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Chinese Inflation Explodes: Hits 3 Year High 6.4% In June

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http://www.zerohedge.com/article/chinese-inflation-explodes-hits-3-year-high-64-june

It had been widely expected that Chinese CPI would come in smoldering in June, with some predicting a print of 6% or just over. Few, however, expected 6.4%, a blistering spike compared to May's 5.5%, which is the highest inflation recorded in China in 3 years, and depending on how one looks at GDP (and the government's way is certainly modestly flawed to say the least), China may well be approaching the revolutionary point where real interest rates turn negative, and purchasing gold becomes a costless opportunity, which in turn would send the price the yellow metal well north of $2,000. China Daily, the government's official mouthpiece comes with the usual Douglas Adams advice: "We don't have to panic about the June CPI figure," said Zhang Liqun, a macroeconomic analyst with the State Council Development Research Center, China's top government think-tank....Of the 6.4-percent CPI growth in June, 3.7 percentage points were contributed by the carryover effect of price increases last year, the NBS said in a statement on its website. "A CPI growth above 6 percent doesn't mean the inflation situation is worsening in China, because 3.7 percentage points of the increase were contributed by the carryover effect,"

Bernanke will be partying tonight.

More printy printy to come to secure Bernankes victory....

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http://www.zerohedge.com/article/chinese-inflation-explodes-hits-3-year-high-64-june

Bernanke will be partying tonight.

More printy printy to come to secure Bernankes victory....

At which they will increase bank reserve requirements, and hike interest rates...

Not things the western world can do..

Remember China is a shooty shooty country. People kick up a fuss? They get shot.... So benake can print like crazy, once gas goes over $5 a gallon they can't shooty shooty without destroying themselves.

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At which they will increase bank reserve requirements, and hike interest rates...

Not things the western world can do..

Remember China is a shooty shooty country. People kick up a fuss? They get shot.... So benake can print like crazy, once gas goes over $5 a gallon they can't shooty shooty without destroying themselves.

I doubt hiking rates will help - this inflation is coming through in payment for their exported goods, in the guise of western (read: US) printed money. How will hiking up borrowing rates in China stop the US from printing? EDIT: Arguably, this could even suck in more hot money, doing more damage than good. In fact, if it encourages yet more saving in China, it will feed US borrowing further, building up a bigger problem in the future.

The only way this will end, is when China stops pegging against the dollar and aims for a trade balance, rather than a huge surplus.

When your main trading partner for your exports can only afford them when they print money, you know that particular game is up. There is no future in the current economic model for China. They will need to let go of some of the sweat shops, factories etc, let their currency appreciate, then start importing more stuff with their new found currency strength. It would have been easier to let their currency float from the start, rather than going full speed into a brick wall, but there is no point crying over spilt milk.

Edited by Traktion

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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