to “buy”, then interest rates would need to rise to attract the fewer dollars of real investors. This would deter congress from spending too much because the businesses who donate to congress dont like higher rates as they also temper consumer spending.
The US went off the gold standard because it was no longer capable of producing large quantities of cheap oil and would have to start massive imports of crude. Nixon had 3 options: trade our gold reserves for oil until they run out, massively curb oil imports and go European with high super high prices and small cars, or float the dollar. The last option was judged to be the least politically painful.
The last option was also the most innovative, and has led to novel ideas in finance, some of which are actually useful.
I doubt it would pan out the same way, Nixon’s world didn’t have the internet and magic internet money, or anywhere near as many people in the world. The US would not be able to corner all the gold in the world, and so would be lending not sending.
Mish, this is excellent, lucid analysis. China’s nature being more authoritarian than Japan’s would seem to pave the way for them to go the Japanese route of extended malaise rather than an honest cathartic reckoning. The path of least resistance for the craven ruling class responsible.
Japan is just as authoritarian as China, but they are so much better at presentation.
“Inflation benefits those with first access to money: The banks, the already wealthy, the asset holders, politicians, and the politically connected.”
Dumping stocks at excessively inflated prices, Warren Buffett has first access to money so as to buy up assets with depressed value. Both inflation and deflation benefit the already wealthy.
And deflation would benefit the many more non wealthy people also. They wouldnt be squeezed by high rent to make ends meet and they could better afford buying a basic house, plus the economy would be more inclined towards producing real goods and services, instead of bubbles in stocks and RE as it has been.
It used to be: “It’s the Economy, Stupid”
Now it is: “It’s the Debt, Stupid”.
The debt never matters until it does in FIAT. Glad Mish pointed out that Gold used to be a constraint on countries printing FIAT at will.
Trump ran on the assumption that somehow debt, in the US, would be reduced (tariffs?) and that the lower middle class would benefit via lower prices.
The dollar is going to roll-over which will cause inflation. Helping no one but the rich, as always.
Again, Trump is 50 years too late.
We can get deflation and better prices if we just boot out about 20M immigrants. I was told this weekend by a bank official that there are a lot of houses being held by banks again that are behind on payments but banks haven’t foreclosed on the owner yet. In many cases, he says these are immigrants who came here on a work visa and bought a home thinking the boom would go on forever. I’m hearing stories of a lot of H1Bs getting laid off or their visas are being allowed to expire. There is a massive wave coming but only a few are feeling it right now.
If this plan includes the ability to print 250 MM Chinese babies of various ages 0-24 yrs of age, then they might be able to fix their problem.
US consumers are the global consumers of last resort.
–
No. They are the consumers of first, middle and last resort. US consumers still consume about 5x more on average than any consumer outside of the US. And it is really the top 10% of incomes that consume the most in the us. They are responsible for about 80% of consumer spending. The whole world really relies on such a small sliver of the US population that has the most disposable income.
So we can kill China if we stop buying plastic, you say? I’m in!
Trump is right about one thing. The world can’t live without us. And it isn’t just plastic.
Chinese lost their life savings in the ghost city real estate collapse. Chinese cities cannot pay their bank loans putting banks in a precarious position. Relocation of Chinese manufacturing to Southeast Asia and USA made jobs hard to find for young Chinese. The one child limit demographic time bomb has arrived. Half the Chinese population is over the age of fifty. Xi Jinping couldn’t stimulate the Chinese economy with a cattle prod.
Nicely put!
..add to that the weird situation where there is:
a. not enough women; but,
b. too many leftover women in the cities…
so what you have is a countryside full of lonely men, and cities full of lonely women.
chuck on top of that the intense competition and poverty, and social control.
Then layers of extended credit since about 2014, without the RoI to justify it.
It’s bleak. I know some of these women. Some are very attractive, but the implication of marrying them is taking on huge costs and being linked to CCP-land.
It’s all over the world really, but in China is a particularly ugly manifestation.
A “Great Leap Forward” comrades!
Plans are great, until you have to implement them. The Democrats had Big Plans, but how did that work out? I don’t see “A Chinese Government List” & “A Chinese Citizen List” as nearly the same. They found that out last time.
Now, like the U.S. Needs to Cut so do the Chinese, but “The List” does not represent a favorable outcome, but rather one of failure, once again.
“The authorities promised to undertake “multiple measures to stabilize the stock market” and to underpin the real estate market”. The problem is that the Chines People don’t believe them. They don’t trust them either, so it’s a stale mate. You can’t make them spend it, but you can take it away from them I suppose. That won’t go over well, so not really an option at this point.
The General Office of the cabinet and the General Office of the Central Committee of the Communist Party, do not live like the people. They can tell them what to do, but that doesn’t mean it can be done. Start to punish them for it, and you will not be happy with the results IMO. This is a big issue for China, and they really have no current methods to resolve it without force, or dictate, and that’s a heavy, load to carry and expect it to come through to fruition. They are in a tough spot at the moment…
“Everyone has a plan until they get punched in the face.”
— Mike Tyson
Exactly! I saw him from his first fight, and taped the first 10! Used to make plans and watch Him fight with my Dad, thanks for the memories!
I can’t believe Mike Tyson used to fight with your Dad!! Man that must have been great to watch.
Now he eats psilocybin daily
I passed Tyson at O’Hare back in his prime. He was about my height but 3 of me wide, all muscle. A remarkable specimen.
Real state in China has crashed aproximately.
Houses are still expensive and nobody really buys a house in China. The land is only leased for 80 or 100 year, then return to the communist party.
That’s OK.
The apartments built on the land will only last for 25 years.
