The China Domino Has Fallen: Big-Time Inflation Coming All Around The World

[boedicca]

Scary stuff from SocGen, which is predicting high inflation beginning next year. Why? Net-net, China has shifted out the demand curve. It's the opposite impact of adding billions of incredibly low paid people to the global labor force in past years. Back then, low priced labor kept prices down. Now, China is moving towards a consumer based economy, and is competing for global supply. Result: inflation.

China is about the export inflation to the rest of the world in a process that will resemble the fall of three dominos, one of which is already fallen, according to Societe Generale.

In a massive report titled "The China Domino has Fallen!" Soc Gen analysts outline the three dominos of the Chinese inflation export scheme, and their current progress.

Domestic inflation: China switch to a consumer driven economy means more domestic demand. Supply remains constant, so prices rise. This is already happening.

China exports inflation: "This dynamic seems as inevitable as gravity itself." Chinese demand for oil and steel has pushed prices up in those markets. Now it is effecting commodities like cotton and food products. That's being passed on to developed markets like the U.S., and it will really hit home in 2012. This is in the process of happening.

China demand shock: The country's long-term economic rebalancing results in an permanent increase in global demand. Supply is sticky, and it will take time for it to catch up, thus limiting the world's ability to cope with this rise in demand. This is starting to happen.

If this didn't sound alarming, their conclusion on how this resembles the reverse of China's entry into the WTO should....

Read more: http://www.businessinsider.com/socie...#ixzz1QV5lSjBG

[Samson]

This inevitability is why I stopped saving, and started buying.

I hope my Octopus Farm begins to take off soon.

[The T]

It has been said that China needs us more than we need them. (Them being our banker set aside)...Any thoughts on this?

[boedicca]

We're all in an ugly Gordian knot of financial interdependency.

That's why China is intervening to support the Euro.

Essentially, the major powers and the banking system have borrowed/seized $Ts from future generations. There is no way to painlessly solve this problem. So the game is to continue tossing the hot potato/ticking time bomb so that somebody else is holding it when The Inevitable occurs.

[Samson]

Originally Posted by boedicca

We're all in an ugly Gordian knot of financial interdependency.

That's why China is intervening to support the Euro.

Essentially, the major powers and the banking system have borrowed/seized $Ts from future generations. There is no way to painlessly solve this problem. So the game is to continue tossing the hot potato/ticking time bomb so that somebody else is holding it when The Inevitable occurs.

So, with a hot potato.....does that mean revenge, a dish best served cold, is out of the picture?

[The T]

Originally Posted by boedicca

We're all in an ugly Gordian knot of financial interdependency.

That's why China is intervening to support the Euro.

Essentially, the major powers and the banking system have borrowed/seized $Ts from future generations. There is no way to painlessly solve this problem. So the game is to continue tossing the hot potato/ticking time bomb so that somebody else is holding it when The Inevitable occurs.

I like this answer. It does merge into a few things I've heard and read in the past months.

And interesting to see the cast of characters involved...some would say NWO...

[Samson]

Originally Posted by The T

I like this answer. It does merge into a few things I've heard and read in the past months.

And interesting to see the cast of characters involved...some would say NWO...

Boediccia is The Expert at Merging "a few things," regardless of their seemingly unrelated nature....I understand she single-handedly began the hypothesis that the USA had used Orbiting Satillites that created Tsunamis in Japan to cause a Toyota shortage in the USA so that the Government Bailout of GM would be effective

[boedicca]

Ahem. Great Unifying THEMES are one of one's specialties.

[Samson]

Originally Posted by boedicca

Ahem. Great Unifying THEMES are one of one's specialties.

One of One's.

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