China's $22 trillion time-bomb

panduranghari

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I am being generous

Because I am a generous bugger here are a few things for people to dwell over;

It is the concept of becoming a Super-Producer (producing more than you consume) that creates the need for savings. We all do this over the course of our lives if we plan to live a long time. It is a well-known fact that old people have a difficult time producing. There comes a time when we must retire on our Super-Producer fruits of yesteryear.

John Locke made the point in 1690 that metal money gives men something lasting to keep, that will not spoil, and does not infringe on anyone else's daily lives.

Today, while in our producing years, we transfer our excess value into bonds. That is, someone else's bondage to us. A SPECIFIC SOMEONE! We hold as wealth reserve a contract that says someone SPECIFIC will provide for us later when we can no longer provide for ourselves. These contracts are reputed to be better than gold! But are they?

This system on its surface is clearly a Ponzi scheme, requiring an ever-growing future army of laborers lured into debt in order to service the Super-Producers of yesteryear. But there are bigger problems than just the pyramid structure of the system.

Rather than staying balanced, the globe has divided into hemispheres where one side is producing more and the other is consuming more. The producing side is accumulating enormous amounts of contracts holding the consuming side in bondage well into the future. So it would seem that future generations in the West would be supporting an aging East (net-net) at some point in time.

The problem is that the trend is now visible to all. The West is shrinking while the East is growing, both in population and economically. Futurecrash is clear to anyone with eyes! So I ask again, are these contracts really better than gold?

There was an interesting article in (I think) early '08 when the dollar was tumbling fast. It was about Chinese merchants dumping US dollars on their local banks as fast as they came in. In China, it was illegal to exchange dollars for yuan anywhere except the banks. And the banks were overwhelmed by the demand for renminbi. The PBOC was printing currency as fast as possible to keep up with the demand, but it was not fast enough. Long lines were forming at the local banks and some merchants were being turned away at the close of business, doomed to hold their depreciating US dollars for one more day.

I think it is helpful to consider the journey of a dollar in today's system.

If I am an importer of goods into the US, I simply pay foreigners with my home currency. But if I happen to be an importer elsewhere, there is a good chance I will have to first buy US dollars before I can pay for my shipment. If I am an exporter in China, I am prepared to receive both yuan and US dollars. But for my operating expenses I need only yuan. So I must go to the bank often to turn in my dollars.

My local Chinese bank then gives the dollars to the PBOC who prints new renminbi ("people's currency" in Chinese, denominated in "yuan and jiao" like "dollars and cents").

Sitting at the core of the Chinese economy of 1.3 billion Super-Producers, the PBOC ends up with an astounding amount of US dollars which it pays for with its printing press. This yuan inflation (printing) is a burden on the Chinese economy which must be offset by the central bank's investment of the accumulated US dollars in future usable wealth reserves.

Today, US Treasury debt is the primary option for such large hoards of greenbacks. No other entity offers as large of a future "debt service" as the US government. So the PBOC ships the accumulated dollars back to Washington DC who spends them back into the US economy. In exchange, China receives a contract stating that future US taxpayers will labor in service to China.

The problem is that our debt has grown so large that we are now servicing it Ponzi-style and with the printing press.

So the Chinese printing press (yuan) is backed by the US Fed printing press (dollars) which is backed by Chinese REAL labor (and goods) which is backed by the Chinese printing press (yuan) which is backed by the US Fed printing press... and on and on and on....

Jumping back to the Chinese merchant who needs yuan to pay his operating expenses, we must remember that he is also a Super-Producer, producing more than he consumes. So he has an inflow of EXTRA yuan to store for future retirement. His three choices are keep the paper yuan (not a good idea with inflation), buy a specific entity's future bondage, or buy a share of the entire future global workforce (gold). This third option has only recently been made available to Chinese citizens.

If our merchant chooses gold, he settles the world's debt to him for the time being, a debt which he can reactivate later by selling his gold in exchange for whatever paper medium is best at that future time for obtaining the goods and services he needs at that time.

It is helpful also to follow the path of the renminbi he exchanges for gold. His gold dealer will redeploy the majority of that renminbi in search of replacement gold, because that is his business. That is his operating cost. This path leads ultimately to either the public's gold, the CB gold, or new gold from the mines. This path of yuan seeking gold bids for the best value from each of these three sources. This yuan is now a heat-seeking missile aimed directly at Freegold. Multiply this effect over the entire globe and imagine the force of trillions of heat-seeking missiles all seeking the same thing! What do you think would be the result?