You touch on a huge problem, and it doesn’t involve people, but rather time. These empty cities, and homes everywhere, decay fast without maintenance. Every day that goes by, hurts the housing/commercial markets as a result.
This is why the rush for pay down, and less cost for turnover purposes. Unfortunately no money for it, and too many available. Trying to find investors is near impossible.
There are never going to be people dwelling in most of those ghost cities, the problem has accelerated miles away from your location at a great velocity.
just like your money in the bank – which is what it is to them.
imagine watching all the worthless crap you expend time and calories working for, just crumble away… tofu dreg currency.
Singapore has a similarly atrocious deal.
Re: ” tariffs cannot fix a problem caused by a lack of an enforcement mechanism.
That enforcement mechanism has always been gold. There has been no constraints on monetary spending since August of 1971.”
Then, I guess we need to restore July of 1971:
1-inventory gold
2-mark gold to market
3-apply result to asset side of SWF
4-issue gold bonds
5-rake in $
Or something like that – see Minard, Bessent, Luke Gromen for better presentation than my bare bones summary.
Gromen is crap at presentation.
What do people who live in communist style housing buy exactly. I get they can mass produce solar panels, EVs and lots of other products. Neat trick but do they actually buy any of it themselves? I think not. Exporting solar panels and EVs was also neat 10 years ago. It’s not anymore.
What do Chinese nationals buy when they have cash? VPN’s, Foreign Passports, Gold,Silver,Jade
And by the same token I guess when Americans have money they buy politicians. I hope someone is asking for a refund.
they buy gadgets and clothes in my experience, and maybe valuables… these are generally small things.
Mish, my take-away question: Do Centrally Planned Economies, such as Japan, China and the USA eventually FAIL due to Economic LEVER failures?
Most probably depends who’s hands are on the levers and they have the required degree of competency to operate said levers.
None of those are centrally planned economies. The USSR was a centrally planned economy. And it failed because it didn’t understand the importance of pricing. Prices aren’t centrally planned in the US, Japan or even China.
Centrifugal forces can break China apart. Xi tries to boost consumption to survive. GDP components: Consumption (down), nonresidential investment (down), residential fix investment (down), inventory change (up, bad items accumulation), import (up?), export ( down?, more via Vietnam after a discount), gov (up, more bloated): The fake Chinese GDP might rise if consumption will rise. Our debt to foreign nation is down. We produce more onshore. Import is down. The dollar supply to other nations is down. Erdogan wants to be a president for life, like Xi, bc centrifugal force deflated Turkey. It’s against the constitution. In order to change the constitution Erdogan needs the Kurdish party vote. He might have done deal with their jailed leader. In Syria the new president signed a federal deal with the Kurds. .
China has a bifurcated trade policy, half the government wants to make more goods to sell to the rest of the world, the other half wants to make more bioweapons like covid19 to wipe out the rest of the world.
The two approaches are mutually incompatible,they cannot sell anything to dead consumers.
It worked in the UK, having inflicted the kin virus on us then then sold us the testing kits and pipe. Not a trick you can pull off indefinitely.
Is the Trump Administration Using Yemen as an Excuse to Attack Iran?I thought he was the peace president? https://larrycjohnson.substack.com/p/is-the-trump-administration-using
He never meant that. If PEACE ONLY BREAKS OUT IN UKRAINE, but WARS ON TERROR CONTINUE FOREVER IN THE M.E., then we have our answer.
WORLDWIDE PEACE IS NOT THE GOAL. Trump simply want to re-direct his ongoing MIC spending in Syria, Iran, Yemen, etc.
We don’t have any control whatsoever in the ME. We also have the same zero control worldwide. When they act up against the U.S. we retaliate, as we should. That’s not war, but standing up for yourself against an aggressor…
Another delusional fool making excuses because daddy lied.
Centrifugal force in China and Iran can break it apart. Centrifugal force in Israel can blow it up. What Hamas, Hezbollah and Iran failed do, they might do to themselves
He is also “The Law & Order” President
The stock market was supposed to rally bigly, and there was supposed to be peace in Ukraine.
Guess that creep lied to us… again. Some of us never learn.
“The only way interest is paid on debt is by printing more money and issuing still more debt.”
No, not al all. We could raise taxes, which everyone hates. We could collectively and ‘voluntarily’ cut down on consumption to spend our current income on paying down debt, which everyone also hates.
There are plenty of alternatives besides issuing new debt, but collectively we don’t want the pain. Is this your point?
Theoretically Michael Moore could become an ultramarathoner.
Two trillion dollar deficit divided by 330 million people is a $6000 per head tax increase.
The problem is in the NUMBER OF UNEMPLOYED (younger than Soc Sec Ages) as well as the Bloated Boomer sector. Add those up and deduct them from your 330 Million and what then, mathematically speaking?
That’d leave about six.
Yes, the number of unemployed that don’t want to work is the problem, I agree.
The Boomer sector is nearly out of the job market, where most money is to be made. This should be a Boom to workers, who are looking for good jobs, left behind by the Boomers.
The Boomer Class is actually carrying the load at cash registers and lunch tables every day.
In FIAT currencies, when the last dollar of debt is paid off there is no more money left. It is extenguished save for a few straggling bills in some wallets. Money is borrowed into existence, and when paid off….poof it is gone.
We are gluttons for punishment. Paying more in taxes, consuming less, and cutting govt spending would be much better for us as the world wouid see us as careful and responsible with a stable future, the opposite of what it sees when we debase the dollar to pay for stuff.
Surely if they can use those magic money computers to make the money with a click, they can just click on delete, and then the recycle button?