Money supply growth is high and inflation rising in much of the developing world. This is leading to inflation in China, Australia, and many other places, as the deflationary effects of adding new labor to the global capitalist labor pool gets outweighed by the hyperactive printing press.
Central banks are still adding to liquidity, perhaps to bail out banks who have made bad loans to parties on the wrong side of securities trades. I like CLSA’s Greed and Fear, but don’t argue with what the central banks are doing, instead, try to analyze what they will do from here.
Two more notes: I don’t see China selling US Dollar assets. It isn’t in their interest. What they would more likely do is begin purchasing US corporations, and/or merely slowing/eliminating debt purchases — those would be more than uncomfortable enough. Second, as I mentioned in my prior post, the risk is not US assets fleeing Asia, but Asian assets fleeing the US.
With that, have a good night. I’ll try to get to my two other posts tomorrow.
RE: China
And isn’t one of your previously mentioned risks that China overshoots on carrying out some policy or another? I believe it was due to their relative inexperience. Seems like an awful lot might be riding on China these days. Anyway, something to think about: what if China screws up in the clutch? How to recognize when it’s happened/happening/about to happen?
I hope you have time to comment on TMA; slow motion disaster for ANYONE that is not using a deposit based lending model.