– October 21, 2010

“When money is created at a faster rate than real economic growth, the result is inflation. Yet so far this year, China’s official statistics show consumer inflation at barely over 3 percent. Those figures have many economists scratching their heads, wondering where the inflation went, while most people in China seem content to believe their country has found a fantastic new formula for prosperity.

In reality, there is rampant inflation in China. It’s just showing up in asset prices. The new money that was created entered the economy as loans, mainly to fund investment in fixed assets. When it finally reached consumers, they bought tangibles, like property, instead of spending on consumer goods.” Read more

“China Hides Rampant Inflation in Money Binge” 
Patrick Chovanec 
Businessweek, October 19, 2010. 

Image by Arvind Balaraman / FreeDigitalPhotos.net.


Tom Duncan

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