Note also that China recently offered its own bondage (backed by the printing press) as an option to help absorb some of this massive yuan monetary inflation, an offering that was basically rejected.

In India people have always saved their excess production in gold. And guess what the gold is coming back not as a currency but as a ultimate wealth asset. Do you know what Baron Rothschilds said about gold - He who owns the most gold, makes the rules. In China most gold is owned by PBoC. In India RBI owns a bit, but the common man on the street owns the most - estimated to be over 20,000 tons.

Here is an interesting video. Please watch it to the very end;

[video]http://www.cbsnews.com/video/watch/?id=7398482n[/video]

With the demise of US dollar the savings that many central banks have in the form of US dollars are going to be worthless. Have you wondered why your Chinese government is buying all the gold it can? Do you know why they are encouraging Chinese people to buy gold?

One final comment, China is late to the gold party. However, late is better than never.:kickass::yo::shoot::finger:
 

SADAKHUSH

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so, congratulations to our Indian friends? are you feeling better now?
It is not a matter of feeling good or being congratulated but the facts have been laid in front of you by an indepedent source it is for you to reject or accept as they are. Instead of being sarcastic use this as an opportunity to question your officials about the reason why the citizens of China are not being kept informed and why foreign foreigners are able to dig out the numbers and expose the cover up by officials. I hope you will relax now and do the duty as a citizen of China that is question your officials instead of getting emotionally upset.
 

ice berg

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Who ever wrote that crap dont know a shit about economy. Who in the right mind will add all the debts including bank loans. Try the same with the other countries, and see how they come up.

If it is just about debts , then China will went bankrupt ages ago. The debt it-self dont tell the whole story. It is about revenues and what type of debts they are. None of the issues are been adressed. Debts dont need to be a bad thing,

I just love how people jumping up and downs because this crap.
 

SADAKHUSH

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the total debt of CHina's railway ministry is less than 2 trillion RMB, China's GDP 2011 is 47 trillion RMB...

So, obvioulsy, you claim is clueless.....such clueless statement just discredit all your words.
The point being made is that GoI does not provide financial backing to private banks off the books.

In China, all major companies like banks, railways e.t.c. are backed by the Chinese govt. So if you add only the railways debt and the debt of the major banks to Chinese govt. debt that give around 150% debt to GDP ratio.
If you add muncipal and provicial debt, it would go even higher.
India's govt. debt both state and centre together is around 65% and is following a declining trend when it was 85% of GDP in 2004. These are the points being debated.
badguy2000: If you carefully read the post by ejazr, he is giving the debt to GDP ratio and you are giving us China's railway total outstanding debt and China's total GDP for 2011. You cannot compare apples to oranges. I am not master of economics but I can see that you have gone onto different track instead of staying on the points raised by ejazr thus you are clueless rather than ejazr.
 

no smoking

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If anyone among you ladies is an economics graduate, I will be happy to discuss the article. If not its a waste of time.
So, you are claiming that you are an economics graduate? Why don't you prove to us that you really know something about china economy? Or you just know how to post other's essay?
 

nimo_cn

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Your latest pet: Pakistan.

So? Please stop feeding it and brining long term trouble for yourself.
Thanks for your considerate suggestion, but sorry that is none of your business.

Since you guys are so eager to see the collapse of China, why do you even care to tell us which bomb is gonna blow first?
 

nimo_cn

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If anyone among you ladies is an economics graduate, I will be happy to discuss the article. If not its a waste of time.
Why don't you ask the thread starter and other Indian posters if they are economics graduates before challenging us?
 

panduranghari

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So, you are claiming that you are an economics graduate? Why don't you prove to us that you really know something about china economy? Or you just know how to post other's essay?

There is an old rule on any internet forum - Discuss the post not the poster.

Now please read the post and then come back to discuss it.
 

huaxia rox

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Your latest pet: Pakistan.

So? Please stop feeding it and brining long term trouble for yourself.
so tell me how to deal with pakistan my indian friend......attack them and kill all the muslims there?? so u got peace and no troubles no time bombs any more?
 

panduranghari

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Why don't you ask the thread starter and other Indian posters if they are economics graduates before challenging us?
The thing is others are discussing the post, not posters. You guys seem to be gung ho. Perhaps you watch too many westerns- Shoot first and then talk.
 

nimo_cn

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The thing is others are discussing the post, not posters. You guys seem to be gung ho. Perhaps you watch too many westerns- Shoot first and then talk.
So you require us to be economy graduates before discussing about posters? Why?
 

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